STATE & LOCAL GOVERNMENT LAW NYU Fall 2001 Briffault Not !

" OUTL#NE
#$ #NTRO%UCT#ON A$ Stat ! & Lo&al Go' r() (t! 1. What is local government? a) Most policies, services, political participation happens at state or local level. b) LGs: Uncertain status, wrt rights entailed. rea ! population di""erences, and di""erences in power, status, organi#ation, "unction, authorit$, and mode o" creation. LG%s usuall$ provide basic services &edu, policing, "ire prevention, road maintenance, transit, waste)&*+). '$pes o" local gov%ts: &1) (chool districts &)) 'owns, cities, villages &*) +ounties, parishes, boroughs, wards &,) Water-par.-"ire-ambulance districts &special svcs) &/) 'ransit-0ort uthorities &1) 23 local gov%ts: 23 +it$-23 +ount$, 4orough o" Manhattan, 0ort 5istrict o" 23-26. 7ther svc districts, business improvement districts 8 all overlapping, with di""erent overlapping duties. c) (tates: limited 9: stable. 7ther characteristics: &1) +onstitutionall$ protected &boundaries, representation) 8 ; indestructible residual power over all aspects of govt< &*,) &)) =>ual status in Union &*) 4asic structure prett$ similar &bicameral, gov, independent ?udiciar$, etc) d) (ome di""erences between state-local: some non@elected ?udiciaries, some pluralist elections, most have direct democrac$ 8 voter initiative B$ Lo&al Go' r() (t Sour& ! of Aut-orit. & Ra(/ of 0o1 r! 1. 'op@down vs. 4ottom@up &!our& of aut-orit.) a) +lassic top@down: count$ 8 provide basic state services at count$ level &1) Law en"orcement, record.eeping, minimal svcs: courts &5 -prosecutors), coroners, registr$ o" deeds, elections, wel"are, road maintenance 8 state "unctions delegated to counties &)) Aistoricall$, not "unctionall$ speciali#ed, but territoriall$ created &thus relativel$ stable). &*) +ounties traditionall$ regulator$ ! service@providing entit$: not law@ or polic$@ma.ing one. &,) (mall bottom@up element: the$ are usuall$ locall$ elected. (imultaneousl$ an arm o" the state $et an agent o" the peopleBdilemmaB b) +lassic bottom@up: cit$-municipalit$ &1) +reated locall$ 8 in response to local interests-petition, due to svcs needed, regulations needed. Cnspired b$ denser populations. &)) .in to private corporations 8 similar interests getting together to achieve some purpose. Get chartered b$ the state &*) 1/D or so o" U( lives in incorporated areas 8 but on onl$ )D o" the land c) Modern developments: &1) +ombination o" top-bottom: townships &2ew =ngland)&*10) &)) )Eth centur$ 8 as urban sprawl intensi"ied, local gov%ts are too small "or area@wide problems. +ount$ gov%ts started ta.ing on svc provision ! legal regulation &moreso than classic minimalist count$ "unctionBthe Furban count$%) &*) 2ow cit$-count$ distinction is more blurred. 'op@down-bottom@up distinction derived mainl$ "rom ) t-o2 of i(& *tio(

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General vs. (pecial &ra(/ of *o1 r!) a) +lassic general: cities, counties &1) Gelativel$ broad responsibilities over a signi"icant number o" areas &public health-sa"et$, land use, streets, transport: general police power)& *11) b) +lassic special: ports, transit &top@down): schools, "ire-water &bottom@up) &1) (ome "unctions combined 8 but u!uall. li)it 2 to o( "a f 1 *ur*o! ! &)) Geasons "or creation: &a) Cndependence "rom general purpose gov%t: ta3 it out of *oliti&! concept &important "or schools) &b) 'ailor HterritorialI scope: 3 . !&al to !i4 of *ro5l ). 5i""erent services best provided over di""erent areas. More e""icient to have one large commuter rail s$stem, or smaller ambulance districts. Large water districts in the West &watersheds, "lood control). &c) void state restrictions on cities-counties and obtain bene"its o" LG without costs &i.e. rules and procedures "or "ormation, voting, taJing powers). S* &ial r ' (u !our& : taJing ! borrowing restrictions can get out "rom under 8 change "ees 8 assured own revenue source that sta$s within that source. 4ridge tolls 8 go toward pa$ing bonds to build it. c) Within special-general districts: authorities o"ten appointed: others elected.

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T6EOR#ES *. 7a) ! Ma2i!o( 8 Kederalist 1E 8 "actions. &(ee *1,.) Wa$s to control "action: remove cause o" "action &destro$ libert$ or "orce sameness) or control e""ects o" "action &use republic s$stem 8 small 9 o" elected o""icials L better leadership and more di""icult "or t$rann$ o" ma?orit$ to "orm). a) +ase against local gov%t. =Jclusionar$ aspects: small groups act to preserve homogeneit$, eJclude Fothers%, in process the$ impose eJternalities on others 8 this is a more modern issue 8 breeds parochialism. =ven i" minorities in town, the$ can be t$ranni#ed b$ fa&tio(!. 5emocrac$ creates problem o" "actions in ma?orit$ rule% it%s a sel"@interested group &ma?oritarian interest, rather than public interest). Madison suggests that e""ects o" "actions can be controlled b$ eJtended r *u5li& rather than pure democrac$. 'his results in better people being elected, and harder "or "actions to "orm &lo&al t.ra((. of t- )a8orit.). Less li.el$ to have one dominant group over a larger area. ,. Al 9i! 2 To&:u 'ill 8 5emocrac$ in merica 8 wh$ townships roc.. &(ee *22.) Local government ma.es people ;citi#ens.< VO#CE. a) +ase for local gov%t. (aw 2ew =ngland as the eJample "or democrac$, without chaos o" democrac$. Local gov%t as school "or democrac$ 8 people get taste o" decision ma.ing, negotiation, etc. 6e""erson also has this idea 8 people learn to be F/oo2 &iti4 (!.% Cmportant &! better than centrali#ed gov%t) b-c people have a sta.e in s$stem, ! people have e>ualit$. 'his supports individualism 8 pursuit o" sel"@interest 8 but not aristocrac$-despotism. (olution to old "ear o" democrac$ leading to chaos-despotism. Local gov%t is solution 8 mechanism "or avoiding chaos 8 b-c people must wor. together. 0ro;li5 rt. 'ia *arti&i*atio( & 2 )o&ra&. 5uil2i(/. 0eople get taste, habit, eJperience: power is decentrali#ed. /. C-arl ! Ti 5out<! theor$ 8 consumer@voters who pic. communit$ which best satis"ies pre"erence "or a particular pattern o" goods. Mariance among communities allows greater reali#ation o" pre"erences. Movement between governments leads to good ones. E=#T. a) Movement between local gov%ts. Ne$ idea L allo&ati' ffi&i (&.. C" local gov%ts have autonom$ re. provision o" services, taJing, regulation 8 distinctive pac.ages are created ! people can choose. Greater chance to satis"$ people%s needs &assuming mobility, variety of choices, informationin reality, often constrained

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by what you can afford, ltd choice, etcyet ltd choice is better than one centrally dictated option?) 0ro;lo&al /o'<t 2u to ffi&i (&. 8 this leads to competition ! "ewer unhapp$ people. E9it o*tio(! are .e$. +lassic eJample "or consumer activit$: $ou bu$ a di""erent cereal: go to gov%t giving $ou a better pac.age. Most people "ocus on taJes ! schools. &1) What about prohibition? =Jit ma$ be a good theor$ wrt bundles o" svcs, but doesn%t address regulation as well. &)) What about ine>uities? 'iebout%s theor$ supposes "ew eJternalities. Wealth di""erences a""ect abilit$ o" districts to di""erentiate themselves. Ri&-ar2 Briffault 8 eJamines two theories re. scope o" local autonom$, public participation &voice), and e""icient provision o" goods-services &eJit), and problems with them. &*>>;?1)

##$ LOCAL GOVERNMENT #N T6E AMER#CAN CONST#TUT#ON Local gov%s are a combo o" top@down &ar) of !tat ) - bottom@up &*oli!), and characteristic o" >uasi@private organi#ation &&or*oratio() 8 service providers. . Lo&al Go' r() (t a! A/ (t of t- Stat &dominant-o""icial model o" LG) 8 LG%s as state instrumentalities. 2o "ed constitutional rights against state: no "ed constitutional right to sel"@gov%t. (tate is principal. 1. Hunter v Pittsburgh 8 blac. letter principles re. municipalities. gent-arm o" state 8 top@ down 8 authorit$ as derived "rom state &principle is state: ma$ be vicariousl$ liable). a) (tate agent role is articulated &*+?): (tate plenar$ power is set out >uite clearl$. rticulation o" "ederalism 8 state power. b) 0 created enabling legislation, 0ittsburgh initiated vote 8 positive regional ma?orit$ wins &rather than concurrent ma?orit$ 8 o" each cit$). lleghen$ protests since it%s more developed 8 more in"rastructure. Merger would mean more taJes "or lleghen$ to pa$ "or 0ittsburgh%s in"rastructure. c) +laim: constitutionall$ protected right to have own local gov%t 8 made under contracts clause ! due process clause. N between lleghen$ citi#ens ! local gov%t that the$%ll be taJed there onl$ &SC rejects this arg): due process right to hearing-vote be"ore Floss o" propert$% &thru additional taJes) & SC rejects this too). d) =nd o" case: vestige o" old idea o" private municipal corp%s 8 land owned privatel$ b$ municipal corp is not totall$ sub?ect to state decisions. 4ut this was not eJplored in brie"s ! court doesn%t discuss "urther. &1) 'his could pla$ out as such: usuall$ when state condemns local-muni propert$ 8 no compensation owed. 4ut incorporated cit$@owned amusement par. or asphalt plant: i" condemned, it%s >uasi@proprietar$ ! could be a claim "or compensation? e) Cnsubstantial, "u##$ line between proprietar$ - other prop 8 is it related to "undamental public health-sa"et$ vs. super"luous or "or@pro"it sanctions? +it$ onl$ Fowns% in capacit$ as arm o" state. ") Hunter rul : t- !tat i! !u*r ) and ;at its pleasure, ma$ modi"$ or withdraw all such powers, ma$ ta.e without compensation such propert$, hold it itsel", or vest it in other agencies.< &*+,) ). Gomillion v Lightfoot 8 con law case re e""ect vs. intent 8 &see esp *@0) a) Gedistricting eJcluded all blac. voters "rom within cit$ voting boundaries. (tate relies on unter: unrestricted power to establish, destro$ &etc) cities. b) (+ rereads unter: not plenar$ power to establish, destro$ &etc) cities: ?ust a resolution o" particular claims. 7ther cases have imposed restrictions & !t "leasant) &i.e. creditors do have N claim with cities although residents don%t 8 state can%t destro$ liabilit$ on cit$ bonds) &1) (tate cannot create-destro$ "or for5i22 ( *ur*o! ! 8 to prevent voting, "or racial-religious discrimination. Kran."urter%s decision 8 can%t eliminate right to vote &1/th ). &4ut this strangel$ b$passes unter 8 right to vote

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in a certain cit$, though not right '7 that cit$?? (+ somehow preserves unter $et ma.es this modest eJceptionB) c) Whitta.er concurrence: right to vote eJists where $ou live. 'us.egee didn%t prevent blac.s "rom voting elsewhere: this is a 1, th issue 8 racial discrimination 8 legislation based on race is unconstitutional. d) Gomillion is now treated as a 1,th caseB e) 7ther cases restricting state power: &1) +an%t prohibit bussing &)) +an%t pass amendment prohibiting ga$ rights laws &*) +' o"ten loo.s at what was happening be"ore state action 8 to see i" new action was i('i2iou!. +' recogni#es local autonom$ "rom state when motives are unconstitutional. #ogers v $roc%ette &/th circuit) 8 does local gov%t itsel" have F!ta(2i(/< to sue state on "ed claim? Ked gov%t subsidi#ed a voluntar$ school brea."ast program: 'O had statute re>uiring certain school districts to participate: GC(5 sued state o""icial "or declarator$ ?udgment that it didn%t have to participate. a) (upremac$ clause: can "ederal gov%t grant local authorit$-give "unds over the head o" the state? A1B Tra2itio(al rul C LG! la&3 !ta(2i(/ to rai! f 2 &o(!titutio(al &lai)! a/ai(!t !tat "&r ator A5"& LG! 1 r ! ( o(l. a! a( ar) of t- !tat B &)) More modern notion "ocuses on whether there%s a real con"lict: LGs ma$ have su""icient autonom$ that there%s a legitimate con"lict o" interest b) +' here 8 common sense: there%s an actual con"lict. (tanding is di""erent than prevalence on merits. +t held that GC(5 had standing to sue 'O. T-i! i!!u i! !till u(r !ol' 2 & +%s are split on standing: U((+ hasn%t ruled). c) 7n sovereign immunit$ issue, note that 0 sued an o""icial, not the state, "or declarator$ relie", not damages. &(ee e& parte 'oung). &1) nother conse>uence o" LGs as arm o" state 8 LGs don%t >uali"$ "or !o' r i/( i))u(it.B Lawrence County v( Lead)*eadwood School *ist( + +ongress established 0CL7' &"ederal 0a$ment in Lieu o" 'aJes) to compensate counties "or loss o" taJes caused b$ "ed prop in the count$: the statute provided that LGs could use the propert$ "or an$ gov%t purpose. Under state law, LGs were re>uired to distribute the pa$ment in the same wa$ as locall$@ raised taJ revenues. (chool district sued count$ "or proportion o" the pa$ment. a) Cssue was +ongress% intentPdid +ongress intend "ull discretion o" LG or state@ imposed allocation? b) +t held that +ongress intended "ull discretion. Kederalism concerns 8 Aills article &*@D)8 "ederalism values o" decentrali#ation and local participation would allow +ongress to deal directl$ with LGs. 4ut Aills distinguishes state regulator$ limits and state revenue enhancements &con"using). 'ension within "ederalism b-t "ormal matter o" the power o" states, and "unctional matter o" the value o" decentrali#ation.

