Opinion
No. ED89230
March 18, 2008
Appeal from the Circuit Court of St. Louis County The Honorable Patrick Clifford.
Eric M. Martin, for Plaintiff/Respondent.
David T. Hamilton, Elizabeth M. Chostner, for Defendants/Appellants.
Introduction
The Boundary Commission, St. Louis County and its constituents (the Commission) appeal from the circuit court's judgment denying the Commission's motion to dismiss Count I of the City of Valley Park's (Valley Park) petition to review the Commission's denial of its annexation proposal as a noncontested case, and finding that the Commission's denial of Valley Park's annexation proposal was arbitrary, capricious and unreasonable. We would affirm the judgment; however, in light of the general interest and importance of the issues involved, we transfer the case to the Missouri Supreme Court, pursuant to Supreme Court Rule 83.02.
History of the Boundary Commission
In order to provide structure and oversight for burgeoning annexation activities in St. Louis County, in 1991 the General Assembly statutorily created a commission known as the Boundary Commission, St. Louis County with authority over all proposed municipal boundary changes within St. Louis County. The enabling statute, after being amended to overcome a few constitutional shortcomings, see O'Reilly v. City of Hazelwood, 850 S.W.2d 96, (Mo. banc 1993) (statute's application to St. Louis County alone violated the constitutional prohibition against special laws where a general law could be made applicable, Mo. Const. art. III, § 40(30)) and State ex rel. City of Ellisville v. St. Louis County Bd. of Election Com'rs, 877 S.W.2d 620, 621 (Mo.banc 1994) (statute violated constitutional requirement that law applicable to any county be applicable to all counties in the class to which the county belongs, Mo. Const. art VI, § 8), today gives the Commission power to review all proposed annexations within St. Louis County, and approve or disapprove them as being in the best interests or not in the best interests of the proposing entity; the area to be annexed; and St. Louis County. See Section 72.403. The statute sets out the factors to be considered by the Commission in making such a determination. Id. If the Commission approves the proposal, then the proposal is voted on by the constituents of the affected areas. Id. If the Commission rejects the proposal, as it did in the case sub judice, then the proposal is not submitted to the voters.
See State ex rel. City of Ellisville v. St. Louis County Bd. of Election Com'rs, 877 S.W.2d 620, 621 (Mo.banc 1994).
The boundary commission law encompasses Sections 72.400-72.423. All statutory references are to RSMo 2000, unless otherwise indicated.
The statute itself by its terms does not apply only to St. Louis County, although the annexation problems with St. Louis County prompted its creation. In fact, the statute's original limited application to St. Louis County was one of its earlier constitutional problems. For the purposes of this opinion, however, we are dealing only with the St. Louis County Boundary Commission, and therefore, we will refer to all of the statutory provisions as applying to St. Louis County.
These factors are set out later in this opinion.
The Commission is made up of eleven members. Four are appointed by the St. Louis County Executive, three of which are required to be from the unincorporated area of St. Louis County and one of which is to be from the incorporated area of St. Louis County. Section 72.401. The chief elected officials of all municipalities wholly within St. Louis County which have a population of twenty thousand or less but more than ten thousand persons, each name one member to the Commission. Id. The chief elected officials of all municipalities wholly within St. Louis County which have a population of ten thousand persons or less, each name one member to the Commission. Id. The chief elected officials of all municipalities wholly within St. Louis County which have a population of more than twenty thousand persons, each name two members to the Commission. Id. An appointive body consisting of the director of the St. Louis County Department of Planning, the president of the municipal league of St. Louis County, one additional person designated by the St. Louis County Executive, and one additional person named by the board of the municipal league of St. Louis County, which appointive body, acting by a majority of all of its members, shall name three members of the Commission who are residents of St. Louis County. Id.
Factual and Procedural Background
In 2004, Valley Park submitted to the Commission a proposal to annex a 526-acre area adjacent to Valley Park hereinafter referred to as "Peerless Park." On September 20, 2004, the Commission held a public hearing on the proposal, pursuant to Section 72.403.2. Based on feedback generated by the public hearing, Valley Park submitted an amended proposal in October 2004. On February 8, 2005, a public hearing was held on the amended proposal. On April 29, 2005, the Commission, eight out of eleven members present and voting, issued its decision denying the proposal. On May 24, 2005, Valley Park appealed the Commission's decision to the circuit court in a two-count Petition for Writ of Certiorari; Count I seeking review of the decision as a noncontested case pursuant to Section 536.150, and Count II seeking review of the decision as a contested case pursuant to Section 536.140. The Commission filed a motion to dismiss Count I, arguing that the matter was a contested case. The circuit court denied the Commission's motion to dismiss, reviewed the decision as a noncontested case pursuant to Section 536.150 and entered its judgment finding the Commission's decision denying the proposal was arbitrary, capricious and unreasonable. The Commission now appeals.
