Reagan National Advertising of Austin, Inc. D/B/A Reagan National Advertising v. City of Austin, Texas And Marc A. Ott, Being Sued in His Official Capacity
Opinion
ACCEPTED 03-15-00370-CV 7086471 THIRD COURT OF APPEALS AUSTIN, TEXAS 9/24/2015 3:14:24 PM JEFFREY D. KYLE CLERK NO. 03-15-00370-CV __________________________________________________________________ FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS AUSTIN, TEXAS FOR THE THIRD DISTRICT OF TEXAS 9/24/2015 3:14:24 PM TRAVIS COUNTY, AUSTIN, TEXAS JEFFREY D. KYLE Clerk __________________________________________________________________
REAGAN NATIONAL ADVERTISING OF AUSTIN, INC., APPELLANT
VS.
THE CITY OF AUSTIN AND MARC A. OTT, IN HIS OFFICIAL CAPACITY, APPELLEES __________________________________________________________________
ON APPEAL FROM th THE 200 JUDICIAL DISTRICT COURT TRAVIS COUNTY, TEXAS CAUSE NO. D-1-GN-12-001211 __________________________________________________________________
APPELLANT’S BRIEF __________________________________________________________________
B. Russell Horton State Bar No. 10014450 rhorton@gbkh.com George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, Texas 78701 (512) 495-1400 (512) 499-0094 FACSIMILE ATTORNEY FOR APPELLANT __________________________________________________________________
ORAL ARGUMENT IS REQUESTED _________________________________________________________________ IDENTITY OF PARTIES AND COUNSEL
1. Appellant: Reagan National Advertising of Austin, Inc.
2. Appellee: City of Austin and Marc A. Ott, in his official capacity
3. Trial counsel for Appellant: B. Russell Horton Taline Manassian George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, TX 78701
4. Trial counsel for Appellees: Patricia Link Gray Laird City of Austin Law Department PO Box 1546 Austin, TX 78767
5. Counsel on appeal for Appellant: B. Russell Horton George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, TX 78701
6. Counsel on appeal for Appellees: Patricia Link Gray Laird City of Austin Law Department PO Box 1546 Austin, TX 78767
i TABLE OF CONTENTS
PAGE
IDENTITY OF PARTIES AND COUNSEL ............................................................ i
TABLE OF CONTENTS .......................................................................................... ii
INDEX OF AUTHORITIES.....................................................................................vi
STATEMENT OF THE CASE ..................................................................................2
STATEMENT REGARDING ORAL ARGUMENT ............................................... 3
ISSUES PRESENTED...............................................................................................4
STATEMENT OF FACTS ........................................................................................5
1. The Evolution of the City’s Billboard Registration Program and Fee ........ 5
2. Reagan’s Billboard Registration Fee Payments to the City......................... 7
3. The City’s Analysis of the Cost of the Billboard Registration Program ........................................................................................................7
4. Reagan’s Analysis of the Cost of the Billboard Registration Program .......................................................................................................12
5. The Trial Court’s Ruling and Findings of Fact and Conclusions of Law ....................................................................................13
6. Background Relevant to the Issues of Res Judicata and Limitations ..................................................................................................14
SUMMARY OF THE ARGUMENT ......................................................................17
ARGUMENT ...........................................................................................................21
I. STANDARD OF REVIEW .................................................................................21
ii II. ISSUE NO.1: The trial court erred in finding that res judicata did not apply and entering findings and conclusions that conflicted with the findings and conclusions of a federal judge entered after a full trial on a stipulated record ............................................21
III. ISSUE NO. 2: The trial court erred in concluding that the City’s billboard registration fee was a fee, rather than a tax, given the arbitrary near doubling of the fee, the absence of any assessment of costs until after the fee was increased, and the unreliable and imprecise assessment of costs performed by the City’s expert ................................................................................................25
A. Under Texas law, a municipality cannot impose an occupation tax on a particular industry if the State of Texas has not imposed an occupation tax ...........................................25
B. To determine whether the fee is a permissible fee or an unconstitutional tax, the trial court was required to consider whether the purpose of the fee was regulation or revenue and whether the fee was more than reasonably necessary to cover the cost of regulation ............................................27
C. This appeal challenges the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee is a fee .......................28
1. The City did no assessment of its costs prior to raising the fee, and, before any lawsuit was filed, the City acknowledged that its increased fee was approximately $60 too high .........................................................30
2. Early attempts to justify the fee included actions and programs beyond those authorized by the enacting ordinance......................................................................................30
3. In litigation, the City’s retained expert’s analysis was based on imprecise and arbitrary estimates and looked at the City’s program as implemented, rather than as authorized by the 2008 ordinance ...................................31
iii 4. The evidence is insufficient to support the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee................................................................................33
D. Case law on the assessment of a municipal fee gives the City discretion, but does not and should not allow for arbitrary fee increases and unsubstantiated after-the fact justifications ........................................................................................35
E. The trial judge in this case deferred to the City’s exercise of its discretion more than the evidence warranted ............................39
IV. ISSUE NO. 3: Because Reagan filed this case within 60 days of the dismissal of the Federal Action becoming final, the trial court erred as a matter of law in concluding that Reagan’s claims for fees paid for 2009 and 2010 are time barred .............................41
A. Section 16.064 of the Texas Civil Practice & Remedies Code and case law show Reagan was timely because it filed the second lawsuit without 60 days of the federal court losing its power to alter its judgment .........................................41
B. The City’s restrictive reading of Section 16.064 is inconsistent with Texas law ................................................................43
C. The trial judge initially rejected the City’s limitations argument, but he subsequently entered a conclusion of law on the issue that was inconsistent with his stated intended ruling ....................................................................................44