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T- A) ri&a( 0oli!E Lo&al Go' r() (t a! Auto(o)ou!F % )o&rati& 0olit. . LG%s have de "acto autonom$, and local sel"@governance has important role in democratic political s$stem. LG is creature o" state but enables communities to implement local vision o" public interest & esp wrt voting). uthorit$ is derived "rom people 8 the taJpa$ers &principle is people 8 universal su""rage). 1. Avery v. Midland County 8 +ommissioners +ourt was composed o" / members 8 1 elected at large "rom entire count$, , "rom districts. 5istricts di""ered enormousl$ in population b-c one was urban with Q/D o" the count$%s population. a) Aolding: ac.nowledged that LGs are arms o" the state: as long as state legislature is properl$ apportioned, sub?ect to correction thru elections, LGs should be able to be mal@apportioned in theor$. 4ut in practice, LGs eJercise state power R

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autonomous polic$ and decisionma.ing over man$ matters &*G2). 'hus, LGs are local autonomous democracies and o( ;* r!o("o( ;'ot applies. b) Kortas dissent: agreed with ma?orit$ that one@person-one@vote applies in mini@state govts. 4ut "ound that the +ommissioners +ourt was a special@purpose govt, with blurred admin and legis "unctions, mainl$ "ocusing on rural roads. 10-1M doesn%t appl$ to special@purpose govts, so doesn%t appl$ here. &Ma?orit$ "ound that 10-1M may not appl$ to special@purpose govts)&*G>). &1) G4 doesn%t "ind dissent persuasive b-c ++ had count$@wide taJing power: thus, the rural dominated ++ could use taJes to redistribute SS: such redistribution would be tenable i" done at a state@wide level b-c urban dwellers would be "airl$ represented: but the$ weren%t "airl$ represented here. c) 5i""erence b-t ma?orit$ and dissent is over "actual matterPwhere the ++ "alls on continuum "rom general to speciali#ed. City of "hoeni& v( ,olod-iejs%i 8 cit$ o" 0hoeniJ held an election to authori#e issuance o" general obligation bonds. Under T law, propert$ taJes would be used to service the indebtedness. 7nl$ real propert$ taJpa$ers were permitted to vote on the bond issues. a) 4ond issues involve a two@step process: "irst, the +it$ +ouncil votes on the issuance: second, voter approval is re>uired. 'hrough a bond issuance, the LG ma.es a binding commitment to repa$, which will mostl$ be done through propert$ taJes. b) Aolding: 2on@propert$ owners cannot be disen"ranchised. Must loo. at the bene"iciaries, including non@propert$ owners, as well as the people who bear the burden &*D0). L7%s don%t bear the "ull burden b-c taJ has rami"ications throughout communit$ &*D1). cademic debate over how eas$ it is "or propert$ owners to pass on the taJ: some probabl$ stic.s with propert$ owners. 7verall, ct%s sense is that prop owners are not a discrete communit$Pbene"its o" public "acilities and services are shared with non@propert$ owners and burden o" taJ ripples through the communit$. +". ,ramer v( .nion /ree School *istrict &U.(. 1Q1Q) &*D>) 8 +t invalidated a 23 law that limited the right to vote in school board elections to owners or renters o" taJable propert$ within the school district and to parents o" children enrolled in the schools. a) +t applied strict scrutin$ std: "ound that rule was not narrow enough &didn%t reach U o" compelling state interest). b) +t in "hoeni& also seemed to appl$ strict scrutin$, though tests were still cr$stalli#ing. olt Civic Club v( City of 0uscaloosa Aolt lies outside 'uscaloosa, but w-i the police ?urisdiction &dealing with crime, sanitation, etc.). Aolt voters claimed that +it$%s eJtraterritorial eJercise o" police powers over them w-o eJtension o" the "ranchise e>ual to +it$ residents was violation o" 5ue 0rocess and =>ual 0rotection. a) 2ote: issue o" eJtraterritorialit$ isn%t seen at state level at all: onl$ relevant at local level. b) Aolding: Moting rights cases concern residents &*D,). 4-c Aoltians are non@ residents, this case is not about voting rights. (o the test becomes rational basis, not strict scrutin$. Under rational basis, ct doesn%t determine whether the state has chosen the soundest "orm o" internal govt possible & *D@) Uphold statute. &1) +it$%s decisions alwa$s have eJtraterritorial e""ects, but no one suggests that all nonresidents li.el$ to be a""ected have a constitutional right to vote. Unless the "ormal authorit$ o" police ?urisdiction means more than eJtraterritorial e""ects, Aoltians have no argument "or "ranchise. c) 4ri""ault: +t duc.ed the cruJ o" the matterPto what eJtent is the police ?urisdiction li.e a cit$ boundar$ v. indirect e""ects. 0olice ?urisdiction boundar$ is more signi"icant than indirect e""ect. Aere there were two state@created boundaries, so U is which boundar$ matters more.

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0ro@"ranchise: Aoltians are sub?ect to more control than other non@ residents. &)) nti@"ranchise: Aoltians are not sub?ect to the same degree o" control as 'uscaloosians. !illi%en v $radley 8 school desegregation case &LG imposed cross@district bussing). a) (+ 8 scope o" remed$ must match scope o" problem &1) 5+ had said 8 state was complicit, had connections to desegregation. 5etroit schools are arms o" state 8 so state is vicariousl$ liable 8 and suburbs can also be brought in as arms o" state. b) (+ 8 practice in Mich. is local autonom$. Man$ laws &see "n )E, *10D) giving schools responsibilit$. 'he$%re independent o" state ! each other. Local control leads to participation &'oc>ueville idea): structure programs to "it local needs and use variet$-innovation-competition &'iebout ideas). &1) (tate could have made metro area remed$, but lower court can%t impose it. c) 5+ ! dissent see school district ?ust as arm o" state 8 not locall$ autonomous. 5i""erent views o" what a school district is. 2o constitutional re>%t "or local autonom$ 8 but it eJists. Village of Belle Terre v Boraas 8 land use regulation. a) &(+ upheld #oning in =uclid 8 ver$ local regulation 8 upheld local autonom$) b) Aere 8 aggressive use o" #oning to separate not ?ust industrial-residential uses but to separate character o" living arrangement &to eJclude students), control housing-prices-densit$-tra""ic 8 but done b$ eJamining relationships o" people. c) (+ >uestion: which standard o" review? &1) Kundamental right L "reedom o" association, so strict scrutin$? 'ra""ic ! congestion rules "ail 8 should ?ust limit 9 o" cars or peopleB&or)B?ust rational legislation, so rational basis? Gational wa$ o" limiting tra""ic, etc. &)) 6. 5ouglas summaril$ dismisses idea o" "undamental right 8 so, it%s rational basis. bout right o" people to create environment the$ li.e &he li.ed open space ! conservation). Kamilies have right to ma.e space "or selves. &*) 'his is vision o" communit$ o" "amilies 8 using local gov%t to protect values. Kamil$ law also somewhat implicated 8 what is a "amil$? 4ut that%s not a direct >uestion here. d) 6. Marshall dissent 8 "undamental rights at sta.e: tra""ic ! congestion are legit concerns but should be addressed di""erentl$. e) +ommunities can%t o""iciall$ Fopt out% o" nationall$ de"ined civil rights-constitutional rights 8 but this case comes close 8 local gov as protecting "amil$-home interests: and values are loaded di""erentl$ in balance o" constitutional rights.

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Lo&al Go' r() (t a! Hua!i;0ro*ri tar. Fir) 8 assumes LG%s act on behal" o" local constituents &investors-consumers) rather than state. =Jample @ special districts &principle is taJpa$ers or special groups 8 constituents, not ?ust general public). Hua!i;*ri'at )o2 l$ 1$ Voti(/ Rul ! a) 1very le"t open possibilit$ o" some special district eJemptions "rom 10-1M rules. Cn post@1very cases dealing with special districts, i" 10-1M applies, no clear basis to decide otherwise. 'hen came $all b) $all v 2ames 8 special purpose district a""ected some people much more than others 8 ver$ "ew people in large area &metro 0hoeniJ): water storage issue. Moting scheme was 1acre-1vote, and not necessar$ to be a natural person &corp%s-owners could vote). +osts o" district borne b$ L7%s. Cssues o" limited &though multiple) powers, disproportionate impact. 4ul. o" revenues came not "rom L7%s sub?ect to assessment but "rom residents o" 0hoeniJ bu$ing electricit$.

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+': Salyer still limits powers &passage on *12@: ;KirstBonl$ nominall$ publicB T courts recogni#eBessentiall$ businessB) &a) Ct is gov%t 8 can assess "ee, condemnation, issue bonds 8 but court sa$s it%s >uasi@gov%t, more li.e a "irm. c) (chool districts now seen as general purpose 8 so 10-1M "unction necessar$, putting them on polis side 8 but water districts are still on "irm side. 2o "urther (+ cases. Bu!i( !! i)*ro' ) (t 2i!tri&t! a) 4C5 8 instituted b$ initiative. L7%s agree to sub?ect themselves to additional &prop) taJes &cit$ collects them), to "und special services. +it$ gives S to management bod$ o" 4C5 &district mgmt ass%n 8 5M 8 elected b$ L7%s) 8 which provides services, i.e.: &1) =Jtra securit$ services &)) =Jtra sanitation services &*) 0h$sical improvements 8 streets, par.s &,) Aelp business development, tourism, homeless issues &/) L7%s have dominant voice in running 5M . b) 4C5%s have open@ended eJistence &usuall$ no sunset clause) 8 4C5 has N with cit$: can be cancelled. c) +ourt had to decide 8 polis or "irm? 5oes 10-1M appl$? &1) ,essler v GC*!1 *1>, &a) Gesidents want 10-1M representation. +ourt%s argument: &i) Kocuses on special districts 8 though here, not such limited services, ! no disproportionate impact &ii) 4C5 ma$ be public but not a gov 8 no power to ma.e law. (ub?ect to cit$ control. uthorit$ is limited. nd business@"ocused. &iii) (o, 10-1M isn%t triggered. &)) 'his case, City of "hoeni& 8 circular? &a) F(pecial limited purpose% is ver$ sub?ectiveB &b) 2ew concept created 8 public, but not bottom@up: elected, but mainl$ administrative. 2ot Fgov%t% 8 lots o" oversight &unli.e cities 8 not much state oversight 8 1very)

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LOCAL GOVERNMENT FORMAT#ON & BOUN%ARY C6ANGE A$ T- Si/(ifi&a(& of Lo&al Bou(2ari ! 1. 4oundaries determine: a) Who votes b) 'aJation &revenue-S raising) &usuall$ done within boundaries: primaril$ landtransaction- income taJes) c) (ervices &usuall$ within borders: an$ dut$ outside borders i" eJtended?) d) Gegulation &limited amounts o" eJtraterritorial regulation) ). Weiher article *1?D 8 political boundaries as per"orming social "unctions. 'his cr$stalli#es idea o" communit$. (harpl$ di""erent racial-economic distinctions are made even crisper when "ormal boundaries eJist 8 whereas in"ormal neighborhoods blur together. (ocial distinctiveness "rom geographical boundaries. *. 'a%ima 8 court loo.ing at cit$%s duties, boundar$ mar.s scope o" duties. *1,> ,. 0e&ar%ana 8 charge more "or eJtraterritorial services? C" more costl$ 8 ?usti"ied, but ma?orit$: utilit$ consumer relationship. 4ut no voice or eJit options "or them 8 so must be protected. 'reats public utilit$ as private &even though statute, *1,+, seems to give cit$ power to raise rates). *issent 8 characteri#es as citi#ens, not consumers. /. 7verall debate 8 when cit$ serves non@residents, can the$ discriminate, treat di""erentl$? &C" taJ "unded, might be economicall$ ?usti"ied) &Klip >uestion 8 can cit$ bar outsiders charge more "or services?B$es)

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i.e., public trust doctrine, beaches 8 or even 1st issues &Laden v Greenwich) (ame theor$ o" par.s? 4rings up issues o" eJcludabilit$ too 8 can $ou gate it o""? Wwhat about nat%l "orests 8 U(K( pass? 'his implicates "inancing issues-user "eesX

B$ Mu(i&i*al #(&or*oratio( W4oundaries "ormed during incorporationBX 1. Cncorporation 8 creating new cities a) What are interests at sta.e? Aow re"lected b$ laws, cases? &1) Cnternal 8 services, taJes, regulations, voting &)) =Jternal 8 count$-township having land subtracted, other cities% potential anneJation. lso loss o" regulator$ power, revenue. +ounties usuall$ still have some authorit$, but less. &*) Man$ cities de"ensivel$ incorporate to avoid anneJation. &,) 3hite v Lorings 8 internal disagreement over what%s needed, what boundar$ si#e is appropriate. *1+? b) 0rocess-Cnitiation: b$ initiative? &1) Geview &b$ count$, advisor$ committee 8 ad hoc-permanent, ?udicial review, re"erendum: or an$ combo o" these) c) (tandards "or Cncorporation: &o"ten "u##$ terms) &1) Minimum population &)) rea-si#e o" land &*) 2eeds, capacit$, resources &,) Urbani#ation-communit$ &local pre"erences?) &/) 7ther authorit$%s capacit$ to "ul"ill needs &1) =""ects on, i.e., segregation: motive: impact C$ A(( 9atio(F S & !!io(F & Bou(2ar. C-a(/ 1. 7verall >uestions: a) (hould we "avor man$ small governments &'iebout variet$ ! 'oc>ueville participation), or more centrali#ed bigger governments &better service coordination ! diversit$)? b) rguments "or sel"@determination, or "or larger area needing consolidation? Kavor central cit$ "ollowing pop growth, or let new areas sel" determine, have their own governments? c) U!ual *ro& !!: petition, review o" petition, vote &people usuall$ vote "or smaller gov%s though). 2ear universal rule: can%t anneJ an area without its consent. Municipalities have power to decline to anneJ &*1D+). &1) Cn past, cities wealthier, advantage to ?oin: now business ! people "lee cities to escape high taJes, etc. &)) +ounties 8 usuall$ "ewer services, taJ rates var$: cities have more services. &*) (tates with a sales taJ 8 goes either to count$-cit$: but wh$ else would count$ care about losing area?BtaJing ! #oning powerB d) Aow do courts balance: -ar) to eJisting communities, &o(o)i&!, elitist@driven &or developer driven) )oti' !, ideas o" local autonom$ or ! lf;2 t r)i(atio(B e) What standard do courts appl$: I-ar)o(iou! 1-ol J &0 cases) or r a!o(a5l ( !! &6ac.son)B (tatute elements to center@cit$ ;need< &to grow? to "und svcs?), abilities to provide services, best interests, etcB Cssues o" consent, limitations &i.e. growth #ones) &1) Aow to draw line? 4 +-administrative level does "act "inding, boundar$ negotiation, transition agreementsB &)) Aow should metro areas be organi#ed? Cs larger area part o" whole, ta.ing advantage o" center@cit$ services, or not? 'iebout variet$ better?

).

*.

,.

Cncorporation cases a) 4n #e 4ncorporation of $ridgewater *1+@ &1) 0etition 8 4orough dvisor$ +ommittee 8 ?udicial review 8 voters &)) What authorit$ did 4 + have? &a) Cncorporation would result in predominantl$ white secluded area in otherwise integrated area. 4orough would be "inanciall$ o. but remaining township would be worse o"". &b) +t upheld decision to den$ incorporation. b) 4n #e 4ncorporation of 5ew !organ *1+G &1) Wanted to incorporate an area that overlapped with some othersB impermissible avoidance o" #oning? &a) +ourt said, not a problem, and not a clear )oti' an$wa$. Mer$ little 2i!ru*ti' ff &t. 2o people reall$ there $et &1): ?ust L7%s. nd court loo.s at present loss to other cities o" taJes, not "uture potential loss. &b) 5issent 8 applicants should not be allowed to avoid local laws the$%re unhapp$ with b$ incorporating. c) 4n #e 4ncorporation of Chilton *1@0 &1) lso "ew people: but wanted to ma.e peninsula into its own area &elite residential communit$ with gol" club). +ourt less worried here about fi(a(&ial i)*a&t on eJisting township &no harm) but more about !o&ial i)*a&t 8 better to regionali#e services than to "ragment broader area. +ourt reads "rom statute a polic$ o" having Z/EE people to incorporate. d) *augherty v City of Carlsbad + challenge to anneJation &1) 'echnical >uestionsBwhat is Fcontiguit$%? 2earl$ universal re>uirement o" contiguit$, "or incorporation or anneJation. 6ust barel$ touching 8 barbell-string anneJation 8 does it count? &a) 0h$sical connection ma.es services easier: easier to have Fone communit$% imageB &b) (ubstantive contiguit$ &some states have actual re>uirements) *1D?;D, &)) 5istinction between anneJation initiated b$ cit$ or b$ outsiders wanting in? &Lower danger o" eJploitation?) (ecession: issues o" local sel" determination &smaller ! larger areas): preservation o" integration, e>uit$. a) arris 0rust + Cllinois statute. (mall area ma$ secede, with court con"irmation, unless u(r a!o(a5l. 2i!ru*ti' &ct said disconnection not that disruptive, *202) b) *emarest + 26 statute. +it$ must consent &ct reviewed cit$ discretion wrt re"usal to consent to deanneJation Hcit$ "ound economic hardshipI, but still up to local gov%t unless it%s acting unreasonabl$, *20>;0?) &1) +t: desire to cut taJes is "ine but not enough to overcome overall municipalit$%s ob?ection to deanneJation - secession c) What is Fcommunit$%? What model to go with 8 Ti 5out !* &iali4atio( or 2i' r!it. &something "or ever$one)? d) (taten Csland 8 1YQY 8 incorporated into 23+: got services, 23+ got open space &"or garbage ! "or "uture eJpansion). 23+ must consent to secession, and is not even considering. +onsistent with state laws. (ecession would change balance o" power in 23+ 8 it%s "airl$ homogenuous, more middle@class, homeowners. &1) Good theoretical potential "or secession though due to geographical separation, somewhat separate eJistence alread$B &)) 2ow 8 ease o" governing, taJ base issues eJist 8 these are common, also are ver$ top@down, in line with view o" cit$ as problem to be Fmanaged% 7ther .inds o" boundar$ change: consolidation, detachment, disincorporation &see *1DG)

