Opinion
No. 1 CA-CV 18-0109
02-21-2019
CITY OF PHOENIX, Plaintiff/Appellant, v. STATE OF ARIZONA, Defendant/Appellee.
COUNSEL Osborn Maledon, P.A., Phoenix By Colin F. Campbell, Joseph N. Roth, Eric M. Fraser Co-Counsel for Plaintiff/Appellant Phoenix City Attorney's Office., Phoenix By Brad Holm, Thomas G. Stack, Cris A. Meyer Co-Counsel for Plaintiff/Appellant Arizona Attorney General's Office, Phoenix By Rusty D. Crandell Counsel for Defendant/Appellee
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2016-014855
The Honorable Daniel J. Kiley, Judge
AFFIRMED
COUNSEL Osborn Maledon, P.A., Phoenix
By Colin F. Campbell, Joseph N. Roth, Eric M. Fraser
Co-Counsel for Plaintiff/Appellant Phoenix City Attorney's Office., Phoenix
By Brad Holm, Thomas G. Stack, Cris A. Meyer
Co-Counsel for Plaintiff/Appellant Arizona Attorney General's Office, Phoenix
By Rusty D. Crandell
Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Kenton D. Jones delivered the decision of the Court, in which Presiding Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined. JONES, Judge:
¶1 On January 20, 2016, the City of Phoenix (the City) approved the establishment of the Roosevelt Business Improvement District (Roosevelt BID) under the then-applicable statutory scheme. Two months later, the Arizona Legislature added a requirement to the improvement district formation process and applied the change retroactively to "any districts for which the city or town council ha[d] not adopted a boundary map by January 1, 2016." 2016 Ariz. Sess. Laws, ch. 9, § 3 (2d Reg. Sess.) (H.B. 2440).
¶2 The City sought declaratory judgment that H.B. 2440's retroactivity clause (Retroactivity Clause) did not apply to the Roosevelt BID. On summary judgment, the trial court ruled that the Retroactivity Clause applied to the Roosevelt BID and entered judgment in favor of the State. For the following reasons, we affirm.
STATUTORY BACKGROUND
¶3 A municipality's governing body is authorized to establish "an improvement district . . . within a designated area to provide public service within the district at a higher level or greater degree than provided in the remainder of the community." Ariz. Rev. Stat. (A.R.S.) § 48-575(A). Before H.B. 2440, a governing body seeking to establish an improvement district was required to follow only six steps:
Absent material changes from the relevant date, we cite a statute's current version.
1. The governing body must file with the clerk "preliminary plans that show the location and the type and character of the proposed improvements and estimates of the cost and expenses of the proposed improvements." A.R.S. § 48-577.
2. Next, the governing body must pass a resolution of intention briefly describing the proposed improvement.
A.R.S. § 48-576(A). If the governing body determines that the proposed improvement "is of more than local or ordinary public benefit, it may order the expense of the improvement chargeable upon" the proposed district. A.R.S. § 48-576(B). In that event, the resolution of intention is also required to "describe the extent of the district in general terms . . . either by reference to street lines or block numbers, or by designating its exterior boundaries by their courses and distances from the street or streets the improvement of which is contemplated." Id. Additionally, the resolution "may refer for a more particular description" of the improvement district "to a map on file with the city or town engineer, showing the exterior boundary lines of the district, and delineating block and lot numbers or containing such details as will show the location of the lines." Id.
3. Next, the governing body must publish the resolution of intention and cause notices "to be conspicuously posted along the line of the proposed improvement" which "shall state the fact of the passage of the resolution of intention" and "briefly describe the improvement proposed." A.R.S. § 48-578.
4. After a fifteen-day comment period, the governing body must "hear and pass upon" objections to the proposed improvement. A.R.S. § 48-579(A), (E). If, after considering objections, the governing body "modif[ies] the extent of the proposed assessment district," it must pass "a new resolution of intention . . . containing a description of the modified district," that requires public notice in the same manner required of the original resolution. A.R.S. § 48-579(E). If the governing body makes no modifications after passing upon the objections, "its decision shall be final and conclusive." Id.