V. ISSUE NO.
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ACCEPTED 03-15-00370-CV 7086471 THIRD COURT OF APPEALS AUSTIN, TEXAS 9/24/2015 3:14:24 PM JEFFREY D. KYLE CLERK NO. 03-15-00370-CV __________________________________________________________________ FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS AUSTIN, TEXAS FOR THE THIRD DISTRICT OF TEXAS 9/24/2015 3:14:24 PM TRAVIS COUNTY, AUSTIN, TEXAS JEFFREY D. KYLE Clerk __________________________________________________________________
REAGAN NATIONAL ADVERTISING OF AUSTIN, INC., APPELLANT
VS.
THE CITY OF AUSTIN AND MARC A. OTT, IN HIS OFFICIAL CAPACITY, APPELLEES __________________________________________________________________
ON APPEAL FROM th THE 200 JUDICIAL DISTRICT COURT TRAVIS COUNTY, TEXAS CAUSE NO. D-1-GN-12-001211 __________________________________________________________________
APPELLANT’S BRIEF __________________________________________________________________
B. Russell Horton State Bar No. 10014450 rhorton@gbkh.com George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, Texas 78701 (512) 495-1400 (512) 499-0094 FACSIMILE ATTORNEY FOR APPELLANT __________________________________________________________________
ORAL ARGUMENT IS REQUESTED _________________________________________________________________ IDENTITY OF PARTIES AND COUNSEL
1. Appellant: Reagan National Advertising of Austin, Inc.
2. Appellee: City of Austin and Marc A. Ott, in his official capacity
3. Trial counsel for Appellant: B. Russell Horton Taline Manassian George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, TX 78701
4. Trial counsel for Appellees: Patricia Link Gray Laird City of Austin Law Department PO Box 1546 Austin, TX 78767
5. Counsel on appeal for Appellant: B. Russell Horton George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, TX 78701
6. Counsel on appeal for Appellees: Patricia Link Gray Laird City of Austin Law Department PO Box 1546 Austin, TX 78767
i TABLE OF CONTENTS
PAGE
IDENTITY OF PARTIES AND COUNSEL ............................................................ i
TABLE OF CONTENTS .......................................................................................... ii
INDEX OF AUTHORITIES.....................................................................................vi
STATEMENT OF THE CASE ..................................................................................2
STATEMENT REGARDING ORAL ARGUMENT ............................................... 3
ISSUES PRESENTED...............................................................................................4
STATEMENT OF FACTS ........................................................................................5
1. The Evolution of the City’s Billboard Registration Program and Fee ........ 5
2. Reagan’s Billboard Registration Fee Payments to the City......................... 7
3. The City’s Analysis of the Cost of the Billboard Registration Program ........................................................................................................7
4. Reagan’s Analysis of the Cost of the Billboard Registration Program .......................................................................................................12
5. The Trial Court’s Ruling and Findings of Fact and Conclusions of Law ....................................................................................13
6. Background Relevant to the Issues of Res Judicata and Limitations ..................................................................................................14
SUMMARY OF THE ARGUMENT ......................................................................17
ARGUMENT ...........................................................................................................21
I. STANDARD OF REVIEW .................................................................................21
ii II. ISSUE NO.1: The trial court erred in finding that res judicata did not apply and entering findings and conclusions that conflicted with the findings and conclusions of a federal judge entered after a full trial on a stipulated record ............................................21
III. ISSUE NO. 2: The trial court erred in concluding that the City’s billboard registration fee was a fee, rather than a tax, given the arbitrary near doubling of the fee, the absence of any assessment of costs until after the fee was increased, and the unreliable and imprecise assessment of costs performed by the City’s expert ................................................................................................25
A. Under Texas law, a municipality cannot impose an occupation tax on a particular industry if the State of Texas has not imposed an occupation tax ...........................................25
B. To determine whether the fee is a permissible fee or an unconstitutional tax, the trial court was required to consider whether the purpose of the fee was regulation or revenue and whether the fee was more than reasonably necessary to cover the cost of regulation ............................................27
C. This appeal challenges the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee is a fee .......................28
1. The City did no assessment of its costs prior to raising the fee, and, before any lawsuit was filed, the City acknowledged that its increased fee was approximately $60 too high .........................................................30
2. Early attempts to justify the fee included actions and programs beyond those authorized by the enacting ordinance......................................................................................30
3. In litigation, the City’s retained expert’s analysis was based on imprecise and arbitrary estimates and looked at the City’s program as implemented, rather than as authorized by the 2008 ordinance ...................................31
iii 4. The evidence is insufficient to support the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee................................................................................33
D. Case law on the assessment of a municipal fee gives the City discretion, but does not and should not allow for arbitrary fee increases and unsubstantiated after-the fact justifications ........................................................................................35
E. The trial judge in this case deferred to the City’s exercise of its discretion more than the evidence warranted ............................39