B$

%$

Bou(2ar. C-a(/ & t- Ri/-t to Vot /. $oard of Supervisors of Sacramento County v L1/C6 of Sacramento County ) 4oard o" sup%s suing because o" ma?or loss o" revenue i" +itrus Aeights incorporates. a) 0rocess 8 petition &) routes), L K+7 review ! negotiations, voter approval. b) Moting ! sel" determination issuesB &1) Who votes 8 what does right to vote eJtend to? &)) 5iscussion o" Loc%port 8 concurrent ma?orit$ re>uirement: (+ said constitutional: .e$ issue is whether local gov "ormation ! boundar$ polic$. 'his is !tat la1. Gight to vote here is related 8 it%s about polic$. (o rational basis review given. &a) Aere: *21> issue is state%s power to decide how subdivisions are created. (tate has discretion to determine voting boundaries "or boundar$ change issues. &(tate legis. decision re. who votes on incorporations "alls under rational basis.) &*) nother right to vote >uestion: L7%s pre"erred position. Usuall$ wrt initiating local government changes. Cllustrates historical local gov%t association with land. 'raditionall$ the$ pa$ "inancing taJes: a .e$ action o" local gov is regulation o" land thru #oning. &a) (+: strict scrutin$ onl$ on right to vote: petitions are not votes. Goodyear is leading case but no (+ "inal sa$ &on G4 "or L7%s greater interest in being ta.en account o".) &b) Usuall$ petition to initiate admin review &L7 protest?) election. 0etition is su""icientl$ removed "rom election that right to vote is not implicated: but L7%s can%t bloc. elections?? &c) +ourts sa$ing, need su""icient L7 support to get to election, and then 10-1M .ic.s in. (tate matter. Gational basis. &d) C" initiation is onl$ thru L7%s, what about local citi#ens who want sel" determination, local gov? &2o real answer out there $et??) &,) Moting Gights ct *21G &a) Kederal law re>uires that certain statutor$ changes a""ecting right to vote are sub?ect to "ed litigation &[ )): certain areas o" historical discrimination sub?ect to 576 preclearance &[ /) "or an$thing "rom polling locations to district-general elections to anneJationsB &b) 'ensions created 8 cases brought this on in 1QVE%s due to blac. cities anneJing white suburbs 8 changes ma?orit$ o" voters, but also increases taJ base per capita 8 political dilemma. 'rade reduction in political minorit$ power "or more SS, better abilit$ to provide services?? Good urban planning polic$ to anneJ, but potential "or voting rights in"ringementsB S* &ial %i!tri&t! 1. +haracteristics: ver$ diverse, o"ten created b$ special legislative process, can be created b$ LG%s pursuant to state enabling legislation, can be voter@initiated thru general enabling legislation. ,ED lac. taJing power. 6udicial review o" "ormation o" special districts is limited. +an implicate other local gov%t "ormation 8 ma$ ma.e creation o" municipalit$ less attractive. 0rovision o" some o" same services, but less SS.

##$

STATE;LOCAL RELAT#ONS E$ Stat 0o1 r & #t! Li)it! 1. 0lenar$ state power vs. local autonom$ a) 0(0 is dominant model in all state constitutions 8 see language in unterBLocal gov%t is a delegate, agent o" the state. b) 3et local autonom$ ;recessive gene< persists 8 historical practice &though "ormal Fagent% setup) has been, local people getting together ! "orming states, cities. Geal governance at the local level. &4ri""ault article *22+)

1E

c) d) e) ).

(trong local autonom$ shran. around the time 'oc>ueville wroteB 6udge +oole$: eJcerpt re. local autonom$, necessit$ o" it "or libert$. *22@ Cnherent right to local autonom$ has b$ now been re?ected 8 it eJists, it%s ma$be good, but 0(0 is law-dominant legal model-blac. letter rule. Li)it! o( Lo&al 0o1 r: shield-limits on state &ban on special commissions 8 o"ten over political Fpatronage% battles: ethnic battles: power grabs.) a) 4an on (pecial +ommissions &i.e. a state bod$ to ta.e over a municipal "unction) &1) (ometimes done thru Fripper bills%: not ver$ common now &1Q1Es@VEs, spate o" redevelopment commissions). &)) What is special commission: what is municipal "unction? Specht court doesn%t reall$ de"ine. &*22D;>1) &a) 5eciding about municipal "unctions: problems with histor$-tradition, capacit$-who%s better, who decides on capacit$, etc. 5oes the matter occur within boundaries, or are there spillover e""ects? &*) nother .e$ thing: separation o" some activit$ "rom historical cit$ control 8 !* &ial &o))i!!io( i! auto(o)ou! fro) &it. &a) 7dd in Specht: state authori#ation, but cit$ actuall$ creates the special commission. +it$ appoints commissioner. 2ot a Fripper% situation. 4ut problem was, +it$ couldn%t "ire them once appointed. &b) 'wo prongs o" Specht: &i) (pecial commission & utonom$? +reation o" @@? ppointment b$ @@ ?) &ii) Municipal "unction &loo. at histor$, who does it better, eJtra@local e""ects) &iii) Whenever state intervenes, have to loo. at how to protect local gov b) 4an on (pecial Legislation &1) (imilar to e>ual protection clause on state level: to protect against legislative time spent on deal ma.ing, and advance goal o" greater continuit$ in legislation: recognition o" var$ing needs o" localities 8 legislation should ta.e into account and create laws o" general applicabilit$, or within general categories. 6ust shouldn%t target speci"ic cities. &)) General legislation should recogni#e diversit$ and classi"ication &i.e. Fcities o" the 1st class% 8 classi"ication to order rules due to common needs-problems, usuall$ identi"ied b$ population). +lasses must be open: must be minimal-rational? basis "or di""ering laws between classes. &*) $ayonne case: separate state taJ rules applied. Gational, the$ had their own voc. ed. program, didn%t want to be double taJed "or count$ program. &a) Aow legislature got around: de"ined a special law wrt location o" count$ &mista.e\ 8 should have ?ust done b$ si#e-classi"ication) 8 then "urther b$ population &so it was limited to one count$): then added that cit$%s program must have longevit$. (o onl$ applicable to 4a$onne. &b) Longevit$ re>uirement seems o. &to 4ri""ault) 8 shows investment b$ cit$ in programB &c) Geographical re>%t seems most suspicious &d) 4ene"its vs. burdens 8 wh$ can constitution prevent a ma?orit$ o" state legislature "rom helping a localit$? &,) 7merald 4sle: Man$ non@locals have interest in this beach "acilit$B

11

c)

5oes state have to ma.e general law re. all beaches, or can it target this spot? (ome places do have distinctive characteristics 8 special concernsBhere, interest b$ outsidersB &b) Cs =.C. distinctive? C" it is-had been, was law o.? &c) *2?>: state constitutional provision 8 ;no special or local act shall be enacted concerning the sub?ect matter directed or authori#ed to be accomplished b$ general or uni"orml$ applicable laws.< &Loo. at whether it%s a ;local< act?) U!uall. (o !* &ial la1! ar allo1 2 1- ( / ( ral la1! &a( a&&o)*li!- /oal$ &/) 23: state legislature ma$ ma.e special laws wrt prop-a""airs-gov%t o" 23+ onl$ with special re>uest b$ cit$ council &-o) rul r :u !t) &a) i.e.: +ouncil didn%t re>uest Fno term limits% 8 (tate could have passed general law 8 no term limits in 23 state, or no term limits when a disaster o" a certain magnitude occurs within FJ% time period be"ore end o" termB Gules gainst Un"unded Mandates: concerns L sheer "inancial burden, who%s responsible 8 political accountabilit$?, could lead to separation o" costs-bene"its 8 state bene"its 1EED but at no cost? Gov%t ine""icienc$B &see *2?+) &1) When is something a mandate, when is it ?ust an eJpected norm o" behavior &i.e. Fmust "ollow anti@pollution-discrimination laws%?) &)) L1 v State: + constitution made new state mandate 8 must pa$ wor.er%s comp. &a) Ge>%t "or higher wor.er%s comp "its within concerns above &b) 4ut not reall$ within law 8 not a new program, not targeted at local gov%ts &but rather at emplo$ers across board) &c) C" it had been targeted on locals 8 should there be a di""erent outcome? &d) Cs there a reason "or state constitution to onl$ address mandated services, not mandated costs? +ourt reads teJt narrowl$ 8 cost service. Ma$ be more appropriate to include costs?? (hould teJt be changed?

&a)

K.

S&o* of Lo&al 0o1 r to A&tE %illo(<! Rul F 6o) Rul local agenc$ 8 counterpart to unter 1. 5CLL72%( GUL=: ; municipal corporation possesses ! can eJercise onl$ the "ollowing powers: &1) those granted in e&press words: &)) those necessarily or fairly implied in or incident to the powers eJpressl$ granted: &*) those essential to the accomplishment o" the declared ob?ects ! purposes o" the corporation 8 not simpl$ convenient, but indispensable. n$ "air, reasonable, substantial doubt concerning the eJistence o" power is resolved b$ the courts against the corporation, and the power is denied.< &*2,1) a) nti@local@democrac$? +oncern that locals would be too closel$ dominated b$ private interests 8 "actions &Madison). (o limited local autonom$. Gule L bac.ground norm. b) Gule "ollows concept o" local gov%t as agent 8 tight delegation doctrine. &(ee also 4ri""ault, *2,2 8 rule as protecting private prop against abuse b$ democrac$ ! b$ private economic powers. c) Was both rule ! controversial at timeB1Y1Y rule: "irst Fhome rule% adoption b$ 1YV/ &(t Loius M7) d) GC: 5illon%s rule mentalit$ 8 statute re habitabilit$: cit$ includes hot water. L%s protest: be$ond scope o" what statute eJpressl$ authori#ed. +ourt agrees. *2,> &(upports idea o" FeJpressio unius%) e) M : still has 27 home rule 8 i.e. 1rlington Co v 3hite &LG eJtended insurance coverage to domestic partners.) &1) 'his case doesn%t have eJtraterritorial e""ects, isn%t about regulation o" "irms 8 acting less as gov%t than as an emplo$er 8 in providing bene"its.

1)

1.

Under home rule this would be considered local matter 8 but M court loo.ed at whether states gave local authorit$ to do this? &Aome rule states would have "ramed as: is this Flocal%?) &*) 2o eJpress authorit$Bimplied? 5epends on what means Fdependent%B ultimatel$ court stri.es down domestic partner bene"its. see *2,+ ") 5eparture "rom 5illon%s Gule: .tah v utchinson( &1) Aome rule "or cities but not "or counties: count$%s re>uirement o" campaign spending disclosure, not eJpressl$ authori#ed-re>uired b$ state law, or implied &regulating election is di""erent than regulation spending practices). +ourt "ocuses on right to govern selves 8 local gov%t is appropriate locus o" responsibilit$ &2+0;+1). 2eeded "or e""ective gov%t. +oncern re. local abilit$ to deal with local problems, especiall$ in light o" rarel$ meeting legislature\ &2+2) &)) 5issent: 5illon%s rule is about state sovereignt$: limit on use o" police power: gov%t poses problem o" t$rann$ 8 so should have limited gov%t. &(uspicion o" too man$ gov%tsB) &a) 5illon%s Gule reduces 9 o" gov%ts 8 bac. to 'iebout, political views var$, not evenl$ distributed &clumping), but need minimal protection o" rights 8 at state or local level? g) re di""ering local rules, about common problems &i.e. emplo$ment discrimination) a diversit$ issue or an authorit$ problem? 'his is underl$ing issue "or courtsB h) +ontrol on local abuse o" powers lies in: &1) local electoral-political control &)) ?udicial en"orcement o" state-"ed rights &*) state autonom$ to intercede-oversight A7M= GUL=: i) Cnvolves two powers 8 to enable LG%s to underta.e actions without speci"ic state authori#ation &i(itiati' - sword): and to protect LG decisions concerning local actions "rom displacement b$ state law &i))u(it. - shield). *2+, ?) Cnitial "orm o" home rule L i)* rio rul 8 local initiative ! immunit$ 8 most sa$, "ailure. (tates reluctant to give immunit$, so initiative o"ten also impaired. *2++ .) 2L+-2ML home rule &*2+@) 8 give up immunit$ ! go "or initiative 8 home rule as delegation o" all power state could give until it ta.es it bac.. i.e., constitutions. ;L /i!lati' -o) rul .< &Cn the sense that legis has delegatedB) 5illon%s rule in reverse 8 instead o" presumption o" no power unless given, presumes LG has power to act until ! unless ta.en. l) #(itiati' fu(&tio( &home rule as Fsword%) 8 5oes rule concern something uni>uel$ local or statewide? 5oes rule have eJtraterritorial-spillover e""ect? Cs there a value to diversit$ in this rule &e.g., eJperimentation, diverse pre"erences) or is there a value to uni"ormit$ throughout state? Cs rule consistent with state polic$? &1) ,alodimos v !orton Grove: &(+ o" Cllinois, 1QY,) &a) Cs the Morton Grove ordinance Flocal%? Local v. statewide concern 8 lthough gun sa"et$ is an issue in ever$ localit$, widespread nature doesn%t convert to statewide concern as long as there%s a local interest and LG can handle e""ectivel$. &i) Cssue o" restriction doesn%t turn on uni>ue issues 8 i.e. densit$, ecolog$, etc. 8 "actors same. 4ut @ pre"erences, needs are di""erent? What rules are appropriate "or uni"ormit$-variet$? &ii) 5issent 8 Widespread nature o" problem means that it isn%t a local matter &narrowing o" AG).