Points on Appeal
In its first point, the Commission argues that the circuit court erred in denying its motion to dismiss Count I of Valley Park's petition because it failed to state a claim for noncontested case review in that the procedure governing boundary changes under the Commission's jurisdiction is a "proceeding before an agency" requiring a hearing and determining the legal rights of specific parties, thereby making it a contested case, not a noncontested case.
In its second point, the Commission claims the circuit court erred in reversing its decision denying Valley Park's annexation proposal because said reversal is not supported by substantial evidence in that the undisputed evidence is that the annexation would result in an elongated protrusion into St. Louis County; the area to be annexed would suffer from an increase in taxes without a significant increase in services, and St. Louis County would lose $ 122,292.00 in revenue, all supporting the Commission's decision that the proposed annexation was not in the best interests of Valley Park, St. Louis County, or the area to be annexed.
Standard of Review
The classification of a case as "contested" or "noncontested" is not left to the discretion of the agency but rather is to be determined as a matter of law. Cade v. State, 990 S.W.2d 32, 36 (Mo.App.W.D. 1999).
On appeal of a contested case, this Court's review is limited to the record made before the agency, and we review the decision of the agency, not the circuit court. McKenzie v. Mo. Dept. of Social Services, 983 S.W.2d 196, 198 (Mo.App.E.D. 1998). The proper standard of review in contested cases is found in Section 536.140, and concerns whether the decision of the agency was unconstitutional, unlawful, unreasonable, arbitrary, capricious or the product of an abuse of discretion. Cade, 990 S.W.2d at 37.
On appeal of a noncontested case, this Court reviews the circuit court's judgment, not the administrative agency's decision. Id. We review the circuit court's judgment to determine whether its finding that the agency decision was, or was not, unconstitutional, unlawful, unreasonable, arbitrary, capricious or the product of an abuse of discretion as set forth in Section 536.150 rests on substantial evidence and correctly declares and applies the law. Id.
Discussion
The key to the classification of a case as contested or noncontested is the requirement of a hearing. Cade, 990 S.W.2d at 36; THF Chesterfield North Development, LLC, 106 S.W.3d at 18. An administrative decision is considered to be noncontested if it is made without any requirement of an adversarial hearing at which a measure of procedural formality is followed. Cade, 990 S.W.2d at 38; THF Chesterfield North Development, L.L.C., 106 S.W.3d at 18. A contested case means a proceeding before an agency in which legal rights, duties, or privileges of specific parties are required by law to be determined after hearing. Section 536.010(2);Mosley v. Members of Civil Service Bd. for City of Berkeley, 23 S.W.3d 855, 858 (Mo.App.E.D. 2000).
In the case sub judice, a "public hearing" was required and held. However, it lacked certain formalities contemplated in a contested hearing, both as set out in the statute, and as actually conducted. The term "hearing," as used in Section 536.010(2), means a proceeding at which a "measure of procedural formality" is followed. Hagely v. Board of Educ. of Webster Groves School Dist., 841 S.W.2d 663, 668 (Mo.banc 1992). Procedural formalities in contested cases generally include: notice of the issues (Section 536.067), oral evidence taken upon oath or affirmation and the cross-examination of witnesses (Section 536.070), the making of a record (Section 536.070), adherence to evidentiary rules (Section 536.070), and written decisions including findings of fact and conclusions of law (Section 536.090). Id. On the other hand, a noncontested case is one without any requirement of a formal, adversarial hearing of the type required in contested cases. Id. at 667.
In the instant case, Valley Park was limited to a fifteen-minute presentation at the public hearing. Witnesses did not give testimony upon oath or affirmation. There was no cross-examination of witnesses. Rather, interested parties were allowed to submit letters regarding the proposal for twenty-one days following the public hearing. There was no formal adherence to procedural rules of evidence.