IV. ISSUE NO. 3: Because Reagan filed this case within 60 days of the dismissal of the Federal Action becoming final, the trial court erred as a matter of law in concluding that Reagan’s claims for fees paid for 2009 and 2010 are time barred .............................41
A. Section 16.064 of the Texas Civil Practice & Remedies Code and case law show Reagan was timely because it filed the second lawsuit without 60 days of the federal court losing its power to alter its judgment .........................................41
B. The City’s restrictive reading of Section 16.064 is inconsistent with Texas law ................................................................43
C. The trial judge initially rejected the City’s limitations argument, but he subsequently entered a conclusion of law on the issue that was inconsistent with his stated intended ruling ....................................................................................44
V. ISSUE NO. 4: Alternatively, the trial court erred in failing to order that Reagan was entitled, at a minimum, to a return of the amounts it paid in excess of $190 for the four years that the City charged a fee of $200 and in failing to grant attorneys’ fees .............................................................................................45
PRAYER ..................................................................................................................47
CERTIFICATE OF COMPLIANCE .......................................................................48
iv CERTIFICATE OF SERVICE ................................................................................48
v
APPENDIX A: Final Judgment (dated March 31, 2015) (CR 508)
APPENDIX B: Amended Findings of Fact and Conclusions of Law (dated May 27, 2015) (CR 561-565)
APPENDIX C: Tax Injunction Act (28 U.S.C. § 1341)
APPENDIX D: Texas Constitution, art. VIII, § 1
APPENDIX E: Texas Civil Practice & Remedies Code §16.064
APPENDIX F: Austin City Ordinance No. 20080605-076 (“2008 Ordinance”) (Plaintiff’s Exhibit 2)
APPENDIX G: Austin City Ordinance No. 20120405-007 (portion of Defendants’ Exhibit 2)
APPENDIX H: Austin City Code § 25-10-152 (Nonconforming signs)
APPENDIX I: November 9, 2009 email from Robert Rowan (Plaintiff’s Exhibit 8)
APPENDIX J: Whitaker’s Billboard Registration Fee Study (without its attachments) (Defendants’ Exhibit 10)
vi INDEX OF AUTHORITIES
CASES PAGE
Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex. 1992) ................................24
Black v. City of Killeen, 78 S.W.3d 686 (Tex. App.—Austin 2002, pet. denied) ..........................................21
Butler v. Continental Airlines, Inc., 116 S.W.3d 286 (Tex. App.—Houston 2003, pet. denied) .....................................23
Chacon v. Andrews Distributing Co. Ltd., 295 S.W.3d 715 (Tex. App.—Corpus Christi 2009, pet. denied) ...........................42
Citizens Ins. v. Daccach, 217 S.W.3d 430 (Tex. 2007)...........................................22
City of Brookside Village v. Comeau, 633 S.W.2d 790 (Tex. 1982).......................27
City of College Station v. Turtle Rock Corp., 680 S.W.2d 802 (Tex. 1984) ........... 28
City of Fort Worth v. Gulf Refining Co., 83 S.W.2d 610 (Tex. 1935) ..............12, 27
City of Houston v. Harris County Outdoor Advertising Assoc., 879 S.W.2d 322 (Tex. App. – Houston [14th Dist.] 1994, writ denied), cert. denied, 516 U.S. 822 (1995) ....................................... 24, 26, 27, 35, 36, 39, 46
Hill v. Kemp, 478 F.3d 1236 (10th Cir. 2007).........................................................24
Hoefling v. City of San Antonio, 20 S.W. 85 (Tex. 1892) .......................................26
Hurt v. Cooper, 110 S.W.2d 896 (Tex. 1937) .........................................................27
Igal v. Brightstar Info. Tech., 250 S.W.3d 78 (Tex. 2008)......................................22
McKesson Corp. v. Division of Alcohol Beverages and Tobacco, Dept. of Business Regulation of Florida, 496 U.S. 18 (1990) .................................26
vii Oscar Renda Contracting, Inc. v. H&S Supply Co., Inc., 195 S.W.3d 772 (Tex. App.—Waco 2006, pet. denied)....................................42, 43
Pierce v. City of Stephenville, 206 S.W.2d 848, (Tex. Civ. App. – Eastland 1947, no writ)...............................................................26
Quick v. City of Austin, 7 S.W.3d 109 (Tex. 2004) .................................................21
Ruiz v. Austin Indep. Sch. Dist., 2004 WL 1171666 (Tex. App.—Austin 2004, no pet.) .....................................43, 44
Smith v. Travis County Educ. Dist., 791 F. Supp. 1170 (W.D. Tex.), vacated on other grounds, 968 F.2d 453 (5th Cir. 1992) .........................................26
Vale v. Ryan, 809 S.W.2d 324 (Tex. App.—Austin 1991, no writ) ........................42
CITY ORDINANCES
Austin City Code, Chapter 25-10............................................................................... 5
Austin City Code, Section 25-10-152(F)(1)(d)..................................................26, 27
Austin City Code, Section 25-10-152(F)(1)(e) ..................................................26, 27
Austin City Code, Section 25-10-237 ......................................................................27
Austin City Ordinance No. 20080605-076 ................................................................ 5
Austin City Ordinance No. 20120405-007 ................................................................ 6
RULES
Fed. R. Civ. P. 59 .....................................................................................................42
Fed. R. Civ. P. 60(c)(1) ............................................................................................42
Fed. R. Civ. P. 62.1(a)..............................................................................................42
viii CONSTITUTIONS & STATUTES
Tex. Civ. Prac. & Rem Code § 16.064 ..................................... 15, 20, 41, 42, 43, 45
Tex. Civ. Prac. & Rem Code § 16.064(a)(2) ...........................................................41
Tex. Const. art. VIII, § 1(f) ......................................................................................26
Texas Occupations Code..........................................................................................26
28 U.S.C. § 1341 ......................................................................................................22
ix NO. 03-15-00370-CV __________________________________________________________________
IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS TRAVIS COUNTY, AUSTIN, TEXAS __________________________________________________________________
REAGAN NATIONAL ADVERTISING OF AUSTIN, INC., APPELLANT
VS.