&))

1*

&b)

&))

=Jtra@territorial e""ect 8 Morton Grove doesn%t have central e""ect on state &although other villages might): some people ma$ avoid Morton Grove. &i) 5issent 8 =mphasi#es e""ect on non@residents and ad?acent communities. &c) 5iversit$ 8 C" people reall$ disagree, diversit$ is o. &or even good) &i) 5issent 8 Cnconsistent local gun laws could cause problems: what%s to prevent LGs "rom enacting more permissive laws? &d) +onsistenc$ with state polic$ 8 Language o" state constitution &*2@0) sa$s that ;concurrent< action b$ LGs and state is permitted. &i) 5issent 8 (tate deadl$@weapons statute is comprehensive. &e) Cmperio provision here: *2@0 ;Aome rule unit ma$ eJercise an$ power ! per"orm an$ "unctionBma$ eJercise and per"orm concurrentl$ with the (tateB< &") *2@1: Aome rule ;is predicated on the assumption that problems in which local governments have a legitimate and substantial interest should be open to local solution and reasonable eJperimentation to meet local needs, "ree "rom veto b$ voters and elected representatives o" other parts o" the (tate who might disagree with the particular approachB< City of 1tlanta v( !c,inney &(+ o" Georgia 1QQ/) tlanta adopted three measures: &a) 5omestic partnership registr$ valid. &i) 7rdinance does not alter state laws regulating marriages. &ii) +it$ has power to grant visitation rights to cit$ ?ail to registered people. &iii) Gegistr$ ordinance is a reasonable eJercise o" cit$%s power. &iv) 2ote that registr$ ma$ have been a polic$ statement on non@marriage relationships b$ the +it$, but its onl$ legal e""ect was on who could visit ?ails and no eJtra@territorial e""ect. &b) 0rohibition o" discrimination in cit$ emplo$ment valid. &i) 7rdinance prohibiting discrimination is proper eJercise o" cit$%s police power &to protect health, sa"et$, general wel"are o" public). &c) 4ene"its to domestic partners o" cit$ emp%ees invalid. &i) +t loo.s to speci"ic AG provision in Municipal AG ct that grants cities authorit$ to provide insurance bene"its "or cit$%s emp%ees and their dependents issue is whether cit$ can de"ine ;dependent< to include domestic partners. & ct doesn%t de"ine.) &ii) +t loo.s to de"initions o" ;dependent< in other state acts: traditional de"inition is spouses &whether or not literall$ dependent) and minor children. &iii) +t uses 5illon@t$pe anal$sis: ;'he powers o" cities must be strictl$ construed, and an$ doubt concerning the eJistence o" a particular power must be resolved against the municipalit$.< &*2@D) &a) c". 1rlington County "or similar issue in 5illon%s Gule conteJt. &iv) 2ote that with ?ail visitation, domestic partners would be treated the same as a group o" relatives: with bene"its, ct

1,

)B

was war$ o" treating domestic partners li.e spouses &the onl$ permissible non@ dependent dependents). &*) City of 1tlanta v( !organ &(+ o" Georgia 1QQV): revised bene"its provision upheld. &a) 7rdinance re>uired some dependenc$ in "act, but "ocus was reall$ on sharing, similar to interdependenc$ in "irst version. &b) 4ri""ault >uestions whether ordinance was reall$ much di""erent or whether there was a change in the ct. &,) 0rivate law eJception 8 idea that home rule authorit$ doesn%t eJtend to enactment o" private or civil law governing civil relationships. *2GD &a) =Jception ma$ be eJplicit in state home rule provisions or ct ma$ read eJception into home rule provision. &b) +overs contracts, tort, propert$, "amil$ law, civil procedure, but blurr$ at the margins &e.g., landlord@tenant law is state, but housing regulations are local). &c) =.g., 23+ regulation that landlords must chec. cornices ever$ O $ears. Kailure to do so would in"luence a landlord%s tort liabilit$. 4ut 23+ could not determine that "ailure to chec. cornices leads to strict liabilit$. &/) Gationale: wh$ can%t LGs address these matters? &a) Manderbilt 8 b-c o" their nature these matters are inherentl$ reserved "or the states &b) +ardo#o 8 ""airs are eJclusivel$ those o" the state: do not touch a""airs that cit$ is organi#ed to regulate. &c) 'hese rationales suggest that state couldn%t delegate power to LGs to legislate in these areas, but law in this area is unclear. &d) lso need to >uestion wh$ these limitations on LGs are inherent, esp. "or propert$ law, which concerns local matters o" land use. #))u(it. fu(&tio( A6o) Rul a! a IS-i l2JB &1) +ases below all concern imperio home rule states &had the$ been legislative home rule, state would have won). &)) Local power to act comes "rom AG provisions in state constitution. (tate power to act is presumed: onl$ need to chec. that there are no bars to state action, e.g., prohibition on un"unded mandates. &*) "olice v( *enver 8 +7 approach, balances state ! local reasons "or action. &a) +7 has strongest home rule language in U.(. &*2D>). &b) +t held that 5enver deput$ sheri""s are not entitled to minimum training prescribed in state act. Kactors "or determining whether state%s interest is su""icient to override home rule: &i) 2eed "or statewide uni"ormit$, &ii) =Jtraterritorial impact, &iii) 7ther state interests &i.e. public sa"et$) &iv) sserted local interests. &c) Aere: state interest wea. 8 little eJtraterritorial e""ect, little need "or uni"ormit$: local interest strong 8 cost o" bene"its, local control o" local emplo$ees. &d) Ma?orit$ and dissent agreed that there%s local interest, but disagreed on strength o" state interest "act@based in>uir$ into duties o" deput$ sheri""s. &,) La Grande v( #etirement $oard 8 7G approach, legislative@home@rule@li.e approach &which means that state will win). &a) (tate is onl$ prevented "rom acting where it would harm the structure o" LG.

1/

).

+' is concerned that i" it tries to search out sub?ect matter interest 8 substituting courts "or political process? 5on%t want to ?udiciali#e these matters. (till state is more inclusive bod$ 8 a""ects more interests 8 so in substantive polic$, state prevails: i" ;mode< o" local gov%t 8 cit$ has power o" home rule &*>00). &i) (tate is more inclusive as to which interests it ta.es into account &interest o" well@being o" all citi#ens). &c) +ompeting interests 8 what standards to separate them? (ince greater power &state) has interest in smaller 8 de"er to its decisionB &d) 'his decision nearl$ ma.es 7G a legislative home rule state &imperio, but turns into 2ML). &/) 2ohnson v( $radley 8 + dialectical approach, in e""ect intermediate scrutin$ o" means-ends. see *>12;1> &a) 6ust since state leg has passed a law, not nec a statewide concern. 0rinciple: this is not a matter o" legislative decision 8 should be ?udicial? &b) (trong local interest in elections-procedures 8 this goes to core o" municipal a""airs. +ourt applies intermediate scrutin$ 8 state must show important interest in integrit$ o" local elections &G4: this is >uestionable): but ban on public "unding doesn%t enhance integrit$ 8 doesn%t inter"ereBthis loo.s li.e a ?udgment on merits o" two laws @ court getting too political? &what 7G court was worried about) Hor court placing more de"erence on voter initiative than legislation?I &G4: no, the$ ?ust thought it was wrong\) &c) + case was imperio, but balancing test turns out "or state. Lo&al! 1ill 1i( 5ala(&i(/ if 2 )i(i)i! !tat i(t r !t or la1 2o !(<t ! r' i(t r !t: also will prevail i" there%s reall$ (o &o(fli&t. &preemption issues)Bot- r1i! !tat 1i(!. (!L +on"licts: WA7 WC2(? a) 2ML: state wins 8 built in statement 8 Fnot in con"lict with state laws% b) Cmperio: tric.ierBmunicipalities have initiative, possible immunit$

&b)

G.

0r )*tio(E (eries o" e""orts to stop state inter"erence with local integrit$: deciding when state action inter"eres with local action. 1. E9*r !! *r )*tio(E state law speci"icall$ prohibits something a) Goodell *>1D &C case): eJpress preemption o" cit$ #oning re. agriculture. +t compares state-local rules: count$ ord re>uires more 8 so it con"licts with state law. ). #)*li 2 *r )*tio(E a) +on"lict o" laws: when ordinances are inconsistent with state law &allows-prohibits something prohibited-allowed) &1) =Jpress con"lict: state ! local laws eJpressl$ con"lict on same issue &)) Cmplied con"lict: local bar on something state allows 8 since local ordinance inconsistent with something?? Local ord creates new re>uirements be$ond what state sa$sB &*) When is more regulation ?ust more, when is it in con"lict? Cs state sa$ing, t-i! )u&- & (o )or or ! tti(/ a floor and cities ma$ go "urther? &,) When is local action inconsistent with state polic$? What is state polic$? b) 7ccupation o" "ield: no actual con"lict o" laws, but totalit$ o" state law precludes additional local laws even i" consistent &what is the "ield though?). =nough rules alread$\ &7hio case?)

11

S ###$

1llied 8ending *>2G &M5 case): local gov%t had stronger interest in regulating cig salesB&better argument about additional local concern than in Cowa case.) +omprehensive state interest here: but does state@granted license L entitlement? d) +ali"ornia election case: court sa$s, need not be statewide issue 8 room "or locals *. rguments: should there be a uni"orm state rule? (trong state concern? (tate setting ;"loor< ! locals can increase regulation? outli( &-art o( *a/ ! >??;?, r /ar2i(/ Stat ;Lo&al Co(fli&t!$ #NTERLOCAL RELAT#ONS & METRO0OL#TAN AREA 0ROBLEMS 6$ #(t rlo&al R latio(! 1. 'riangular relationship between state-local-local ). (ocio-econ realit$ 8 people ! businesses utili#e ! rel$ on resources-services all over region, multiple localities. =vents have regional impacts. 3et legal-political 8 no such thing as regional gov%t. "ew entities have regional scope 8 i.e. M' , but "ew H only speciali-ed?I. *. Kragmentation 8 municipalities near each other ,. 7verlap 8 addition o" a district &water, transport, etc.) superimposed on top o" separate municipalities /. Long assumption 8 this was bad 8 ine""icient. +ould do better with economies o" scale. (ince 1Es, 'iebout%s wor. showed bene"its o" this. +ompetition, learn "rom each other &eJperimentation ! innovation), speciali#ation. 1. 5ownside o" competition 8 ine>ualit$ &the more services are decentrali#ed, the more ine>ualit$ problems): also i" shared regional concerns, should region ma.e decisions as an entit$? V. 'oc>uevillian response: democratic up@si#ing loses abilit$ o" people to hold gov%t accountableB A$ #(t rlo&al Co(fli&t! Y. 4etween overlapping entities: i.e., who controls schools? school district-count$ #oningB a) 1ustin v Sunset 8alley: Gap 8 no eJplicit authorit$ "or either district-count$. +ourt suggests school district is superior: seen as arm o" state "or these purposes. 4urden on local to sa$, acting reasonabl$. &5ebate over who must prove un-reasonableness) Q. 4etween localities a) $arrington ills v offman 7states: Toning "or open air music theatre in A.=. 8 gets taJes, "ame, eJtra commercial activit$. Cn corner o" localit$ though so no noise, tra""ic, litter impacts 8 a""ects 4.A. more. &1) ssuming standing, harder >uestion is, who wins? Loo. at: &a) =conomic bene"its o" theatre 8 how much gain to region? &b) +osts to region? &c) 2et gain or loss 8 to region, to localities? &d) +oasian anal$sis 8 .ind o" "alse. nd what i" region as whole loses &net loss) $et Ao""man =states still gains locall$? &)) +ould there be a regional decision 8 b$ vote or decision@ma.ing bod$? Usuall$ no regional oversight committee 8 though man$ states have some sort o" review. 1E. 4etween local ! general region a) Livermore: 5illon%s-home rule issue here too 8 court loo.s at "ederal concerns &i.e. right to travel, discrimination): then local concernsB<general wel"are< applies to region. 4urden o" proving an ord doesn%t serve general wel"are is on challenger &here 8 developers) &1) 'his case is both pro@local and pro@regional. *>+? 8 must show Freasonable reasons% "or actions though: court needs evidentiar$ records &)) Moratorium on new housing in Livermore has eJtralocal e""ect o" driving up regional prices &due to less suppl$)

c)

1V

11.

Gationale "or limiting: controls apartment suppl$ 8 population demanding services also controlledBvalue o" properties - per capita taJ base goes upB"iscal bene"its. Gacial-class incentives? 0eople who can own homes? What counts as eJclusionar$: wrt lot-house si#e, availabilit$ o" multi"amil$ dwellings? &,) 6udicial review o" these t$pe o" cases alwa$s wants to loo. at regional impact 8 i" eJclusionar$ e""ects eJist. Toning still done locall$, but must ta.e eJternalities into account. b) !t( Laurel: ;"air share< concept 8 but how to de"ine region, pro?ected need, "air share? 26 has special masters to "igure out 9sB lso Gegional +ontribution greements 8 localities can pa$ each other to ta.e on greater portion o" F"air share% &1) 26 approach is more positive, whereas 2A approach negative 8 Fnot too much eJclusion% c) E9&lu!io(ar. 4o(i(/: &1) +haracteristics-bac.ground: &a) (ubstantial delegation o" power to #one &b) Kew guidelines &health, sa"et$, wel"are) &c) Little or no state oversight o" LU decision &hand"ul o" bodies to review env, econ disparit$) &)) Motives "or eJclusionar$ #oning: &a) 5rive up taJ base to provide better services. &b) Lower taJ rates ma$ drive up prop value &c) Kiscal, econ, social issues tied together 8 structuring communities in certain wa$s &*) Kine line between eJclusionar$-inclusion 8 !t( Laurel F"air share% o" F"uture need% 8 how to de"ine? Aow to reproduce H force?I local FmiJ% o" regional characteristics? Cnclusionar$ measures 8 set asides, bonuses, but how "ar can $ou go? Cs this a local "unction, to increase below@mar.et housing: should it be paid "or b$ greater densit$? &a) 26 supreme court: integrationist model: legis@housing model: ?ust get it built somewhere\ &b) 7ther 2= states 8 &!+ ) statutor$ measures. +ourt decisions to deal with this 8 but econ segregation is tough 8 econ ! mar.et realitiesB &,) +onse>uences o" eJclusionar$ #oning: &a) 5rive up housing costs &b) Greater homogeneit$ &c) (prawl\ Leap"rog development 8 older communities have more regulation so people move "urther out. &d) =con segregation &can lead to school finance problems) &/) 6udicial response: curtail action without den$ing power to actB Cnterlocal Kiscal Cne>ualit$ a) S&-ool Fi(a(& R for) &closel$ related to eJclusionar$ #oning): &1) (chool "inance creates ! rein"orces interlocal wealth di""erentials &)) Most states 8 Cndus-commercial prop taJed at higher rate 8 generate hi revenue. lso hi@value homes. 5istribution o" these, low@income across a region that has man$ taJing boundaries 8 leads to enormous disparit$. 0oor, old inner@suburbs ! rural areas 8 get least revenue. &*) 0ublic education L 91 eJpense "or local-state gov%ts &at least, largest single eJpense) &a) Used to be that local "unctions centered around LU 8 "ire, water, waste, econ regulation. s idea o" common school spread 8 became more o" a local "unction.

&*)

1Y

b)

c) d)

(plit between state-local "unding varies greatl$Band state aid &"lat grants) doesn%t nec e>uali#e &,) 1st method o" attac. on disparate school "inance 8 :ual *rot &tio( const challenge. U((+ laid out test 8 suspect classi"ication or "und right 8 and wealth suspect class and educ "und right, even though important. (o G4 test: and local control counts as G4. 'his ?usti"ies local "inancing ! di""erences. lso "ederalism implications 8 state matter, not "or (+. &/) 'hen, state shi"t: education as "und right in state constitutions 8 must create Fthorough ! e""icient% method o" educBMandates "or educ. &5i""erent "rom "ed const 8 which is more about power, ver$ little mandate o" an$thing) 'wo strands o" arg 8 &a) (tate L protection clauses 8 now since educ is obligator$ in state, L protection issue &b) =""icienc$ 8 enormous ine>ualities shows that state has "ailed to "ul"ill mandate &1) pproaches "or e>uali#ation re"orm &what =0 re>uires): & *>G>) &a) Kocus on une>ual spending 8 state should e>uali#e, provide same per capita level o" spending &but, e>uali#ation removes local abilit$ to controlB) &b) Guaranteed min amount to meet basic educational needs &c) 5istrict power e>uali#ation 8 give each district taJ base o" a hi@end district, guaranteed 8 district chooses own rate. C" base J rate L lower $ield than guaranteed amount, state ma.es up di""erence. &5oesn%t necessaril$ mean e>uali#ed education though) &d) Gedraw taJ district lines 8 but lots o" opposition to this 8 wrt maintaining decision ma.ing powerB.also pure sel"@interest: don%t want to share taJ@base: can $ou reall$ separate out decision ma.ing power "rom "inancing? 9e: *oes ; even matter anyway? 3hat about social effects? p399 &") What about ade>uac$? 5oesn%t nec mean the best 8 but is relativeBade>uac$ changes over time with technolog$, innovation, etc. &V) *rd wave o" school "inance re"orm litigation: &a) 1st 8 "ederal &b) )nd 8 state L protection &c) *rd 8 Gose-=nglewood 8 e""icienc$ arguments &Y) Gole o" courtsB0rod public agenda? +onst interpretation? Aow much o" a role in deciding e""ective schools, in e""ecting "inance ! state-local roles? +asesB6udicial pproachesB &1) *u"ree & r.., =0 challenge) 8 school "unding disparit$ due to reliance on taJ base. +t stri.es s$stem down: not rational. &)) 7dgewood &'J., ade>uac$-e""icienc$) 8 school "inancing s$stem violates 'O const re>%t "or e""icient s$stem o" "ree public schools &became more about e>ualit$ in later appeals). &*) #ose &N3, e""icienc$) 8 loo.s at whole school s$stem. =""icienc$ L provide ever$ child with minimal capacities &listed *>D0) &N3 is now model o" school re"ormBbut how to reall$ measure improvement?) &,) 7dgar &CL, separation o" powers) school >ualit$ is not an appropriate ?udicial determination. Cn school "inancing, state delegation to localities is norm. LG%s usuall$ provide local services out o" local taJ base. +hallenges usuall$ "ocus on e""orts to promote greater e>uit$. Gegional response to Cnterlocal Kiscal Cne>ualit$: $urnsville, M2 case

&b)

1Q

&1) &)) &*)

&,) &/)

&1)

Kiscal 5isparities ct 8 treats 'win +ities area as unit. 1ED o" commercial valuation goes to regional potBredistributed bac. based on need &based on population-capacit$) Main legal response: being taJed to support someone else? Cdea o" uni"ormit$ that ever$one in a ?urisdiction should be taJed the sameBand also idea that local taJes should go to local services. Cs this M2 ct ?ust eJpropriating S "rom one localit$ to another? &a) +ourt: no. =ach localit$ bene"its "rom activities o" others. 5ecision to locate a compan$ in a region ma$ have a lot to do with regional distribution o" wor."orce, transportation, amenities &competition), level o" envir. impactB(o growth happens regionall$ ! i" localities wor. together, better growth potentialsB &#egionalist argument 8 see also 0eirce article *>?+) What about services serving region, supported b$ regional taJ 8 i.e. transport s$stemsBnot general revenue sharing li.e M2 8 it%s earmar.ed. Gegional taJes to support an amenit$ located in one localit$ 8 i.e. #oo, sports arena. 'he$ serve a regionBHwhat i" localit$ would rather have their share go towards better schools, i.eBI 8 no real constitutional argument here. Gegional taJes are imposed-collected b$ state 8 not sub?ect to ban on special legislation because special problem. 'argeted state response to deal with speci"ic state need.