Further, the legal rights, duties, or privileges of specific parties were not determined after this public hearing, because none of the parties involved has any legal right in the determination of a city's boundaries. See Hunter v. Pittsburgh, 207 U.S. 161, 168 (1907). Although this is a case of first impression in Missouri, Michigan, which applies the same definition as does Missouri for what constitutes a contested hearing, has examined this very issue. In Midland Township v. State Boundary Commission, 259 N.W.2d 326, 341 (Mich. 1977), the Michigan Supreme Court stated that an "annexation proceeding is not a 'contested case' even though the Commission must hold a public hearing and representatives of a city, village or township and other persons have a right to be heard at such a hearing before the Commission makes its determination." The Court found that the procedural right of a public hearing does not create any substantive legal right in a "named party" because, based on Hunter, no governmental authority or person has any legal right in the boundaries of a city, village or township. Id. at 340-341.
Based on the foregoing, we find that the case before the Commission was noncontested. Point I is denied.
The standard of judicial review of noncontested cases is governed by Section 536.150. THF Chesterfield North Development, L.L.C. v. City of Chesterfield, 106 S.W.3d 13, 18 (Mo.App.E.D. 2003). In noncontested cases, the circuit court does not review the record for competent and substantial evidence, but instead conducts a de novo review in which it hears evidence on the merits, makes a record, determines the facts and decides whether the agency's decision is unconstitutional, unlawful, unreasonable, arbitrary, capricious, or otherwise involves an abuse of discretion. Id. The circuit court does not defer to facts found or credibility assessed by the agency and need not conform doubtful evidence to the agency's decision. Cade, 990 S.W.2d at 37. Unlike its role in contested cases, the circuit court in a noncontested case acts to determine the evidence and give judgment from that evidence. Id. The reviewing court owes no deference of credibility to the administrative agency's decision in a noncontested case. State ex rel. Public Counsel v. Public Service Com'n, 210 S.W.3d 344, (Mo.App.W.D. 2006).
In reviewing any proposed boundary change, the Commission shall approve the proposal if it finds that the boundary change will be in the best interest of the municipality and the unincorporated territory affected by the proposal and the areas of the county next to such proposed boundary. Section 72.403. In making its determination, the Commission shall consider the following factors:
(1) The impact, including but not limited to the impact on the tax base or on the ability to raise revenue, of such proposal on:
(a) The area subject to the proposed boundary change and its residents;
(b) The existing municipality or municipalities, if any, proposing the boundary change and the residents thereof;
(c) Adjoining areas not involved in the boundary change and the residents thereof; and
(d) The entire geographic area of the county and its residents;
(2) A legal description of the area to be annexed, incorporated, consolidated, or subject to the transfer of jurisdiction;
(3) The creation of logical and reasonable municipal boundaries in the county, and for such purpose the commission shall have the ability to make additions, deletions and modifications which address legal boundaries, technical or service delivery problems or boundaries which overlap those of other proposals; however, such additions, deletions and modifications shall not make substantial changes to any proposed boundary petition;
(4) The present level of major services provided by the municipality or other provider, provided to the unincorporated area by the county, and proposed to be provided by the annexing municipality or municipality to be incorporated or consolidated, including, but not limited to, police protection, fire protection, water and sewer systems, street maintenance, utility agreements, parks, recreation, and refuse collections;
(5) A proposed time schedule whereby the municipality or proposed municipality plans to provide such services to the residents of the area to be annexed, incorporated or consolidated within three years from the date the municipal boundary change is to become effective;
(6) The current tax rates of the areas subject to the proposal;
(7) What sources of revenue other than property tax are collected or are proposed to be collected by the municipality or proposed municipality;
(8) The extraordinary effect the boundary change will have on the distribution of tax resources in the county;
(9) How the municipality or proposed municipality proposes to zone any area not presently incorporated;
(10) The compactness of the area subject to such proposal;
(11) When the proposed boundary change shall become effective.
Section 72.403.3(1)-(11).