5. After final resolution of objections, the governing body may then "order, by resolution, the proposed improvements described in the resolution of intention." A.R.S. § 48-581(A).
6. Finally, before it can assess taxes against properties within the approved district, the governing body must approve an assessment diagram "show[ing] each separate lot, numbered consecutively, the approximate area in square feet of each lot, and the location of the lot in relation to the work proposed to be done." A.R.S. § 48-589(A).
¶4 H.B. 2440 added a seventh step to the improvement district formation process. Now, after final resolution of objections but before ordering the improvements, as described in step five above, a governing body must:
[S]ubmit within one hundred twenty days to the city or town clerk a petition to form the district that is signed by owners of more than one-half of the taxable property units within the area of the proposed district and that is signed by persons owning collectively more than one-half of the assessed valuation of the property within the area of the proposed district.A.R.S. § 48-576(A)(2).
FACTS AND PROCEDURAL HISTORY
¶5 In November 2015, the City passed a resolution of intention to establish the Roosevelt BID. Objections were filed, and at a hearing on January 20, 2016, the City passed upon the objections and adopted a resolution establishing the Roosevelt BID. The City did not, at the January 20 hearing or at any time thereafter, approve a proposed assessment diagram for the Roosevelt BID that would allow it to levy taxes on property in the district.
¶6 In response to the Roosevelt BID, the legislature passed H.B. 2440, applying the new requirement via the Retroactivity Clause to "any districts for which the city or town council has not adopted a boundary map by January 1, 2016." The governor signed the bill on March 11, 2015, and the law went into effect on August 6, 2016.
¶7 In September 2016, the City sued the State seeking declaratory relief that H.B. 2440 did not retroactively apply to the Roosevelt BID. The City moved for judgment on the pleadings, and the State cross-moved for summary judgment. The trial court determined the term "boundary map" in the Retroactivity Clause referred to the assessment diagram described in A.R.S. § 48-589(A) and, because the City never adopted an assessment diagram for the Roosevelt BID, entered judgment for the State. The court also held that the Retroactivity Clause was not unconstitutional special legislation and awarded the State attorneys' fees as the successful party pursuant to A.R.S. § 12-348.01. The City timely appealed, and we have jurisdiction pursuant to A.R.S. §§ 12-120.21(A) and -2101(A).
DISCUSSION
I. The Retroactivity Clause Applies to the Roosevelt BID.
¶8 The City argues the trial court erroneously interpreted the phrase "adopt a boundary map" in the Retroactivity Clause to mean the approval of the assessment diagram described in A.R.S. § 48-589(A)-(B). The interpretation of statutes is a question of law that we review de novo. Yavapai-Apache Nation v. Fabritz-Whitney, 227 Ariz. 499, 503, ¶ 13 (App. 2011) (quoting Libra Grp., Inc. v. State, 167 Ariz. 176, 179 (App. 1991)). In interpreting a statute, "our primary goal is to effectuate the legislature's intent." Stambaugh v. Killian, 242 Ariz. 508, 509, ¶ 7 (2017) (quoting Wade v. Ariz. State Ret. Sys., 241 Ariz. 559, 561, ¶ 10 (2017)). The basic principles of statutory interpretation are well-established: if a statute has only one reasonable interpretation, "we apply it without further analysis." Id. Additionally, "when statutes relate to the same subject matter, we construe them together as though they constitute one law and attempt to reconcile them to give effect to all provisions involved." Berndt v. Ariz. Dep't of Corrs., 238 Ariz. 524, 528, ¶ 11 (App. 2015) (quoting Fleming v. Dep't of Pub. Safety, 237 Ariz. 414, 417, ¶ 12 (2015)).
¶9 The City argues the phrase "adopt a boundary map" unambiguously refers to passing the resolution of intention described in A.R.S. § 48-576. In support of its interpretation, the City notes that a resolution of intention must "describe the extent of the district in general terms," and can do so either "by designating its exterior boundaries" or by referring "to a map on file with the city or town engineer, showing the exterior boundary lines of the district." A.R.S. § 48-576(B). We disagree.