THE CITY OF AUSTIN AND MARC A. OTT, IN HIS OFFICIAL CAPACITY, APPELLEES __________________________________________________________________
ON APPEAL FROM th THE 200 JUDICIAL DISTRICT COURT TRAVIS COUNTY, TEXAS CAUSE NO. D-1-GN-12-001211 __________________________________________________________________
APPELLANT’S BRIEF __________________________________________________________________
TO THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS:
Appellant Reagan National Advertising of Austin, Inc. (“Reagan”), through
its undersigned counsel, offers this Appellant’s Brief, by which Reagan
respectfully would show the Court the following:
1 STATEMENT OF THE CASE
In April of 2010, Reagan filed Civil Action No. 1:10-cv-275, Reagan Nat’l
Advertising of Austin, Inc. v. City of Austin et al., in the United States District
Court for the Western District of Texas, Austin Division (“Federal Action”), to
challenge the constitutionality of the City of Austin’s billboard registration fee. CR
361, SF #34. 1 On November 30, 2011, after a bench trial on a stipulated record,
Judge Lee Yeakel concluded the federal court lacked subject matter jurisdiction
based on the federal Tax Injunction Act and dismissed the case. CR 361, SF #35.
On April 25, 2012, Reagan filed a new suit raising the same claims in the
Travis County District Court. CR 361, SF #37; CR 4. Both parties filed motions for
summary judgment, which were denied. CR 197. The case was tried to the bench
on December 15, 2014. RR2. 2 After trial, Reagan supplemented the record with
evidence on attorneys’ fees. CR 386; CR 509. On March 31, 2015, Judge Stephen
Yelenosky entered a take nothing judgment. CR 508; see Appendix A. On April
29, 2015, Reagan filed a motion for a new trial. CR 524. Upon request, the trial
court entered Findings of Fact and Conclusions of Law, which it later modified.
CR 515; CR 535; CR 561; see Appendix B. The trial court did not act on the
motion for new trial. On June 16, 2015, Reagan filed a notice of appeal. CR 566.
1 “CR” refers to the Clerk’s Record. “SF” refers to a Stipulated Fact taken from the Joint Stipulation of Facts located at CR 359-363. 2 “RR” refers to the Reporter’s Record. “RR2” refers to the second volume of the Reporter’s Record.
2 STATEMENT REGARDING ORAL ARGUMENT
Reagan requests oral argument because this case presents two questions that
deal with issues not adequately addressed by Texas case law.
The first question involves whether a dismissal for lack of subject matter
jurisdiction can be res judicata as to more than jurisdiction alone when the basis for
dismissal encompassed a determination of the core issue in the case – whether a
particular fee was a constitutional fee or unconstitutional tax. The initial case was
dismissed by a federal court after a determination, for the purposes of the Tax
Injunction Act on which the dismissal was based, that the fee was a tax. Should the
federal court’s rulings or any of its specific findings have been recognized as
having some effect in the subsequent state case?
The second question is whether court intervention is warranted where a city
nearly doubled a fee before analyzing whether an increase was appropriate and
where the city continued to charge the increased fee after its own staff concluded
the fee was too high. Although courts may hesitate to involve themselves in
policing municipal governments, do the fee payers warrant protection in this
instance?
Oral argument would allow the Court and the parties to address the existing
body of law on these issues and determine whether clarification or extension of the
law might be needed in either area.
3 ISSUES PRESENTED
This appeal presents four issues.
(1) Did the trial court err in ruling that res judicata did not apply and
entering findings and conclusions that conflicted with the findings and conclusions
of a federal judge in a prior related proceeding?
(2) Did the trial court err in concluding that the City’s billboard
registration fee was a proper fee and not an unconstitutional tax, or did the
evidence support the trial court’s findings?
(3) Did the trial court err in concluding that Reagan’s claims for fees paid
for 2009 and 2010 were time barred where Reagan filed its lawsuit within 60 days
of the dismissal of a prior lawsuit for lack of subject matter jurisdiction becoming
final?