#$

#(t rlo&al Coo* ratio( 1. What "unctions cross local lines? Aow to deal with it L mergers-anneJations &not too man$). Aow to maintain legal-political-"iscal independence $et come together voluntaril$ "or individual activities &! ta.e advantage o" economies o" scale)? a) Volu(tar. i(t rlo&al a/r ) (t! 8 three archet$pes 8 &*?0G) &1) +ontract "or services 8 localit$ bu$s ;J< &i.e. water suppl$, crime lab use, "ire protection) "rom localit$ 4. &*urango case) &)) 6oint services agreement 8 pooling o" resources &"laggermeier case 8 pooled policing to go a"ter drun. drivers) &*) +ollaborative establishment o" new governmental unit 8 ?oint entities 8 ?oint ventures. &Goreham case) b) '$pical legal issues: &1) Cs agreement authori#ed b$ statute? &a) Usuall$ gov%ts don%t have authorit$ to act be$ond boundariesB &)) 5oes activit$ "all within scope o" statute? &*urango) &*) Cs local consent re>uired "or agreement arrangements? & "laggemeier) &,) 5elegation issue 8 was authorit$ delegated properl$, with e""ective criteria-guidelines given to control, or e""ective oversight? c) Co(tra&t for ! r'i& !E urango 8 cit$ to ta.e over count$ transport s$stem 8 contract between cit$-count$. &1) +7 constitutional language 8 ma$ cooperate-N with each other to provide "unction-service law"ull$ authori#ed to each. &)) Aere, cit$ has authorit$ but it%s limited to own boundaries, unless authorit$ received "rom 0U+. 0rivate co which currentl$ controlled transport didn%t li.e this. &a) +ourt: ambiguous language. 5ecides to liberall$ construe 8 state meant to encourage cooperation. &*) 7ther >uestion: this isn%t ;cooperative< 8 it%s the cit$ ta.ing over "or the count$. Aas count$ lost control? &a) +ourt: shared management-"inancing not necessaril$ needed "or cooperation. Lead agenc$ concept. 5ecision to share is enough:

)E

d)

e)

count$ citi#ens still represented since N is entered into b$ elected rep%s, so loss o" accountabilit$ is not a problem. &,) 'his is implicitl$ supported since it loo.s li.e N ma$ be le"t-voided &at will?) 8 in a longer term N where cit$ needed to invest heavil$ in e>uipment, it might be harder to withdraw "rom N &also i" debt were to be entered into in reliance on N) +ourt arg gets wea.er the harder the N is to leave. 7oi(t S r'i& ! A/r ) (tE Plagge!eier 8 count$ ! , cities agreement to deal with drun. driving via tas. "orce, ?oint board &this approaches ?oint ventureB) 0olice authori#ed to pursue drun. drivers into other ?urisdictions. &1) (tructure not "iled though or rati"ied b$ each o" local legislatures 8 so agreement not e""ective &tas. "orce re>uires pa$ment, which re>uires legis authori#ation) &)) 4ut court: this doesn%t vitiate eJisting consent. +onsent ma$ be an admin decision 8 a handsha.e agreement is o. to allow the eJtended pursuit. &*) Cs accountabilit$ lost here? +hie" o" police can change mindBand residents can remove chie" &assumption 8 serves at pleasure)Bwhereas tas. "orce is commitment, needing more "ull@"ledged process. &,) 'his is about &o(trolK Cr atio( of N 1 Go'<t E(tit.E "oreha! 8 5es Moines area 8 1, gov%ts 8 ?oint solid waste agenc$ &M (W ) &1) +onstitutional >uestion: delegation doctrine &a) (tate delegated to localities the authorit$ to create ?oint venture &)) 5oes delegation L loss o" public control? Cs bod$ given enough guidance-control? Aere 8 enough guidance to M (W ? &a) +ourt: $es. Legislature has ade>uatel$ stated ob?ect ! purpose o" legislation, laid down reasonabl$ clear guidelines "or its application. *?20 &*) 4ut problem 8 no oversight. 5istributive issues are not reall$ controlled 8 collective control is not necessaril$ e""ective. &More loss o" control than a state@created admin agenc$Bcourt doesn%t reall$ ac.nowledge this.) Loss o" control particularl$ b-c this creates a debt ! hard to get out o" b$ an$ one localit$.

7$

R /io(al Go' r(a(& Stru&tur ! 1. (ingle 0urpose Gegional Gov%ts a) +haracteristics: &1) Less than state, more than cit$-count$? +o@eJtensive with count$? &)) 2ecessit$ 8 i.e. transport s$stems must cross lines &i.e. 'ri@Met) &*) =""icienc$ 8 economies o" scale &i.e. hospital districts), waste avoidance, coordination o" activities &a) 0lanning issues complicated too b) +oordination could be o"ten done at state level &7G said this) &1) +ould be accomplished b$ large general purpose local gov%t, but unli.el$, not necessaril$ a good idea &issues o" accountabilit$, etc.) c) Cssues: &1) Governance: who? &a) =lected &1p-1v implications) or &b) ppointed &b$ whom?) &i) Goughl$ representative o" population? &ii) +ontrol with general purpose gov%t, or with state. Less direct accountabilit$. 7nl$ removed "or@cause or b$ termsB &iii) Main issues 8 control, accountabilit$

)1

).

*.

Kinancing: &a) (ome power to taJ 8 general or &usuall$) related to services provided &special assessment "ee) &b) Given revenues b$ cit$-count$ &*) 5elegation doctrine issues: &a) Miolation o" home rule? Usuall$ state%s concern is su""icientl$ important to displace local autonom$ &b) 2ot eJactl$ general purpose gov%t 8 not state agenc$ 8 what are the$? lso unclear interaction with state laws &tort liabilit$, sovereign immunit$, sunshine laws, etcBsometimes spelled out b$ statute) &,) +ourt%s role 8 "igure out what rules appl$. Loo. to appointing structure, other issuesB &/) Cssues re. whether or not state ma$ create 8 &a) Little issue on state power to create &b) More problems with moving LU-other power ;up< &"rom-b$ cit$) d) 1ngel /ire 8 institutional design, taJing power 8 same issues as above. *?>> &1) 2ew issues: Cn Cllinois ! 7regon cases, bodies state@created b$ special laws &! large distinct interest area so no ob?ection). Cn 2M state passed enabling act 8 allowing creation o" hospital districts. 5o these districts serve general sa"et$? &a) L7 argument 8 no material bene"it "rom inclusion in this district. ] o" population but ^ o" taJ base. & re the$ pa$ing "or closer hospital at all though?) Gight to create not disputed but the bottom@up creation is resulting in eJploitation o" taJ base. 5isproportionate bene"it-burden. 0rocedural protections don%t protect them since the$%re a built@in minorit$. &b) +ourt response: health care alwa$s entails redistribution o" resources 8 "rom the health$ to the sic.\ &Cs this comparable to redistribution o" territorial wealth though??) &c) +ould address this thru incorporation@t$pe methods: &i) 5e"ensive ;incorp< into a closer district? 7r lobb$ state to re>uire concurrent ma?orities o" areas to be merged into a district? Multiple 0urpose Gegional 5istricts a) =ven when multiple "unctions, usuall$ in"rastructure related: economies o" scale or needs "or coordination. Less common is LU-planning related &7G) b) Cssues: &1) Governance: t$picall$ appointed &0ortland 8 rare 8 elected) &)) Kunctions 8 these evolve, pic. up more over time &a) (eattle 8 began with ?ust water pollution, and eJpanded to transit ! land planning. &i) ppointed members drawn mainl$ "rom elected o""icials &ii) +ourt 8 not a >uasi@proprietar$ agenc$, so Salyer eJception to 1p-1v is n-a &*??2). 7""icials are reall$ elected 8 so it%s a Fgovernmental bod$% and 1p-1v applies. &iii) Cn end 8 no agreement over voting design, so Metro got merged into count$. c) Gegional gov%ts might be more widespread i" $ou could "ind acceptable representation scheme 8 where cit$ voice, countr$ voice, etcB 1p-1v re>uirements complicate this though. +onsolidations - 'wo@tier "ederations 8 see *??G;,1F ?,D a) Largest consolidation: 23+, 1QYQ.

&))

))

b) c) d) e) #V$

Usuall$ )@tier "ederations: wor.s in count$ setting: i.e. 1 large cit$, smaller cities. Might have merger o" count$ ! big cit$ &i.e. Nansas +it$, Unigov in Cndianapolis) Ma?or "unctions o" gov%t done at count$ level 8 e""icienc$ measure. =Jpands count$%s abilit$ to provide services , pools taJ base, maintains some independence o" pre@eJisting LG%s &i.e. local policing) Ning +ount$ &Cunningham case), Miami 8 strong count$ gov%t created, but some things le"t in place to cities. Gegional ! local services ! taJes. 0rotects smaller cities, creates more capabilit$ on larger scale. Gegional gov%ts still "airl$ uncommon.

STATE & LOCAL F#NANCE A$ 0u5li& 0ur*o! R :uir ) (t! ,. Aeavil$ regulated at state &constitutional ! statutor$) level, almost not at all at "ed level &eJcept, contracts clause 8 a""ects borrowing). /. Aistor$: a) (tate debt crisis in 1Y*Es brought this about. =rie canal success inspired publicl$ "inanced transport s$stems. Massive public ! private investment ! incentives. ll blew up in 1Y*V 0anic, deep recession. (tate "iscal crises thru 1Y,Es led to state const revision b) =""orts to limit goals ! techni>ues o" gov%t 8 limit wa$s to aid private sector, wa$s to raise S, public doctrine. 2eed to constrain corruption ! also eJuberance. (peci"ic constraints 8 lending, debt limitationsB c) (till, a"ter states constrained 8 cities would invest in GG%s, etcB.Led to 1Y1Es re"orm, 5illon%s rule. More revisions limiting cities% abilit$ to borrow, lendB d) 2eJt waves o" economic situations leading to re"orm 8 Great 5epressionB.then 1QVEs@YEs in"lation. 1. 0ublic purpose doctrine ver$ logical 8 supports republican notion o" public gov%t supporting public sector, limits on incentive "or corruption. a) 00 doctrines "airl$ e""ective. 7"ten "ocused on ;ends< 8 who received bene"it o" gov%t aid-action. 3et recognition o" public bene"its "rom private sector goods b) 5i""icult to determine eJactl$ what ;00< is c) Gecentl$ &/E$rs) courts less willing to anal$se ends: loo. at means. i.e., ends o" economic development-activit$ 8 usuall$ legit public purpose, $et the means can be s.etch$: can gov%t promote ?obs b$ direct assistance to private companies? 5oes public interest in ?obs ?usti"$ gov%t assistance to widget plant? Most courts sa$ $es. V. !aready 8 2+ case 8 1 o" last states to ac.nowledge this as 00. 3et pa$ing S to widget production, pollution reduction &re>uired an$wa$\\) 8 too much o" a ;00< stretch? a) (teps: &1) =conomic development &?ob creation) L 00 &ends) &universall$ accepted) &)) +ash-loans to private "irms L &means) &*) Will it wor.? C" 00 eJists in giving cash, will it generate ?obs? &Usu courts de"er ?udgment to the legislature). &a) 7"ten these measures are onl$ a small "actor to locating businesses 8 though hard "or LG%s to resist tr$ing to leverage location decisions thru more direct incentivesB b) (tic.iest point is the means 8 even i" legit ends &public bene"it), does that mean it%s ;00<? What level o" private aid is 7N? c) +ourt%s role 8 2+ didn%t "ollow earlier cases. 5i""erent anal$sis. &1) +hanging times issue &)) Cs purpose ostensibl$ to bene"it public? &*) ;0risoners% dilemma< 8 all the other states are providing these incentives 8 the$ have to. &,) C" legis sets a goal o" public purpose, S towards that goal B.&???)

)*

d) Y. Q.

5issent: where%s the logical brea. in appropriate means to legit end? +ountr$ club memberships? Wdissent loo%s at short term benefit< majority loo%s at long termX Loo. at *?@+. !adison Cablevision prongs "or "inding a public purpose: &an$ bite to these?) 1 st, municipal action has reasonable connection with convenience ! necessit$ o" particular municipalit$: )nd activit$ bene"its public generall$. &*?@>) 4oth involve ends ! meansB .tah 0echnology 8 *?G0, legis "indings o" public purpose. Uuestion eJisted about techni>ues. Aanding cash would have been o.. 4ut state agenc$ borrowing S then in turn loaning to private "irms &state gets lower interest rate) L Flending credit%... also issue about bu$ing stoc.B a) Un-authori#ed means? *?@G: not allowed to lend credit "or private underta.ing b) Minorit$ states% de"inition o" lending credit 8 state borrows S then lends to private co. +ommittal o" credit abilit$ to private co%s. c) Ma?orit$ states% reading &U', 23, etc) 8 lending o" credit occurs when state provides loan guarantees to private lenders 8 suret$ship. Most states sa$ no suret$ship b$ state to private lender. Greater ris. in actual loans though 8 possibl$ 27 state resources are ever used in suret$ship. 4ut the "ear is, it%s too eas$ to do and will get states into trouble. d) 0rohibition here is on techni>ue 8 not broad techni>ue o" aid but speci"ic techni>ue o" suret$ship, or o" bu$ing stoc. &1) Greater ris.? Less protected? Aow are these techni>ues worse than giving cash? &Greater intertwining o" public-privateB) Walso more bias, pre"erence problems: =0 down the line?X &)) 6o1 to 2ra1 &l ar li( 5 t1 ( *u5li&"*ri'at *o!!i5l L 4road public acceptance o" legitimac$ o" gov%t activit$ in econ development pro?ects? e) What about indirect F"inancing% 8 i.e. taJ incentives 8 are these sub?ect to public purpose re>%ts? &see *?G?)