¶10 "Words in statutes . . . cannot be read in isolation from the context in which they are used." J.D. v. Hegyi, 236 Ariz. 39, 41, ¶ 6 (2014) (citing Adams v. Comm'n on Appellate Court Appointments, 227 Ariz. 128, 135, ¶ 34 (2011), and Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)). When the Retroactivity Clause is read in context, with the statutes governing municipal improvement districts, its reference to the adoption of a boundary map cannot be interpreted to refer to the approval of a resolution of intention.
¶11 Although the resolution of intention does describe a boundary for the proposed district, it is merely that: a proposal. As the statutes make clear, the boundaries could change as a result of a number of circumstances. For example, A.R.S. § 48-579(B) bars "any further proceedings in making the improvement for six months" if certain owners protest the improvement in writing. Or, the governing body may decide to alter the proposed boundaries requiring a new resolution of intention and public comment period. A.R.S. § 48-579(E). Even if every owner within the proposed district agrees with its formation in a written petition, the governing body must still "verify[] . . . ownership and mak[e] such a finding of fact" regarding unanimous approval before it can approve the establishment of the improvement district. A.R.S. § 48-575(C). Finally, the municipality may ultimately decide not to order the improvements at all. See A.R.S. § 48-581(A) (describing circumstances after which "the governing body may order . . . the proposed improvements") (emphasis added).
¶12 The fact that the resolution establishing the improvement district "need not fully describe the improvement nor the extent of the assessment district, but may refer to the resolution of intention for the description," A.R.S. § 48-581(B), does not make the resolution of intention a final or formal "adoption of a boundary map." This provision simply eliminates duplicative work after the governing body finalizes the boundaries of the improvement district.
¶13 Because the boundaries described in a resolution of intention are merely proposals subject to change, the municipality does not "adopt a boundary map" when it passes the resolution. Indeed, the earliest the City could have adopted a boundary map for the Roosevelt BID is when it resolved objections and ordered the district be established on January 20, 2016, after the retroactivity deadline. Accordingly, H.B. 2440 applies to the Roosevelt BID.
We need not determine conclusively whether the legislature intended the term "adopt a boundary map" to mean the establishment of the improvement district or the adoption of an assessment diagram, as both events would fall within the retroactivity deadline.
II. H.B. 2440 Is Not Special Legislation.
¶14 Having determined that H.B. 2440 applies to the Roosevelt BID, we now consider whether the Retroactivity Clause is a special law prohibited by the Arizona Constitution. Whether a statute is constitutional is a question of law, which we review de novo. Gallardo v. State, 236 Ariz. 84, 87, ¶ 8 (2014) (citing League of Ariz. Cities & Towns v. Brewer, 213 Ariz. 557, 559, ¶ 7 (2006)). We presume the legislature acts constitutionally and will uphold a statute unless it is clearly unconstitutional. See id. at ¶ 9 (quoting Ariz. Minority Coal. for Fair Redistricting v. Ariz. Indep. Redistricting Comm'n, 220 Ariz. 587, 595, ¶ 21 (2009)) (citations omitted).
¶15 The Arizona Constitution prohibits special laws that affect the "[l]aying out, opening, altering, or vacating roads, plats, streets, alleys, and public squares" or the "[a]ssessment and collection of taxes." Ariz. Const. art. 4, pt. 2, § 19(8)-(9). Arizona's Constitution also prohibits special laws if "a general law can be made applicable." Id. at § 19(20). To survive scrutiny as a special law:
(1) the law must have "a rational relationship to a legitimate legislative objective," (2) the classification the law makes must be legitimate, encompassing all members that are similarly situated, and (3) the classification must be elastic, allowing "other individuals or entities to come within" and move out of the class.Gallardo, 236 Ariz. at 88, ¶ 11 (quoting Republic Inv. Fund I v. Town of Surprise, 166 Ariz. 143, 149 (1990)); see also Ariz. Downs v. Ariz. Horseman's Found., 130 Ariz. 550, 557 (1981) ("A special law applies only to certain members of a class or to an arbitrarily defined class which is not rationally related to a legitimate legislative purpose.") (collecting cases).