(4) Did the trial court err in failing to order that Reagan was entitled at
least to a return of the amounts it paid in excess of $190 for the four years that the
City charged a fee of $200 and in failing to award attorneys’ fees, given the City’s
acknowledgment that the $200 fee was excessive?
4 STATEMENT OF FACTS
Reagan is in the business of outdoor advertising, which includes the
ownership and operation of billboards within the City of Austin and the
surrounding area. 3 The City regulates billboards (also called off-premise signs) in
Chapter 25-10 of the Austin City Code.4
1. The Evolution of the City’s Billboard Registration Program and Fee
Before the City Council amended the City’s billboard regulations in June of
2008, the City Code required landowners (not sign owners) to register billboards
on their land every other year. 5 The registration fee was $220 per billboard every
two years. 6
In June of 2008, the City amended its billboard regulations through Austin
City Ordinance No. 20080605-076 (“2008 Ordinance”).7 See Appendix F. The
2008 Ordinance required sign owners (rather than the owners of the real property
on which the signs were located) to register every year on a form prescribed by the
City and to provide an annual inventory of signs to the City. 8 The 2008 Ordinance
also required identifying markers to be placed on the signs, some of which would
3 CR 359, SF #2 and #5. 4 CR 359, SF #7 and #9; Austin City Code Section 25-10-152 is provided at Appendix H. 5 CR 360, SF #12. 6 CR 360, SF #13. 7 CR 360, SF #14; RR3, PE 2. “PE” refers to Plaintiff’s Exhibit. “DE” will refer to “Defendants’ Exhibit.” 8 RR3, PE 2, COA 0026.
5 assist in the verification of the sign height. 9 The 2008 Ordinance further required
the City to notify the billboard owners of a pending expiration of registration. 10 It
also prohibited relocation of the billboard if the registration requirement was not
met, and it authorized the imposition of a fine of up to $500 per day for each sign
that was not registered. 11 The 2008 Ordinance further authorized the creation of an
online database of the billboard inventory. 12 In effect, instead of having to deal
with nearly 500 different registrations from landowners, the City’s new program
called for bulk registrations from approximately eight billboard companies. 13
Beginning in 2009, the City required billboard owners to pay a registration
fee of $200 per billboard per year. 14 When the City Council passed this increase, it
was told that its new fee would be $20 less than the previous fee; actually, the new
fee increased the effective cost per billboard from $110 to $200 per year. 15 The
City charged $200 per billboard per year for 2009, 2010, 2011 and 2012.16
On April 5, 2012, the City Council adopted Ordinance No. 20120405-007,
reducing the registration fee from $200 per billboard per year to $190 per billboard
9 RR3, PE 2, COA 0026. 10 RR3, PE 2, COA 0026. 11 RR3, PE 2, COA 0026-0027. 12 RR3, PE 2, COA 0027. 13 RR3, PE 13; RR2, 104:11-105:23 and 139:9-24. 14 CR 360, SF #15 and #16. 15 RR3, PE 12, COA 0073. 16 CR 360, SF #16.
6 per year. 17 See Appendix G. For 2013 and 2014, the City required billboard owners
to pay $190 per billboard per year. 18
2. Reagan’s Billboard Registration Fee Payments to the City
From 2009 through 2014, Reagan made the following billboard registration
fee payments, under protest, to the City of Austin:
Year Per Billboard Fee Number of Billboards Total Payment 2009 $200 389 $77,800.00 2010 $200 376 $75,221.40 2011 $200 417 $83,400.00 2012 $200 408 $81,600.00 2013 $190 425 $80,750.00 2014 $190 419 19 $79,610.00 20
Failure to register could amount to a penalty of $500 per day per sign. 21
3. The City’s Analysis of the Cost of the Billboard Registration Program
Before adopting the $200 per billboard per year fee, the City did not prepare
a study, budget or survey to determine its cost to implement the billboard
registration program called for by the 2008 Ordinance. 22 Further, the City did not
ask Charles Boas, the code enforcement inspector assigned responsibility for the
17 CR 360, SF #17; RR4, DE 2. 18 CR 360, SF #18. 19 CR 329-330, p. 7-8, ft. 1-6. 20 CR 362, SF #38 - #43. 21 RR2, 51:21-52:3; RR3, PE 2, COA 0027. 22 CR 360, SF #21.
7 new billboard registration program, 23 to assess the program and give input on what
kind of efforts the billboard registration program would require. 24
After the City implemented the $200 per billboard per year fee, Robert
Rowan, a city employee, analyzed the costs of the program and sent the November
9, 2009, email reflected in Plaintiff’s Exhibit 8.25 See Appendix I. That email says:
Based on last week’s meeting in regards to the current Billboard Registration fee of $200, we were asked to review the current fee and see if we can seriously look at lowering the fee to a more reasonable fee. As a result, this can close the gap between the revenue and the expenditures of running this program. Just doing a quick overview, we can lower the rate to $140, which will accomplish this goal. 26
The analysis attached to the email indicates that, even at $140, the City’s revenue
would exceed its costs by approximately $2500.27 Mr. Rowan’s analysis was
submitted to Matt Christianson and Daniel Cardenas.28 Mr. Christianson was Mr.