M$

R ' (u ! 1. +lassi"ications o" LG revenues: a) Cntergovernmental &LG does not control): &1) Krom "ed, state, or other LG &e.g., cit$ gives mone$ to school district). b) 7wn source &LG controls, but sub?ect to constitutional, statutor$, and political constraints, as well as eJit option o" people): &1) 2on@taJ 8 "ees, charges, assessments. Growing in popularit$ b-c not sub?ect to legal or political constraints on taJes. &)) 'aJ 8 real propert$ taJ, other taJes &e.g., sales, income). 0rop taJ is largest single source o" local revenue. &a) 7ver time, prop taJ came to "ocus on real prop onl$. Land is immobile: all owner can control is amount o" improvements that have taJ conse>uences. 4ased on value o" prop &ad valorem). &b) Cn theor$, taJ is imposed neutrall$, based on what people have, to pa$ "or LG services. ). 0ropert$ 'aJ a) 0roblems: &1) 4uilt@in uncertaint$ since prop values are onl$ .nown with certaint$ i" there%s been a recent, arms@length transaction. &a) 7ther techni>ues "or valuing prop: &*,1?) &i) +ost approach &estimate cost o" replacing building) &ii) Mar.et data approach &compile comparable sales data) &iii) Cncome approach &measure present worth o" "uture bene"its o" prop)

),

&))

b)

c)

'aJ on wealth that%s paid with income ma$ lead to wealth@income disparit$: &a) C" in"lation causes prop values to rise "aster than income. &b) Kor retirees. &c) C" "ull mar.et value re"lects the use with the highest value, not the actual use &e.g., i" KMM is "or subdivision dev%ment, not "armland on urban peripher$). ellerstein v( 1ssessor of the 0own of 4slip &23 +t. ppeals 1QV/) &1) 23 statute mandated that prop values ;shall be estimated b$ the assessor at its "ull value< &*?D2). 4ut practice in Cslip &and across 23) was to assess "ractional value, with no set pattern "or application: no rules governed, so percentages were unpredictable problems: &a) Cne>ualit$ in "raction assessed across ?-ds &o" course, i" ?-d assessed lower "raction, it would compensate b$ having a higher rate, so taJ $ield might not di""er). &b) Mer$ di""icult "or taJpa$er to prove an =0 violation &would have to gather data on prop values, rates, etc.) &c) 0otential "or "avoritism within ?urisdictions. &d) 'aJ can be raised without public .nowledge b-c assessor can ?ust change the "ractional D, not the taJ rate. &e) LGs can get more state "unds b$ under@valuing prop, i.e., b$ using a low "ractional D. &(tate countered with (tate =>uali#ation 4oard, which attempted to e>uali#e assessment rates in calculating state aid pa$ments.) &)) +t held that assessments should be done at "ull value. C" 23 had a set "ractional D less than "ull value, or a set schedule o" assessments "or di""erent classes, there would have been uni"ormit$. 4ut practice o" under@ valuation was ?ust too unpredictable. $elas v( ,iga &W 1QQY) &1) Ge"erendum mandated ;value averaging< to minimi#e $ear@to@$ear variation in prop taJes and to cap the rate o" increase in prop values i" rate was over 1/D-$ear. &'his is one attempt to deal with the wealth@income disparit$ in prop taJes.) &)) +t struc. down re"erendum. Miewed it as a gi"t to the wealth$ ! burden on people with low@mid@value props. C" taJ base is held down, taJ rate ma$ have to increase "or ever$one. &a) 'aJ uni"ormit$ can be anal$sed b$: loo. at assessment ratio: are ratios e>ual. *,01 &b) 'his was a principled holding, but note that court made a polic$ ?udgment too. &c) +t didn%t consider polic$ bene"its o" the re"erendum or ac.now@ ledge that capping rates o" increase doesn%t necessaril$ "avor the wealth$ &i.e., low@mid priced props could be gentri"$ing ! incr@ easing in value >uic.l$, while high@value props could be stable). &*) Ge"erendum did not create an eJemption, which is a permissible "eature o" prop taJ s$stem. &a) =Jemptions ma$ be constitutional or statutor$, based on use o" prop or classi"ication o" user. &b) +t held that eJemptions must be eJplicit. &c) =Jamples, *,0>. &,) 7ther cts &e.g., 23) ma$ have held that this re"erendum gave uni"orm treatment to rapidl$ increasing propPless principled approach. &/) lternatives "or W would have been to set up scheme that de"erred taJ liabilit$Pwhich would achieve $ear@to@$ear consistenc$, but not write o""

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d)

e)

")

taJ liabilitiesPor "ine@tune the measure to limit re@assessments when there%s no change o" hands. 'hese ma$ have survived ?udicial review. State $oard of 0a& Commissioners v( 0own of St( 2ohn &C2 1QQY) &1) (tate +onstitution mandated ;uni"orm and e>ual rate o" propert$ assessment and taJation.< &*,0+). (tate 4oard established rules "or classi"ication o" prop according to ;true taJ value,< which di""ered "rom KMM. &)) +t upheld state%s s$stem o" prop taJation according to ;value in use<. &a) 0rop taJ assessments must be based on prop wealth, but di""erent methods o" assessment ma$ be used "or di""erent classi"ications o" prop in order to achieve u(ifor)it.. Crouch 8 case about idea that growth pa$s "or itsel": b$ taJing the growth &1) ;4lighted< &?) area 8 LG commits to redevelop 8 put S in. '$picall$ not done out o" regular budget but b$ borrowing. &)) 'o pa$ o"": calculate taJ base be"ore investment J rate L $ield. 'hen taJ base a"ter investment J rate L $ield. 5i""erence between $ield@1 and $ield@ ) is put into ;'CK< "unds, used to pa$ o"" debt. &*) (o growth seems cost@"ree: municipalit$ not sacri"icing an$ new dollars. 6ust opportunit$ cost. &,) 0roblem here: man$ di""erent taJing entities &count$, cit$, districts) 8 all incremental growth goes into "und. +laim: other entities with limited "unctions are being "orced to pa$ "or something &redevelopment) that the$ don%t bene"it "rom. 'his 'iolat ! *u5li& *ur*o! a(2 u(ifor)it.. &/) L7%s in district 8 capture bene"it b$ having taJ growth pa$ "or debt. 'heir taJes go right bac. to them. 'he$%re pa$ing the same rate 8 so literal uni"ormit$ eJists 8 but more subtle uni"ormit$ issue since their taJes are bene"iting them directl$ &none o" the courts pic.ed up on this). 0ro* 1> 8 5ordlinger &1) 0rop 1* simultaneousl$ raised pro"ile o" use o" ballot@initiatives as a political techni>ue, as well as capping prop taJes. dopted in 1QVY &+ ) 8 culmination o" rapid housing in"lation. 5ue to assessment re"orms, value growth >uic.l$ impacted higher prop taJes. Legislature unable to deal with this e""icientl$. 5idn%t cut rate &there was an increased demand "or servicesB) 8 so how to change prop taJ assessment s$stem? Kinall$ the people got an initiative together. Legislature also "inall$ put a measure on. 0rop 1* &people%s measure) won most votes. &)) 0rop 1* rolled bac. taJ base to 1QV/, and capped taJ growth at )D per $ear: eJceptions: &a) Gov%t ma$ reassess prop &update the value) when sold, or when improvements made &b) Aowever parent@child trans"ers don%t result in ?ump@up o" rate, and old people ma$ .eep their ;base< i" the$ move to a same@si#e or smaller home. &*) 0rop 1* also imposed )-* local vote re>uirement "or new taJes and 1D overall rate cap "or prop taJes &this includes all LG%s that are taJing prop, combined). &a) Later court interpretation o" )-* re>uirement &applicable to cities, counties, ! special districts): (5%s are an$thing that can taJ prop since that was the thrust o" 0rop 1* &court loo.ed at legislative intent). (o )-* re>uirement n-a to (5%s which don%t do prop taJ. &,) 1mador County case 8 immediate challenge to 0rop 1*: + (+ upheld law &/) 'hen 1llegheny "ittsburgh case occurred: count$ assessment &li.e 0rop 1*) was a violation o" mar.et value principles: =0 rules violation.

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0rop 1* re@challenged: still upheld. c>uisition value &what%s used in + ) is not the same as "air mar.et value &what was used in 0 ??). &a) (tevens &dissent): i" prop value is .e$ then 0rop 1* does violate =0: same value homes 8 di""erent taJes being paid. &b) 4lac.mun &ma?orit$): "ocuses more on abilit$ to pa$. Cssue is predictabilit$, stabilit$. &V) (tud$ done later: a"ter 1@V $ears, +al. prop taJes even "or ;newcomers< become less than what the$%d be i" no 0rop 1* limits. (o s$stem does bene"it stable people more than mobile people. 'his has an interestingl$ slightl$ progressive e""ect 8 low income - elderl$ people tend to move less &can%t a""ord costs) so their taJes are more controlled. &see p /*)) 4iggest winners though are business prop owners &i.e. 0G!=, Union 0aci"ic GG) who don%t reall$ ever move. &Y) 0rop 1* has led to huge creativit$ to manipulate it, + has led wa$ in user "ees, development impact "ees, regulator$ "eesB &Q) Aow otherwise can states deal with wealth@income gap? &When prop value increasing, income dropping) &a) 7bvious response 8 L7 can sell. 4ut politicians ! people not happ$ with this result. &b) Widespread response: homestead eJemption. 0rop taJ is n-a to "irst ;J< thousand S worth o" home. 'his especiall$ helps low@ income people. &c) 7r, circuit brea.er program &*,>>) 8 loo. at what D o" income prop taJ eats up. C" more than a certain amount, $ou get credit on state income taJ. &LG%s love this program 8 the$ still get all the S, state bears the burden.) &d) lso, taJ de"erral programs 8 don%t have to pa$ now, but i" $ou sell home then pa$ bac.@taJes out o" gains reali#ed. &G4: this seems ver$ plausible). &e) 'hese issues have "aded somewhat 8 prop value not in"lating so >uic.l$ an$more. (tate constraints on 0rop 'aJ vs. Ked +onstraints: a) (tates impose lots o" taJ limits: &1) (ubstantive 8 limits on taJ rate &i.e. 0rop 1* 1D cap total), limits on increases &i.e. 0rop 1* )D rate cap), limits on $ield &i.e. Mass 0rop ) ^ see *,>,), limits on $ield as D o" value &also 0rop ) ^) Latter ) more about limiting gov%t: "ormer two about protecting homeowners. &)) 0rocedural 8 voter approval &i.e. )-* vote) &*) Uni"ormit$ &as modi"ied b$ state rules permitting clari"ication, or in the sense o" "ull value) b) Ked limits: &1) (ubstantive 8 no limits on taJation in constitution. Gevenue raising taJes are not 50 violation &see *,>G) 2o such thing as too high. +ourts won%t ?udge reasonableness &though i" taJ is regulator$ 8 it ma$ become a ta.ing?) &)) 2o procedural limits either &*) =0 claims do appl$ 8 though enormous de"erence to states% abilit$ to classi"$ &review is onl$ rational basis). Gare violation 8 but 1llegheny "ittsburgh case 8 when assessment violates state law, there%s "ed discrimination within classi"ication scheme &??) &,) 1st amendment limits &/) +ommerce clause 8 taJation on activities primaril$ re. commerce - out@o"@ staters?? A!! !!) (t!F F !F & C-ar/ !

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;'he Gise o" the 2on@'aJ 'aJ< 8 wa$s o" pushing "ees out until the$ start to resemble taJesBwhat distinguishes taJes - "ees? ssessments 8 h$bridB +aps, uni"ormit$ issues, voter approval all depend on distinction. S* &ial A!! !!) (t! 8 !c5ally v 0eanec% &1) ( %s basic wa$ communities "inanced in"rastructure. +harges on speci"ic prop%s receiving &bul. o") bene"it. (ome public bene"it &otherwise no gov%t interest) but also special-local-private bene"it &this ?usti"ies gov%t charging them speciall$). &)) 'eanec. council decided to improve streets in a bunch o" neighborhoods 8 residents didn%t get to choose. +ompulsor$ use &as compared to voluntar$ 8 "ees 8 choose whether to use: or choose to regulate amount o" use). ssessment there"ore coercive. 'hough can onl$ be speciall$ charged "or things with special neJus Wprecursor to 5ollan?X &a) (ometimes communit$ input is available 8 vote-negative vote &*) ssessment here b$ "ront "ootage. lso sent assessors out to ensure reasonable. lso public hearings. L7%s still complained 8 assessment not e>ual, ;no attempt to assess "or peculiar bene"its< 8 "lag lots, corner lots, homes worth more though "ront "ootage sameB bsolute overcharge &wrt bene"it received) as well as relative overcharge &lac. o" uni"ormit$ v@a@v other 7%s). &,) +': lac. o" uni"ormit$ applies onl$ to taJes: ( %s not a taJ. 6ust a reimbursement to municipalit$ "or bene"it: not a revenue@raiser. +it$ has police power to install bene"its: ! to collect reimbursement due to discrete private bene"its. s to absolute overcharge: court assumes cost L bene"it: burden is on _ to prove wrong. &+it$ can%t collect more than cost, otherwise it%s a revenue raiser - taJBso costs ! bene"its are ceiling "or charge 8 can%t be "orced to pa$ more than what $ou get 8 or also a taJ.) &/) ( %s traditionall$ used "or special bene"its appurtenant to land &paving, streetlights) 8 ph$sical in"rastructure: usuall$ a one@time charge. &1) oweverB=Jpansion o" concept o" bene"its 8 ongoing services, area@wide improvements, not based on "ootage but on assessed valuation, directl$. Aas loo.-"eel-concept o" prop ' O. 2o particular bene"it calculation, but a rate on assessed valuation. Used "or @ i.e., cit$ par.ing, tourism o""ice &a) +haracteristics o" ( %s - taJes: *,?+ &i) ( supports local improvements &! should be proportional *,?G): taJ "inances general operations &ii) ( is one@time charge: taJ is annual &iii) ( re>uires direct bene"it: taJ doesn%t &iv) 4oth coercive: gov%t decides to provide service L7%s can%t necessaril$ re"use *,,2 &v) =Jpansive view o" ( %s &blending into taJes) 8 see *,,> &vi) Who pa$s: can be de"ined b$ territorial distinctions, or b$ use distinctionsB*,,? &vii) Aow much $ou pa$: ( %s ma$ not eJceed cost o" pro?ect. Cndividual bene"it determinations 8 see !c5ally &"ront "ootage assessment), !orristown &prop value assessment) S* &ial B ( fit! Ta9 8 !orristown &1) 5i""erent than a taJ: targeted at particular lots &businesses) within particular neighborhood. +omplaint 8 it%s a taJ that violates uni"ormit$. &)) C" it%s a taJ 8 unconstitutional. 4ut court: *,,0, nature o" bene"it is general, not possible to ma.e speci"ic determination o" peculiar bene"its, a value assessment is appropriateB_%s didn%t prove assessment didn%t match bene"it. &'hese arg%s could have proven it was a taJ, not an ( B) 4ene"it applies to discrete subpart o" communit$. &L7%s could argue, no bene"it to

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me 8 i.e. warehouse doesn%t bene"it "rom tourism board 8 and i" this is not a taJ then it%s wrongl$ applied. +ategor$ wrongl$ de"ined.) &*) 'hese (C5%s are hard to challenge though 8 bene"its are general: S goes into speci"ic "und. Malue added ma$ be mar.et value rather than HcurrentI use value. &Loo. at +hicago Mc+ormic. place eJamples, *,,G;,D) &,) Man$ o" these cases 8 over-underinclusive arguments. +ourts generall$ de"er to cit$ 8 but sometimes re>uire cit$ to show some ?usti"ication. &/) 4ene"it taJ distinguishable "rom general taJ: &a) +oercive &b) 5iscrete bene"it &?usti"ies ! limits taJ 8 no more than cost-bene"it) &c) Kor discrete program &earmar.ed) &1) User charges-regulator$ "ees: &a) lso discrete &"und certain program, or pa$ "or something particular) &b) 4ut voluntar$ 8 not coercive 8 $ou choose to use - how much &c) 'hese are attractive to avoid limits on taJation &d) 0olic$ too: e""icienc$, internali#ation o" costs, e>uit$ &i) 3ou pa$ more directl$ "or what $ou use 8 water, gol" 8 whereas sometimes subsid$ b$ all ma.es sense 8 i.e. education 8 or partial subsid$ to mass transit since it bene"its ever$one-less carsB &e) User charges usuall$ earmar.ed, go toward maintaining a certain service R /ulator. F ! & U! r C-ar/ ! &reg "ees, commercial use o" public land charges, utilit$ "ees). Gemember to as., does LG see.ing to impose "ee have legal authorit$ to do so &speci"ic grant or home rule)? Cs the local "ee preempted b$ state law &limited in Gary 45)? &1) Sinclair "aint 8 r /ulator. f on those using lead in production, to pa$ "or child lead screening. &a) Cmportant distinction between "ee - taJ due to 0rop 1* and )-* vote re>%ts "or taJes. &b) 5oesn%t seem ver$ voluntar$ &though >uasi@vol: $ou could prospectivel$ stop using lead ! thus escape "ee) &c) +': some activities are permissible $et sub?ect to regulation &licenses ! permits 8 gov%t regulates them ! charges $ou). C" regulation ?usti"ied, then it%s o. to put cost on regulatee. &i) lmost li.e a tort "ee though? Kund? 0ermit activit$ but cover costs, state will use S to screen victimsB &ii) FMitigating e""ects% "ee 8 to de"ra$ costs o" speci"ic t$pe o" business operation B creative use o" Fregulator$% concept in that it has e""ect o" regulating "uture behaviorBsee *,+,;++ &iii) G4: "ee here doesn%t reall$ "all into paradigm o" "ees to cover costs o" oversight - monitoring - processingB &)) City of Gary, 4ndiana v( 1meritech 4ndiana &C2 )EEE) 8 *ro*ri tar. f !. &a) Gecall that cities are proprietar$ in that the$ own land: cities give permission to private entities to use land and charge them a "ee. Kees are voluntar$ in that private entities don%t have to use public land. 0rivate entities get bene"it o" use o" public land. &b) +it$ charged 1/D o" gross revenues o" meritech. meritech argued that charge should be "or management costs onl$, i.e., the costs it imposes on Gar$. &c) Cssue is whether there%s a limit to what +it$ can charge.