¶16 Here, the parties only dispute the third prong of the test — whether the Retroactivity Clause creates an elastic classification. The City argues that under the new requirements, it would have had to submit signatures within 120 days after the final resolution of objections. However, the 120-day period ended well before H.B. 2440 went into effect, and no signatures were submitted. The City argues this forces an automatic repeal of the Roosevelt BID, but not for any future district, and is therefore an inelastic classification.
¶17 These circumstances are not conclusive. "[I]f a statute is of general application by its terms, the fact that its initial application concerned a finite number of known specific individuals or companies will not render it a 'special law' . . . so long as it may have a potentially broader application in the future." Fund Manager, Pub. Safety Pers. Ret. Sys. v. Corbin, 161 Ariz. 348, 360 (App. 1988) (citing Ariz. Downs, 130 Ariz. at 557-58). Here, although the Retroactivity Clause may affect a discrete number of improvement districts — and possibly only the Roosevelt BID — the amendments within H.B. 2440 still apply to every improvement district moving forward. See id. at 359-60 (concluding a retroactivity clause that "addresse[d] only two specific past events" did not render statutory amendments unconstitutional where they applied "not merely with respect to a definite period of time in the past, but for all time after [the effective date], on into the future"). As such, the Retroactivity Clause does not render H.B. 2440 an unconstitutional special law.
III. The Trial Court Did Not Abuse Its Discretion when It Awarded the State Attorneys' Fees Based upon the Prevailing Market Rate.
¶18 Finally, the City argues the trial court erred when it awarded the State attorneys' fees that were calculated based upon the "prevailing market rate," rather than by the State's actual costs to litigate the case. We review an award of attorneys' fees pursuant to A.R.S. § 12-348.01 for an abuse of discretion, but review "the court's legal authority to use a specific method for determining attorneys' fees" de novo. Charles I. Friedman, P.C. v. Microsoft Corp., 213 Ariz. 344, 350, ¶ 17 (App. 2006) (citing Orfaly v. Tucson Symphony Soc'y, 209 Ariz. 260, 265, ¶ 18 (App. 2004), and Burke v. Ariz. State Ret. Sys., 206 Ariz. 269, 272, ¶ 6 (App. 2003)).
¶19 Although the City correctly notes that no published decision specifically addresses whether, pursuant to A.R.S. § 12-348.01, the State may be awarded attorneys' fees calculated at the prevailing market rate, we previously approved the prevailing market rate standard to calculate the State's reasonable attorneys' fees for awards granted pursuant to A.R.S. § 12-341.01. See State ex rel. Corbin v. Tocco, 173 Ariz. 587, 594 (App. 1992). This Court has also affirmed a fee award to the State, entered pursuant to A.R.S. § 12-348.01, that was calculated based upon the prevailing market rate standard, albeit on a different basis. See City of Tempe v. State, 237 Ariz. 360, 367-68, ¶¶ 28-29, 34 (App. 2015). The City presents no compelling basis to deviate from the prevailing market rate standard when awarding "reasonable" fees under A.R.S. § 12-348.01 as opposed to "reasonable" fees under A.R.S. § 12-341.01; the public policy considerations apply with equal force for both statutes. See Tocco, 173 Ariz. at 591-92 (describing the benefits of using the prevailing market rate standard for calculating fee awards to government agencies). Accordingly, the trial court correctly based the fee award upon the prevailing market rate.
CONCLUSION
¶20 The trial court's orders are affirmed.
¶21 The State requests an award of attorneys' fees and costs pursuant to A.R.S. §§ 12-341, -342, and -348.01. Because the State is the prevailing party, we award it the taxable costs and reasonable attorneys' fees incurred on appeal upon compliance with ARCAP 21.