Boas’s supervisor,29 and Mr. Cardenas was Mr. Christianson’s supervisor and an
assistant Director of the Austin Code Department, the department responsible for
billboard registration.30
Sometime after the email reflected in Plaintiff’s Exhibit 8 was sent, Mr.
Cardenas was asked by Willie Rhodes, his Director, to analyze the cost of the
23 RR2, 76:7-77:2. 24 RR2, 98:15-99:6. 25 CR 360, SF # 22; RR3 PE 8. 26 RR3, PE 8. 27 RR3, PE 8. 28 RR3, PE 8. 29 RR2, 109:10-14. 30 RR2, 107:19-25; CR 360, SF #20 and #23.
8 billboard registration program. 31 Mr. Cardenas concluded that the program
required a fee of $242 per billboard per year. 32 After communicating with Mr.
Rhodes, Mr. Cardenas modified his analysis and concluded a required fee of $352
per billboard per year. 33
In preparing his analysis, Mr. Cardenas did not review annual budget
documents for the year the fee was amended 34 or obtain assistance from the Budget
Office, which is responsible for monitoring the financial performance of all City
departments and providing assistance with budgets and other financial issues.35
The model developed by Mr. Cardenas included 21 staff positions, including a
Performance Specialist, a Municipal Court Coordinator, a Paralegal, and an
Attorney Senior, charged two full-time vehicles, assumed over 500 mailings (even
though only a handful of billboard companies would be registering), and assumed
administration of the sign relocation process.36 (Billboard relocation, however, has
its own permit processes and fees,37 enforcement actions have fines associated with
them, and even changes to billboards have their own processes and fees, apart from
the billboard registration fee.38) Mr. Cardenas’s revised analysis also included the
31 CR 360, SF #23, #24, and #25. 32 CR 361, SF #26; RR3, PE 10. 33 CR 361, SF #26; RR3, PE 11. 34 CR 361, SF #27. 35 CR 361, SF #28 and #29. 36 RR3, PE 11. 37 RR2, 114:2-11. 38 RR2, 114:12-115:13 and 116:16-117:12.
9 costs to develop a searchable Web presentation for a database of billboard
registrations and a $20,000 violation placard annual contract that the City did not
use or purchase.39 Mr. Cardenas’s analysis did not consider fees charged by other
Texas cities for billboard registration programs. 40
After Reagan initiated litigation about the billboard registration fee, the City
retained The PFM Group and Nickie Whitaker to do a “Billboard Registration Fee
Study” (the Whitaker Report”). 41 See Appendix J, the Whitaker Report without its
attachments. The Whitaker Report was issued in January of 2011, took about 30
days to complete, and concluded that “the cost of service for administering the
billboard registration fee is $190.” 42
The Whitaker Report was a “point in time” analysis based on Mr. Boas’s
estimate that he spent two hours per sign per year. 43 At trial, Ms. Whitaker
acknowledged that a fifteen-minute variance on the two-hour estimate could have a
12.5% impact on the final number. 44
In preparing her report, Ms. Whitaker interviewed only two city employees
(Mr. Boas and Kesha Moore, his replacement). She did not meet with either
39 CR 361, SF #30 and #33; RR3 PE 11. 40 CR 361, SF #32. 41 RR4, DE 10; RR2, 196:18-22. 42 RR4, DE 10, p. 4; RR2, 163:23-25. 43 RR4, DE 10; RR3, PE 4; RR2 175:22-176:13 and 177:15-178:5. 44 RR2, 181:16-182:9.
10 employee in person.45 She did not review the employees’ documents or look at
support for any of the information she was given.46 She relied on employee
estimates, without requiring any tracking of time to determine the actual time spent
per registration. 47 She did not assess whether the time estimates she was given
made sense in light of the total hours worked by each employee. 48 She determined
“productive time” by backing out vacation days, sick days, and the like, but did not
verify, for example, whether the employee was eligible for the amount of vacation
time she deducted. 49 She did not speak to anyone in accounting with the City.50
She was not given Mr. Rowan’s analysis and was given only one of Mr.
Cardenas’s analyses. 51 She did not focus on what the ordinance required; instead,
she focused on how the City implemented the ordinance. 52 She also assumed that
Mr. Boas’s two-hour per billboard estimate would apply year in and year out in
perpetuity. 53 Mr. Boas, however, testified that the initial inventory and
registrations took several years to complete 54 but that he expected that the amount
of time it would take to do the work required by the 2008 Ordinance would
45 RR2, 77:3-8, 170:24-171:11, 172:4-6 and 172:10-12. 46 RR2, 172:7-9. 47 RR2, 151:19-152:16. 48 RR2 169:10-170:7. 49 RR2 178:12-181:9. 50 RR2, 192:9-21. 51 RR2, 173:8-174:17. 52 RR2, 174:22-175:8. 53 RR2, 183:18-184:1 and 199:5-12. 54 RR2, 85:11-862.