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0ower to charge "ee is within AG powers &authorit$ doesn%t eJtend to taJ, so "ee v. taJ distinction matters). &ii) (tatute limited "ees to ;"air and reasonable compensation< &*,+D) out@o"@poc.et costs onl$ or share o" private revenues? &d) Aolding: 'here%s no reason +it$ can%t ma.e a pro"it b-c +it$ is providing a mar.etplace to meritech &*,@0, as in 1ce #ent)1) Car). 'hus, this is a "ee, not a taJ. Aowever, C2 legislature limited "ees to ;management costs< &*,@1), which preempts +it$%s "ee. 'hus, +it$ cannot even ma.e a reasonable rate o" return. &e) 2ote that in assessing "ees v. taJes, cts give weight to di""erent "actors &voluntariness? receipt o" service? proportionalit$? earmar.ing?) &i) +t here paid most attention to &1) voluntariness and &)) bene"it received b$ meritech. &ii) +t did not give much attention to revenue@generating nature o" "ee, i.e., the big di""erence b-t the cost to the +it$ and the "ee paid b$ meritech. lthough the "ee ma$ have re"lected the bene"it to meritech, it was much greater than the cost to the +it$. &We don%t see a "ee li.e this in an$ other case.) &iii) +t did not give much attention to ongoing nature o" the "ee, as opposed to one@time pa$ment. $eatty v( !etropolitan St( Louis Sewer *istrict &M7 1QQ*) 8 user "ees-service charges. &") Metro (ewer 5istrict charged "or sewer service &"lat "ee "or residences). M7 &through Aancoc. mendment) re>uires voter approval "or ;taJ, license, or "ees< &*,@?). #oberts &1QY)) interpreted ;"ees< as "ees &thus, all charges sub?ect to voter approval). ,eller &1QQ1) overturned, "inding that ;"ees< can%t reall$ mean "ees b-c "ees are sel"@limiting &tied to costs, not revenue@generating): thus, ;"ees< must mean "ee@li.e taJes. &g) +t anal$#ed ,ellers "ive "actors "or distinguishing "ees and "ee@ li.e taJes: *,@?;@, &i) When is the "ee paid? Cdea is that "ee is more "ee@li.e i" it%s paid with use, not periodicall$. 4ut this is sill$ b-c some taJes are paid with use &sales taJ) ! some "ees are paid periodicall$ &gas ! electric). (o, G4: irrelevant. &ii) Who pa$s the "ee? =ven i" almost all residents pa$ it could still be a "ee &it%s still voluntar$). G4: this "actor doesn%t add an$thing. &iii) Cs the amount o" the a""ected b$ level o" goods or services provided? 4mportant to analysis 8 although +it$ could argue that "lat rate is administrativel$ cheaper and more e""icient, and there%s not much variation among users, it loo.s li.e a taJ. &iv) Cs the govt providing a service or good? 4mportant to analysis 8 +it$ provides a service in return "or a direct pa$ment, so loo.s li.e a "ee. &v) Aas the activit$ been historicall$ and eJclusivel$ provided b$ the govt? G4: this isn%t relevant b-c almost an$ govt service has a private@sector analogue, so test is alwa$s ambiguous. &h) +t held that charge was a taJ, so sub?ect to voter approval.

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G4: ct got it wrong, but it%s understandable wh$ the ct came out this wa$. $olt v( City of Lansing &MC 1QQY) 'o compl$ with +W , +it$ needed to separate storm sewers "rom sanitar$ sewers. +ost S1V1m over *E $rs. +it$ could do this thru taJes, but it would re>uire voter approval &under MC constitutional amendment). Cnstead, +it$ set up "und to impose charge on each parcel o" prop in +it$ based on si#e o" lot and D impervious land. &` ) acres resid "lat rate: commercial-industrial or Z ) acres resid calculation.) Ta9 or u! r f L &a) Kee@li.e characteristics o" charge: &the "actors as outlined b$ G4) &i) =armar.ed &not into general revenues). &a) 4oo.%s "actor 1: Must serve regulator$ purpose rather than revenue raising purpose. &ii) 4ene"it to L7s &continue getting sewer service). &a) 4oo.%s "actor 1: user "ees must be proportionate to necessar$ costs o" the service. &iii) (ome element o" 'olu(tari( !!. &! *,G0) &b) 4ut ct held it was a taJ. &i) =ver$one was charged, not ?ust the )/D o" L7s who still needed services to be separated &*,G1). &a) *issent 8 must see sewer s$stem as a whole. Ct%s unclear "rom the "acts whether whole s$stem would be shut down i" +it$ didn%t compl$ with +W . &ii) +harge was not voluntar$. +t was troubled b$ idea that L7s could change use o" land to decrease "ee b-c it inter"eres with use o" prop. 4ut isn%t this a straight"orward charge "or the costs that $our land imposes? +t could have made a bigger deal out o" the "lat rate "or ` ) acre parcels. &a) lso &in boo. *,G2) lac. o" correspondence between charges ! bene"it con"erred &cit$ "ailed to di""erentiate an$ particulari#ed bene"its), ! lac. o" signi"icant element o" regulation are important. &iii) +harge paid "or capital costs. &a) G4 argues that all service "ees re"lect some in"rastructure improvements and maintenance. (ome capital cost is part o" ever$ "ee\ &b) (till, the problem here was that the charge was imposed over *E $ears, but the in"rastructure would last Z *E $ears. &G4 "inds this persuasive, but consider how much scrutin$ this could re>uire.) &c) *issent 8 enough that "unds are earmar.ed "or the sewer s$stem. &iv) !ore factors = reasoning 8 *,G> City of untington v( $acon &WM 1QQ1) +it$ charged "ee "or "lood and "ire protection 8 "lat rate R amount based on s>uare "ootage. F or ta9L &C" taJ, it%s sub?ect to state limitations and schools are eJempt.) &a) Kactors: &i) uthorit$ 8 not in >uestion. &ii) 2ot voluntar$.

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0roportional onl$ in that people can control s>uare "ootage o" their buildings. &iv) Geceipt o" service? =ver$one has to pa$, and it seems li.e even i" some didn%t, the$%d get protection. 4-c pa$ors do not get direct receipt o" service, it doesn%t loo. li.e a service "ee. &v) 2ature o" "lood and "ire protectionPspillover e""ectsP ma.e it di""icult to eJclude non@pa$ors "rom pa$ors. &b) 5espite these "actors, ct held not a taJ b-c it%s not imposed li.e a taJ 8 not ad valorem &i.e., it avoids the appearance o" a taJ), ! it%s earmar.ed. &c) C" this is a "ee, what wouldn%t be? 'his is an eJtreme decision. &i) (ituation o" 7merson College &*,D,) is much more common. Kee was imposed on tall buildings "or greater than usual services. +t struc. down b-c mone$ didn%t go to discrete "und "or tall buildings, so bene"its weren%t limited to pa$ors. lo*) (t #)*a&t F ! &=Jactions?) +haracteristics: &a) 5CKs re"lect cost o" growth 8 costs are non@linear, ?agged when new in"rastructure is re>uired. Li.e an ;entr$ "ee,< a condition "or development to proceed. 2ot ?ust a circumvention o" taJ limitations, but the desire "or growth to pa$ "or itsel". &b) 7ne@time &li.e a ( ), but paid be"ore the development. &c) 'ied to ph$sical improvement o" land &li.e a ( ). &d) Ma$ be passed "orward to "uture homeowner or ma$ stic. with developer. &e) 0eople who pa$ "ee might not receive the bene"it. &") pproJ. )E states have eJpress authori#ation "or LGs to impose 5CKs: ma$ also be authori#ed under home@rule. &g) (tate cts t$picall$ sub?ect 5CKs to 2ou5l ;( 9u! t !t: &1) &o(( &tio( b-t the need "or services that growth places on the communit$ ! and eJaction imposed, &)) *ro*ortio(alit. b-t eJaction and burden created b$ proposed development. &*olan?) ome $uilders 1ssn of Central 1> v( City of Scottsdale & T 1QQV) &a) ll new developments were charged water resources development "ee based on categories &e.g., single@"amil$ homes, apartments, other uses according to acre-"oot o" water use). Mone$ went to water resources "und. 0 challenged validit$ o" the "ee b-c bene"it to developers who paid was speculative &not clear whether the$ would actuall$ bene"it). &b) +t upheld "ee 8 there was a lo/i&al &o(( &tio( b-t need "or water imposed b$ growth ! earmar.ed "ees. 'hus, there%s no need to show direct bene"it to developer or mature, loc.ed in plan "or earmar.ed "unds. +t didn%t give much attention to proportionalit$. &c) 'his 5CK eJpands the concept o" a ( : it%s paid be"ore development ! it%s cit$wide, not neighborhood based. Cssue that deserves more attention is the e>uit$ o" charging onl$ newcomers, not old@timers &hori-ontal e?uity). lso consider 5CKs as an alternative to using #oning to control growth. Country 2oe v( City of 7agan &M2 1QQV) &a) +it$ adopted road unit connection charge as a condition to issuance o" all building permits in the +it$.

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&,)

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+t struc. down charge on proportionalit$ grounds 8 charge had not been periodicall$ updated to account "or changes in costs, revenues, or patterns o" development &*+0,). &i) Lac. o" proportionalit$ violates principle that 5CK must re"lect the cost o" in"rastructure improvements necessitated b$ the development. &ii) Cn addition, the mone$ collected was not earmar.ed to "und pro?ects necessitated b$ new development: it was intermingled with general road "und. &iii) 0lus, cit$ was not home rule, so no authorit$ to impose "ee: and state had preempted. *+0? &c) 5e"inition o" 5CK: *+0? &i) Korm o" development eJaction in "orm o" predetermined S pa$ment: assessed as condition to receiving permitapproval: pursuant to LG power to regulate growth: levied to "und services nec. "or new development: in proportionate amount to public need generated b$ new development. 8olusia County v( 1berdeen &KL )EEE) &a) KL has constitutional re>uirement "or "ree public schools. +ount$ assessed public school impact "ee on new homes. 0 was mobile home par. that had minimum age re>uirement. &b) Kee had two problems: &i) C" applied to all prop owners in "lat "ee, some people won%t get an$ bene"it b-c the$ don%t have .ids. C" "ee is not tied to discrete bene"it, isn%t it a taJ? &ii) =ven i" prop owner has a child, isn%t "ee a tuition charge? &c) +t struc. down "ee. Gegarding the taJ issue, even prop owners w-o .ids gain bene"it 8 the "ee is tied to the prop, not the pa$or: houses turn over and will impose burden at some point: better schools raise prop values. &i) 4ut this argument does not wor. "or an age@restricted communit$, so must be eJempt &will never bene"it: do not burden). &ii) 'hus, ct distinguished homes that do not have .ids and that cannot have .ids. &Cs this a plausible distinction?) &iii) 'uition issue is harder. Ct%s not a user "ee b-c not paid per child: it%s not a taJ b-c not uni"orm &applied onl$ to newcomers). Ct%s closest to ( . 5CK%s ! 'a.ings 8 5olan = *ollan + *+1> &a) =Jactions cases &2ollan-5olan) 8 limited to land-ph$sical eJactions? &so n-a to "ees?) &b) 7r, (+ suggesting S can be a ', ir =rlich *+1, &+ case) &c) 7r, i" "ee meets double neJus &rough proportionalit$ ! relationship between gov%t purpose ! eJaction) 8 not a '. 4ut could be i" re>%ts not met.

L$

Borro1i(/ & % 5t Li)itatio(! *+??;o( 1. '$pes o" debt: aB %uratio( &1) (hort term debt &a) i.e., 23 +it$ 8 /lushing

**

2$

5ebt ta.en ?ust to cover temp de"icits, uneJpected revenue short"alls or increased eJpenses: S borrowed to balance budget &on basis o" eJpected neJt $ear%s revenues, or "ed "unds) &c) 5ebt repaid within a $ear &d) ' 2%s. G 2%s, etc &e) 2ot supposed to be part o" normal budget c$cle &") 'oo much repeated short term debt indicates "iscal problems, alwa$s running a de"icit, corruption? &)) Long term debt &a) 'o "inance large capital eJpenditures &"or larger pro?ects with long term bene"its) &b) 'oo eJpensive to "inance large pro?ects up "ront, plus not "air 8 "uture residents- generations will be using in"rastructure, so the$ are made to help "inance it down the road &vertical e?uity??) &c) Get "ull bene"it now, pa$ incrementall$ &same principal as a home mortgage) 5B Natur of t- o5li/atio( &1) General obligation debt &"ull "aith ! credit) &a) G7 debt bac.ed b$ "ull revenue raising capacit$ o" borrower &special obligation - non@guaranteed - revenue bond debt onl$ bac.ed b$ speci"ic revenue sourcesBmore common now) &b) 'otal obligation to pa$: ver$ attractive to lenders, due to bindingness, threat to taJpa$ers, due to bindingness. Lots o" limitations. &i.e. voter approval, special "unds, ceilings on amount o" debt or on D o" assessed valuationB) &)) Gevenue bond debt &discussed under state const( limitations, below) E(for& ) (t of Stat & Lo&al % 5t O5li/atio(! a) /lushing: 23 +it$ 8 eJplosion o" taJes, in"luJ o" "ed "unds, substantial program and union wor.er buildupBbegan to develop discrepanc$ between revenue-costs. +losed b$ short term notes. 5ebt ! interest grew ! grew. &1) 1QV/ mar.et got nervous 8 how will cit$ close the gap, repa$? 4orrowing no longer allowed. +it$ tried to convert short@term cit$ debt into long@ term state debt: get note holder to roll the notes over into long@term notes, bac.ed b$ speci"ic state revenues. 7therwise, cit$ said * $ear moratorium on pa$ing bac. short@term notes, and immunit$ "rom suits to "orce pa$ment. +it$ cut services and raised taJes: de"erred loans. &)) +ase: 23 constitution re>uired F"aith ! credit% behind cit$ borrowing. 5oes de"erment violate this? &a) +': debt L binding commitment o" cit$%s abilit$. Kaith ! credit clause re>uires cit$ to do whatever it ta.es to repa$. pplies in emergencies too. &b) +reditors end up with pre"erred position here 8 cit$ must pa$ them bac.B*+,+ &*) =""ects: strength "or states-cities to be able to use such well@bac.ed credit\ (o, better outcome "or state to ;lose< case since court%s emphasis made mar.et re@entr$ easier\ see *+,+ &,) 'his case emphasi#es binding nature o" state "aith ! credit clause. b) .S 0rust &re 0ort uthorit$ bonds) *+,@ 8 U((+ emphasi#ed binding nature o" U( +onst contracts clause. &1) 0 "ormed between 23@26. (ome S went to W'+, some to 0 'A. lso needed to satis"$ bond mar.et &)) 0 did lots o" bridges, tunnels, airports. Mass transit L a bottomless pit. ) states agreed 27' to appl$ an$ 0 S &"ees, tolls, etc.) to mass transit or GG%s other than 0 'A &or an$ non@sel"@su""icient thing), so long as bonds