After considering the relevant factors, the circuit court made findings that, based on the evidence, including expert testimony submitted to it by Valley Park and from the record created by the Commission at the hearing before it, the proposed annexation was in the best interests of Valley Park, Peerless Park, contingent unincorporated areas and contingent areas of St. Louis County, because: (1) it would not have a substantial impact on the tax base or the ability to raise revenue on any of the involved areas; (2) it would enhance or provide new, desirable services to Peerless Park, at a minimal cost to Peerless Park's residents; (3) the proposed boundaries represent a logical progression of Valley Park's current boundaries and do not create pockets of unincorporated areas, so the area is therefore compact and legally contiguous to Valley Park; (4) a total one percent increase in sales tax to be collected by Valley Park is not an unreasonable burden on the area; and (5) the Meramec River is not an impediment to Valley Park providing immediate services to Peerless Park. In light of its findings that the annexation proposal was in the best interests of the affected parties, the circuit court concluded that the Commission's decision denying the proposal was arbitrary, capricious, and unreasonable.
We find the circuit court's findings and conclusions are supported by the evidence in the record. The evidence demonstrates that if the proposal went into effect, the sales tax for Peerless Park would increase from 6.075% to 7.075%. Real property or personal property taxes would increase by $ 0.54 per $ 100.00 assessed valuation, or approximately $ 80.00 annually to each of the 24 condominium residents. Valley Park levies the same 5% gross receipt utility tax rate as St. Louis County. These increases do not create an unreasonable burden on Peerless Park, especially in light of the fact that Peerless Park will receive new, sought-after services, such as maintenance of the parking lot and streets of the Eagle Rock Condominium complex; maintenance and repair of a problematic rock wall abutting the condominium complex, which houses a significant portion of the residents of Peerless Park; and the installation of sanitary sewer lines and lift stations.
The circuit court's finding that the estimated $ 122,292 annual revenue loss to St. Louis County is insignificant is supported by the evidence, in light of the fact that it is approximately 0.03 percent of St. Louis County's 2004 annual budget which was in excess of $ 439 million.
St. Louis County's budget for the fiscal year 2004 was presented at the Commission's 2004 hearing on the proposal, as contained in the record.
The circuit court's finding that the area proposed to be annexed is legally contiguous to Valley Park, as required by statute, is undisputed. The circuit court's finding that the proposed boundary line does not create pockets of unincorporated areas, and therefore creates an area that is compact, is supported by the record. We find no facts in the record to contravene the circuit court's finding that the proposed boundary is a logical progression of Valley Park's current boundary lines. We also find no evidence to contradict the circuit court's determination that the Meramec River, which runs perpendicular to the proposed extension of Valley Park's boundary lines, presents no obstacle to Valley Park's provision of services to Peerless Park.
Section 72.400(2) defines "boundary change" as "any annexation, consolidation, incorporation, transfer of jurisdiction between municipalities or between a municipality and the county, or combination thereof, which, if approved, would result in a municipality composed of contiguous territory" and Section 72.400(4) defines "contiguousness" as "territory proposed for annexation in which at least fifteen percent of its boundary is adjacent to the municipality which is proposing the annexation. . . ." In the instant case, the area proposed to be annexed is twenty-five percent contiguous to Valley Park.
The few subdivisions that would be split by the new boundary lines are not traditional subdivisions with restrictions and indentures, but rather large lots consisting of industrial and commercial uses. The area proposed to be annexed is mostly industrial and commercial, with a population of approximately 50 people, inhabiting 27 dwelling units, consisting of 24 condominium units and only 3 single-family residences. A petition with 26 signatures from residents of the Eagle Rock Condominium complex requests the Commission to allow the proposed annexation to be approved for their vote.
Based on the foregoing, and in light of our standard of review, we find that the circuit court's judgment is supported by substantial evidence. Therefore, Point II is denied.
We note that the residents of Valley Park and Peerless Park will make the final decision about the proposed annexation through their vote. The circuit court's finding that the proposed annexation should have been approved by the Commission as in the best interests of the concerned areas does not mean the proposed areas will be annexed. Rather, it means that the proposed annexation is "approved for submission to the qualified voters of the voting jurisdictions." Section 72.403. The proposal will be remanded to the Boundary Commission for referral to the St. Louis County Board of Election Commissioners for an election on the proposal to be held in Valley Park and Peerless Park as provided by law.
Conclusion
We would affirm the judgment in light of our above analysis. However, because of the general interest and importance of the issues presented, this case is transferred to the Missouri Supreme Court pursuant to Supreme Court Rule 83.02.
Mary K. Hoff, P.J., and George W. Draper III, J. concur.