11 decrease over time. 55 Further, Ms. Whitaker testified that cost of service should be
reviewed every four years or when there has been a significant change in the
administration of the program. 56
Ms. Whitaker did not review fees charged by other cities. 57 At trial, Reagan
offered evidence of what other cities in Texas charge, such as Fort Worth, which
charges $150 every three years, 58 San Antonio, which charges approximately $50
or $79 per year, depending on the square footage of the sign, 59 and Houston, which
charges $110.75 annually. 60
4. Reagan’s Analysis of the Cost of the Billboard Registration Program
For trial, Reagan retained Tom Granger of Midwikis & Granger, P.C., an
accountant with experience in business valuation, 61 to offer an opinion on what the
City’s billboard registration fee should be to comply with state statutes limiting the
fee to the cost to provide the service. 62 Mr. Granger testified that he Reagan’s trial
brief, the joint stipulations of facts and evidence, various City ordinances, the
City’s fee schedule from 2008 and 2009, depositions of Mr. Boas, Mr. Cardenas
and Ms. King, another City of Austin employee, the standards for the billboard
55 RR2, 130:7-131:18. 56 RR2 158:20-159:2. 57 RR2, 182:10-183:10. 58 RR3, PE 25; RR2 41:12-24. 59 RR3, PE 26; RR2 45:6-23. 60 RR3, PE 27; RR2 46:1-2. 61 RR2, 34:1-16. 62 RR3, PE 22 and PE 23.
12 registration program that the City implemented effective April 15, 2010, the 2009
email from Mr. Rowan regarding the City’s fee, the Whitaker Report, and the
report and deposition of Erin Anker that was offered by Reagan in the Federal
Action.63 He also looked at how much other Texas cities charge. 64
Mr. Granger raised concerns about the City’s various analyses. He pointed
out that the amount of labor allocated to code inspectors was inconsistent, 65 that
Ms. Whitaker’s analysis used an excessive amount of sick leave, which resulted in
a higher than appropriate productive hour calculation, 66 and that it was not clear
whether the analyses properly differentiated between registration and other
activities, such as relocation. 67 Mr. Granger’s methodology considered the
differing data used by Mr. Rowan, Mr. Cardenas and Ms. Whitaker in the iterations
of the City’s analysis, averaging them to arrive at his opinion of a neutral fee. 68
Mr. Granger concluded that the City’s $200 per sign per year fee exceeds the
cost to deliver the services required by the City’s ordinance and that a revenue
neutral fee would be $115 per sign per year. 69 He also concluded that the total
amount of charges to Reagan in excess of $115 per sign per year was $198,450. 70
63 RR2 36:18-37:23. 64 RR2 37:24-38:9. 65 RR2 48:23-50:6. 66 RR2 63:21-64:6. 67 RR2 57:13-59:25. 68 RR2, PE 23; RR2 48:23-50:6; RR2 69:25-70:8. 69 RR3, PE 23; RR2 60:2-12. 70 RR2, 61:17-62:24.
13 5. The Trial Court’s Ruling and Findings of Fact and Conclusions of Law
After a bench trial, Judge Stephen Yelenosky filed a letter announcing his
“intended ruling and some significant reasons for it.”71 Judge Yelenosky indicated
that the letter “does not constitute findings of fact or conclusions of law.” 72 Judge
Yelenosky then entered a Final Judgment denying Reagan’s request for relief and
ordering that Reagan take nothing.73
After entering the Final Judgment, Judge Yelenosky filed Findings of Fact
and Conclusions of Law. 74 Reagan requested additional and amended findings.75
Judge Yelenosky entered Amended Findings of Fact and Conclusions of Law. 76
6. Background Relevant to the Issues of Res Judicata and Limitations.
In Reagan’s 2010 Federal Action 77 before Judge Yeakel, the federal court
determined, “the City’s annual $200-per billboard registration fee, for the purposes
of the [Tax Injunction] Act, is a tax.” 78 In making the determination in its Findings
of Fact and Conclusions of Law, Judge Yeakel also found that “the City’s
billboard-registration fee benefits the entire community rather than only defraying
71 CR 383. 72 CR 383. 73 CR 508. 74 CR 535. 75 CR 540. 76 CR 561. 77 As set forth in the Statement of the Case, the Federal Action was dismissed on November 30, 2011. CR 361 SF #35; RR3 PE 16. 78 RR3, PE 15, p. 13.
14 the City’s reasonable costs of registering billboards.”79 He further noted that the
City’s expert had admitted “that it could be useful to review what comparable
jurisdictions charge as billboard registration fees.” 80
In Reagan’s present action, 81 both sides filed motions for summary
judgment. 82 The City’s motion for summary judgment included a claim that
limitations had run on Reagan’s claims as to fees paid for 2009 and 2010 because
Reagan did not file the present action within 60 days of the dismissal of the Federal
Action.83 After a hearing, Judge John Dietz denied both parties’ motions and
entered an order that said:
Plaintiff’s motion for new trial was denied by written order on February 6, 2012. A motion for reconsideration could have been filed within 28 days – or by March 5, 2012. Sixty days from March 5 was May 4, 2012. This suit was filed on April 25, 2012, so it was timely under CPRC § 16.064. 84
At trial, the City again raised the issue of limitations for 2009 and 2010.85
After trial, Judge Yelenosky indicated that the City’s defense of limitations had no
merit. 86 However, after entering the Final Judgment, Judge Yelenosky filed
Findings of Fact and Conclusions of Law that included a conclusion that Reagan’s
79 RR3 15, p. 13. 80 RR3, PE 15, p. 12-13. 81 As set forth in the Statement of the Case, Reagan’s present action was filed on April 25, 2012. CR 361 SF #37. 82 CR 27; SCR 3. “SCR” refers to the Supplemental Clerk’s Record. 83 SCR 8; CR 103; CR 191. 84 CR 197. 85 CR 351; CR 355. 86 CR 383.