&b)

*,

>$

outstanding. 0 made this commitment to lenders &no more GG%s), then state did via covenants. &*) 'hen came 1QV* oil shoc.s, environmental consciousness, cit$ wants more mass transit. Would be good to raise tolls a lot: subsidi#e. 4ut covenant against using "unds "or that. 1QV, state repealed covenants retrospectivel$. S ends up going to mass transit. &,) +': repeal invalid under N +lause. N%s protected, especiall$ between states-gov%ts and people. 5anger with N +lause: don%t want people to contract around public lawB whenever private citi#ens involved, real N obligation. +lause is meaning"ul. &/) (teps court ta.es in anal$sis: &a) Kirst see i" N eJists 8 not ever$ law is a N &Aere, $es, the states% covenant. 2ot an issue.) &b) re r ! r' 2 *o1 r! involved? contract binds current and "uture gov%ts. (tates can%t contract about ever$thing 8 to do so would be li.e const amendment &so vote needed?). Cs legislature allowed to bind itsel" so strongl$? &i) +': &gives circular answer) Gov%t has some core reserved powers it can%t N awa$. *++1 Aere, gov%t has power to contract. &ii) Ma$be some Ns creating negative cov%s would in"ringe on substantive polic$B&unclear) t some point it ma$ get into reserved powers. 4ut not here. &c) #)*air) (t to changing N%s? Was there an outright repudiation o" obligation "or a while &li.e in /lushing, where the$ did pa$ bac. but not till later)? &i) Aere, no re@negging o" pa$ment: ?ust terms changed. +ore pa$ment commitment didn%t changeBCmpairment la$s in removing ban on using "unds "or GG%s 8 threat to debt service pa$ments? +ourt sa$s though that not all N modi"ications are ;impairments.< Wdoes this treat govt ,s more leniently than private ,s??X &ii) *++0, repeal o" covenant too. awa$ Fan important securit$ provision% 8 so perhaps certaint$ o" repa$ment was reduced? 5ebt not as secured? &G4: 'his seems to be guesswor. though. (omewhat ps$chological wrt what%s valuable-not in bond mar.etB) &d) C" so, 8u!tifi 2? Geasonable ! necessar$ "or important public purpose? &i) 2o emergenc$ li.e 5epression or suchBG4: impairment is wea. but ?usti"ication arg is better. (ee *++>. c) 4etween these two cases 8 ironclad obligation "or state-LG debt obligations &helps in long run b$ having good credit, good basis "or debt.) Stat Co(!titutio(al Li)it! o( S&L % 5t a) Kull "aith ! credit obligations in general bonds: source o" enormous securit$ "or borrowers, leads to nice simple borrowing pledges: we%ll pa$ $ou bac.. & /lushing was general ob., .S 0rust was not.) 4U' once gov%t pledges ""!c, voters are bound. (till, bene"its accrue though all around 8 in "inance communit$, to construction world, to service recipients. b) 'o deal with binding, Fseductive% nature o" debts, states impose lots o" limits. 5anger o" debt seen in 5epressionBdebt limits began. c) Marious "orms: 'ot r a**ro'al o" debt, new taJes re>uired "or new debts, 2ollar & ili(/! on debt &with re"erence to assessed value-revenue-B)

*/

d)

?$

Wa.! to / t arou(2 li)it! 8 state const amendment &i.e. L: no debt allowed ever: but *E@something amendments\ *++D), or elseB6ust as non@taJ taJes &! special districts not bound to rules) grew to escape limits: we have (o(;2 5t 2 5t: revenue bonds ! moral obligation bonds. &1) R ' (u Bo(2! &basic, common "orm o" non@debt debt) &a) a.a pro?ect "inance 8 bonds whose interest is "inanced solel$ b$ revenue "rom operation o" "acilit$ being "inanced. &b) i.e. bond bu$ers debt bridge built user tolls collected tolls used to pa$ o"" interest-debt to bond bu$ers. &c) Gevenues onl$ are pledged 8 not ""!c-revenue raising capacit$. &4f bridge falls down, bond holders are screwed??) &d) 5istinctive characteristics: ( 1 r ' (u is involved &that wouldn%t eJist but "or the bonds): revenues are f ! (ot ta9 !: net@ plus &more revenues being generated than debt accrued &?)). Gev bonds ma$ also involve other debt obligations 8 i.e. guidelines on how to set-raise tolls, etc. &e) Gev bonds tend to be ver$ sa"e: interest onl$ slightl$ higher than G7 bonds. Gev bonds have recentl$ been pushed into new domainsBi.e. looser conneJ between "acilit$ "inanced ! use o" revenuesB T- Ri! of t- No(;2 5t % 5t a) 'he (pecial Kund 5octrine: (o long as state limits its obligation to the Fspecial "und% o" S generated b$ the pro?ect ! doesn%t obligate general revenue, r ' (u 5o(2! ;debt.< &6ust as some assessments, "ees ! charges are not taJ: some t$pes o" borrowing are not debt.) (uch bonds are generall$ new S, not pulling S "rom other taJes, no bindingness o" revenue raising capacit$. &1) Convention Center 1uthority v 1n-ai &AC case) &a) (tate had maJ%d debt limit. (tate raised hotel taJ ! pledged incremental revenue to pa$ o"" bonds "or +onvention +enter. (o not a direct pledge o" ++ revenues 8 but indirect "unding &more hotel taJ collected as a b$@product o" ++B) &b) 'his is a stretch 8 i" taJ raised now but ++ isn%t "inished "or ) more $ears, is it legit to use current taJ revenues that aren%t reall$ "rom ++ guests?? &c) 2onetheless the +' upholds the user taJ: reasonabl$ close "it &( 9u!). 7N "or user taJ to precede "acilit$. F(eat o" the pants reasonableness.% Ct is li)it 2 lia5ilit. &so low threat to taJpa$ers): ( 1 r ' (u !: and r al ( 9u! 5 t1 ( fa&ilit. 5 i(/ 5uilt & ta9 &willingness to tease out this relationship varies by state thoughB) (tretch "rom classic pro?ect "inance but o.. &d) +' distinguishes 7a%in &C2 case) which attributed all o" hotel-user taJ to new "acilit$Bthis case didn%t go as "ar. &)) !aroc%ie v 3agoner &WM case) &a) No &o(( &tio( between school building bonds ! consumer sales taJ. +ourt sa$s no. Not ( 1 r ' (u !F (o ( 9u!F r *r ! (t! t-r at to ta9*a. r! &diverting eJisting taJ would mean a new taJ elsewhere)Bstate relies solel$ on limited liabilit$ to ma.e arg in "avor 8 not enough. &*) (tretching the doctrine 8 rather than using admission "or "or +onvention +enter to pa$ bonds, use special taJes &i.e. on hotels) &AC, C2 cases) L taJing activit$ generated b$ the pro?ect. &a) City of artford v ,irley 8 taJ increment as special "und

*1

b)

+it$ wanted pro?ect to help investment in blighted area: raise taJ, incremental revenue collected used to pa$ "or pro?ect. Cs this debt? &ii) rg that it isn%t: limited liabilit$, bonds onl$ paid out o" new "unds, no obligation on cit$ revenue raising capacit$, pro?ect "inance aspect 8 no diversion o" other "unds, S collected b$ pro?ect pa$s "or itsel". Cncrease in prop taJ value is b-c o" pro?ect &iii) 4ut +': long term commitment to divert "uture revenues: use o" prop taJ is troubling. 7ther bonds use other charges, hotel-"ood taJBusing prop taJ carve@out is not o.. Kragments prop taJ. Cncrease in land value could occur outside o" pro?ect, so prop taJ increment "inancing not nec limited liabilit$. &iv) 'his is a close case 8 ver$ close to pro?ect "inance 8 other courts go the other wa$. 2ote that court wasn%t sa$ing bonds unconst, but that enabling statute sa$ing bonds debt is wrong: and since +it$ had alread$ surpassed const debt limits, that%s wh$ it%s not o. here. &v) 'his loo.s a lot li.e pro?ect "inance 8 but +' doesn%t accept premise that it is, that all revenue is due to pro?ect. Not tru li)it 2 lia5ilit.. Ct%s a threat to eJisting revenue. S r'i& 0ur&-a! : C" cit$ wants long term N "or services &i.e. paper clips) 8 to loc. in price, supplier, or renting space &guaranteed space is better) 8 long term commitment might be needed b$ vendor "or capital investment 8 i.e. investing in special e>uipment to produce LG@speci"ic items. &1) Cssues o" cheaper cost, assurance o" suppl$, assurance to vendors ma.ing investments "or LG. Cs a long term service purchase commitment debt? &)) =arl$ court decisions: true service N%s &periodic pa$ment, tied to receipt o" products inthat period) is not debt. (een as series o" short term agreements. '$picall$ N%s sa$ dut$ to pa$ tied to receipt o" services. &a) 4ut debt@li.e >ualit$, especiall$ when used as incentive on LG%s behal". &i.e., $ulman 8 state wanted o""ice building built 8 can%t do itsel" due to debt limits: ma.es long term commitment "or periodic pa$ments to contractor). &*) !assey &M case) 8 bond bu$ers% S went to WM ' "or Metro s$stem &operation ! maintenance: construction alread$ dealt with as debt): "ares pa$ bac. bonds 8 this would be classic pro?ect "inanceBbut Metro "ares don%t pa$ totall$ "or itsel". (o agreements between M -5+-M5 to pa$ into Metro ! cover s$stem costs. 5ebt? &a) LG%s tried to st$le it as service purchase 8 bu$ing Metro services &b) 1st case, +' throws out 8 that%s not what it is, it%s a share o" operating de"icit. (et@up is, pa$ment provided onl$ i" service provided 8 but court points out: calculation o" pa$ment amount had no relation to amount o" service provided, or cost o" particular service. &c) &LG%s rewrote statute) &d) )nd case, "ormula based on amount o" service in each ?urisdiction &to determine amount o" pa$ment) 8 o. with court as a ;service purchase,< 8 not debt. &=ven though charge not necessaril$ e>ual to actual cost o" operating) &,) $ulman 8 another evasion o" debt limits b$ waiving service purchase idea 8 even more manipulable.

&i)

*V

&B

(tate contracts with developer to build a state building. 4ond bu$ers% S went to building. 5eveloper pa$s bac. bonds b$ charging state Frent%, based on overall cost o" construction, eJpense, pro"it. &b) G4: 5eveloper is ?ust a middle man 8 has nothing really to do with "inancing. 6ust an evasionar$ device. Ma?or concern was ?ust to avoid debt limit. &c) 2onetheless +' thin.s it%s o.. (tate could lease a building "or )/ $ears: interprets this arrangement as a lease rather than installment@purchase arrengement. Ct%s a lease b-c o" clauses providing "or damage repair, lease termination. 2ot a totall$ binding obligation 8 so ! r'i& *ur&-a! . &d) G4: real deal here 8 LG probabl$ at debt capacit$, or didn%t want voter approval. &/) 'hese ) cases demonstrate 8 not ?ust as simple as, service purchase L pa$ment in eJchange "or services. Method o" calculation matters too. 'his is a little di""erent though than paper clips &a discrete item that%s shopped "or?) 8 here the item ;purchased< has been created b$ LG%s in the 1st place. &1) +ommon to have declarator$ ?udgment at beginning sa$ing bonds-debts constitutional 8 else later LG can get out o" debt-bond b$ having it declared unconstitutional\ &V) W0(( bonds comments &*+D,;D+) 8 ;- ll or -i/- 1at r< clause L huge liabilit$. (hould have gone thru "orum re>uirements 8 voter approval 8 the$ didn%t, so not o.. &a) (ome sense o" +' treating W0(( cities li.e children &N capacit$ o" minors) 8 eJcept that court ma.es them ta.e responsibilit$. =ven though small cities, li.el$ no att$%s on sta"" "or adviceB No(;A**ro*riatio( Clau! !F Moral O5li/atio(!F Borro1i(/ 5. 0u5li& Aut-oriti ! &1) Ultimate >uestion: what i" LG doesn%t pretend to be bu$ing an$thing? (tate-building authorit$-bond holders arrangements 8 where building authorit$ builds, state sa$s it%ll send S to pa$ debt service. 2o revenues generated b$ 4 . LG ?ust sa$s the$%ll pa$ amount o" S needed to cover debt serviceBon a $ear@to@$ear determination. Moral o5li/atio( 8 is this ;debt< or is it nothing? &)) *y%es case 8 M court 1st sa$s, debt. 'hen reverses itsel" ! sa$s, nothing. 23 court sa$s straight awa$ it%s nothing. C" $ou aren%t Fbinding% $oursel" 8 it%s a non@binding commitment. &a) Kair"aJ +ount$ 8 deal with 2o. M 'ransportation 5ist: '5 will issue bonds, get S, use to build par.wa$ +ount$ wants. +ount$ promises to send S to cover debt service, "rom general revenues, contingent upon annual appropriation. 2ot a pledge o" "ull "aith ! credit. 4ond bu$ers also told, bonds bac.ed b$ +ount$ but not general obligation. 2ot a N: the$%ll pa$ i" the$ want to pa$\ &b) 0romise to appropriate is non@binding, is this unconst debt not approved b$ voters? &c) +': not a special "und eJception since road doesn%t pa$ &and no gas taJ or something related to pro?ect S generated to rel$ on either). Mone$ is coming "rom general "unds. Ma$ not be legall$ binding, but practicall$ bound &*+DD). &d) 5issent: ma?orit$ con"lates ;practical e""ect< ! ;legall$ obligated.<

&a)

*Y

&e)

&*)

&,)

&/) &1) &V)

Gehearing: court sa$s there is a di""erence a"ter all: li.e dissent had pointed out\ (ee *@02: ma?orit$ sa$s, ;%(ub?ect to appropriation% "inancing does not create constitutionall$ cogni#able debt b-c it does not impose an$ en"orceable dut$ or liabilit$ on the +ount$.< &i) *issent: ;Cs an$one so naave that the$ trul$ believe that the +ount$, in realit$, is not compelled to ma.e annual appropriations until the bonds are retired?< Schul- v 5' 8 state deal with 'hruwa$ uthorit$ which issues debt "or various highwa$ pro?ects. &a) +' sa$s state is not automaticall$ liable "or public service authorit$ debtBstate is barred "rom lending its credit: but state can give S to them and commit itsel" to do so. *@0@ Moral obligation ma$ eJist 8 but it%s not legall$ binding. 2oncommittal: ;Laws ma.ing annual appropriations "rom a special "und do not ! cannot create debts within the meaning o" the re"erendum re>uirement.< *@0G;0D &b) G4: this is reall$ a scam, thruwa$ is ?ust a conduitBbac.door "inancing. *@1? 'his .ind o" "inancing is reall$ common "or 23( though. Ct needs S and its credit is bad. General idea here 8 debt has >uasi@constitutional aspect that binds into "uture. 4ut commitments to run programs, spend mone$ on certain things are not debt 8 it%s a good idea 8 e""icienc$ 8 to .eep programs going, but not binding upon "uture governments &whereas promise to pa$ Fcome hell or high water% certainl$ is debt). 5ebate over whether limits, di""erent .inds o" "inancing are good 8 what%s the right level o" debt limitations? &see *@1,;1+) G4: so much evasion, that we end up with ?ust costs o" limits, not bene"its. 'hat doesn%t necessaril$ mean abandon them thoughB? 0ublic authorities 8 sometimes reall$ needed, but have problems. see *@12;1?.

*Q