GREATER NEW BRAUNFELS HOME BUILDERS ASSN. v. City of New Braunfels

240 S.W.3d 302, 2007 WL 2214519
CourtCourt of Appeals of Texas
DecidedAugust 22, 2007
Docket03-06-00241-CV
StatusPublished
Cited by4 cases

This text of 240 S.W.3d 302 (GREATER NEW BRAUNFELS HOME BUILDERS ASSN. v. City of New Braunfels) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GREATER NEW BRAUNFELS HOME BUILDERS ASSN. v. City of New Braunfels, 240 S.W.3d 302, 2007 WL 2214519 (Tex. Ct. App. 2007).

Opinion

OPINION

DIANE HENSON, Justice.

The Greater New Braunfels Home Builders Association, David Pfeuffer, Oak-wood Estates Development Co., and Larry Koehler (collectively, the Developers) appeal a judgment rendered in favor of the City of New Braunfels in a declaratory-judgment action filed by the Developers. The Developers sought (1) declarations to invalidate certain portions of three succes *304 sive ordinances adopted by the City that imposed fees for stormwater development and connection on all new development and (2) a permanent injunction against the City’s enforcement of those portions of the ordinances. The Developers argued that the City failed to follow the statutory requirements of subchapter C of chapter 402 of the Texas Local Government Code when imposing the fees and that the fees are illegal drainage charges, illegal impact fees, and unreasonably discriminatory. After a trial on the merits, the trial court ruled in favor of the City, finding that because the stormwater connection fee “is not intended for use to off-set capital improvements,” it is neither an impact fee under chapter 395 of the local government code nor a drainage charge under chapter 402 of the local government code. The trial court found that the City’s adoption of the ordinance imposing the “stormwater connection fee” was authorized under the City’s police power as a home-rule municipality. The trial court also found that the complaint concerning the earlier ordinance that imposed a “stormwater development fee” is moot because that ordinance was superseded by the later ordinance imposing the “stormwater connection fee.” Because we find that the stormwater connection fee and the stormwater development fee are drainage charges under chapter 402, that the issue concerning the earlier ordinance is not moot, and that the City failed to follow the statutory requirements imposed by that chapter, including publishing notices, holding hearings, assessing the charges against all property owners within the service area, and exempting lots on which no structure exists, we will reverse the trial court’s judgment and render judgment declaring that the complained-of portions of the City’s ordinances are invalid. We will remand the case for the trial court to reconsider the Developers’ request for an award of attorneys’ fees.

BACKGROUND

This case presents the issue of what restrictions, if any, apply to a home-rule municipality once it adopts subchapter C of chapter 402 of the local government code in imposing drainage-related development fees.

The Statutory Scheme

Before reaching the merits of the Developers’ issues, it is helpful to understand the history and structure of subchapter C. Subchapter C was enacted in 1987 and is known as the “Municipal Drainage Utility Systems Act.” Tex. Loc. Gov’t Code Ann. § 402.041 (West 2005). The legislature found that authority was needed to “permit municipalities to establish a municipal drainage utility system within the established service area; ... provide rules for the use, operation, and financing of the system; ... [and] prescribe bases on which a municipal drainage utility system may be funded and fees in support of the system may be assessed, levied, and collected.” Id. § 402.042(a)(1), (2), (5) (West 2005) (emphasis added). Section 402.043 provides that this subchapter applies to “any municipality.” Id. § 402.043 (West 2005).

Section 402.045 provides that the governing body of a municipality may adopt subehapter C through an ordinance that declares the drainage of the municipality to be a public utility. Id. § 402.045(a) (West 2005). Subchapter C places express limitations on the charges that a city can levy to finance the drainage system. Section 402.045 provides that a municipality “will establish a schedule of drainage charges against all real property in the proposed service area.” Id. § 402.045(b)(1) (West 2005). Section 402.045 also requires that a municipality hold a public hearing before levying drainage charges and that notice be published *305 three times before the hearing. Id. § 402.045(e), (d). Section 402.047 identifies the factors on which “the governing body must base its calculations” in setting the charges. Id. § 402.047(b) (West 2005).

Subchapter C defines a “drainage charge” to include “the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefited property.” Id. § 402.044(4)(A) (West 2005). “Cost of service” is broadly defined to include the prorated cost of “the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefited property; ... all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the , benefited property; ... [and] the administrative costs of a drainage utility system.” Id. § 402.044(2)(B), (D), (G). “Drainage charge” is also defined to include not just a charge levied to recoup the cost of service, but also a charge to pay for capital improvements — the “funding of future drainage system construction.” Id. § 402.044(4)(B).

Section 402.053 provides that certain types of property “shall be exempt from the provisions of any rules or ordinances adopted by a municipality pursuant to this Act,” including “a subdivided lot, until a structure has been built on the lot and a certificate of occupancy has been issued by the municipality in which the property is located.” Id. § 402.053(c)(3) (West 2005).

The City’s Adoption of Subchapter C

Pursuant to the statutory scheme described above, in 2000, the City adopted Ordinance Number 2000-48, which provides,

[T]he City Council hereby adopts Texas Local Government code Chapter 402, Subchapter C (entitled “Municipal Drainage Utility Systems”); declares the drainage of the city to be a public utility, to be known as the City of New Braunfels Drainage Utility; and dedicates to the drainage utility all city owned property, real and personal, facilities, materials and supplies constituting the city’s drainage system....

Cf. id. § 402.045(a) (“[T]he governing body of the municipality, by a majority vote of its entire membership, may adopt this sub-chapter by an ordinance that declares the adoption and that declares the drainage of the municipality to be a public utility.”). The 2000 ordinance did not set a schedule of drainage charges, and the City did not levy any drainage charges between 2000 and 2005. During that time, the City paid the costs associated with its drainage system using ad valorem property taxes.

In May 2005, the City adopted Ordinance Number 2005-43, which declares that the City adopts subchapter C of chapter 402 of the local government code and that the City’s drainage facilities are a public utility. The ordinance states that “the City of New Braunfels, Texas, desires to adopt a drainage development fee consistent with the requirements of Local Government Code Chapter 402.”

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240 S.W.3d 302, 2007 WL 2214519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greater-new-braunfels-home-builders-assn-v-city-of-new-braunfels-texapp-2007.