15 claims for fees paid for 2009 and 2010 were time barred. 87 Reagan requested
additional and amended findings.88 Judge Yelenosky entered Amended Findings
of Fact and Conclusions of Law but did not change his conclusion that Reagan’s
claims for 2009 and 2010 were time barred. 89
87 CR 539. 88 CR 540. 89 CR 565.
16 SUMMARY OF THE ARGUMENT
Reagan has tried this case twice. First, it tried the case on a stipulated record
in federal court. That case resulted in the federal court dismissing the case for lack
of jurisdiction after it sua sponte raised the issue of the Tax Injunction Act, which
prevents a federal court from taking certain actions as to taxes under state laws,
unless a plain, speedy and efficient remedy is not available in state courts. Because
the federal court decided that the registration fee was a tax, it lacked jurisdiction
under the Tax Injunction Act and dismissed the case without prejudice. Reagan
then refiled the case in state court and tried it again to the bench, this time on a
partially stipulated record. After the second trial, the trial judge decided that the
registration fee was a fee, not a tax, and entered a conclusion of law that Reagan’s
claims for the years 2009 and 2010 were barred by limitations. Reagan appeals
because the state court trial judge’s determinations conflict with the findings of the
federal court judge and because the state court trial judge’s determinations are not
supported by the law or the evidence in this case.
For a municipal charge to be a fee and not a tax, the charge’s primary
purpose must be for regulation, rather than revenue, and the charge cannot be
excessive or more than reasonably necessary to cover the cost of the regulation, or
it must bear some reasonable relationship to the legitimate object of the ordinance.
The evidence in this case is that the City nearly doubled its billboard registration
17 fee – from charging the landowner $220 per billboard every two years to charging
the billboard owner $200 per billboard per year – without assessing the cost of the
regulation. Additionally, the evidence is that the City Council was told the fee was
being decreased by $20, when in fact it was being nearly doubled.
After raising the fee and before litigation was filed, the City did an internal
assessment and concluded that it could reduce the fee from $200 per billboard per
year to $140 per billboard per year to accomplish the goal of closing the “gap
between the revenue and expenditures of running this program.” But the City did
not reduce the fee. It continued to charge $200.
The City later did a second internal analysis in which the Assistant Director
of the Austin Code Department concluded that the cost of the billboard registration
program was $242 per billboard per year. After consulting with his boss, the
Assistant Director changed the cost to $352. Both analyses including activities not
authorized by the enacting ordinance, made faulty assumptions, and included
activities for which the City charges other fees, wholly separate from the
registration fee.
The City, for litigation, hired an outside expert who concluded in January of
2011, largely was based on one inspector’s unverified estimate that he spent two
hours per sign per year, that the cost of administering the billboard registration fee
was $190. The expert did not know what the enacting ordinance required and did
18 not ask the City about the work the inspector reported doing to learn whether it was
required by the ordinance. Additionally, she did a “point in time” analysis, not an
analysis of the City’s ongoing cost of registering the program. Based on her
analysis, the City reduced its fee, beginning in 2013, from $200 per billboard per
year to $190 per billboard per year.
Municipal fees are presumed reasonable, but the law allows for review of
those fees and requires that fees be reasonably necessary to cover the cost of the
regulation. Reagan offered internal City communications that took place before
litigation was initiated in which the City acknowledged that its per-year fee was at
least $60 too high. Further, Reagan showed that subsequent efforts to justify the
fee included costs for activities not properly within the scope of the enacting
ordinance. To allow a city to nearly double a fee with no prior consideration to
whether an increase is warranted, allow arbitrary and imprecise estimates to
support a fee after that fact, and focus on costs regardless of whether those costs
were for activity reasonably related to the purpose of the ordinance gives cities
more authority than was intended under the law. The federal court’s findings
should have been honored by the ruling of the trial judge.
Additionally, the trial court erred in concluding that Reagan’s claims for
2009 and 2010 were time barred. Reagan’s claims were filed within 60 days of the
federal court’s ruling becoming final, which makes those claims timely under
19 Section 16.064 of the Texas Civil Practice and Remedies Code. The evidence will
show that the trial judge initially concluded that the claims were timely, but
entered a conclusion of law proposed by the City that conflicted with the judge’s
previously articulated ruling.
Reagan asks that the court reverse the trial court’s findings, find that the
billboard registration fee is an unconstitutional tax, require that Reagan be
reimbursed the portion of the fee that amounts to an unconstitutional tax, and
award attorneys’ fees. Alternatively, Reagan asks that the Court award Reagan
reimbursement of fees paid in excess of $190 for the years 2009, 2010, 2011, and
2012, and attorneys’ fees.
20 ARGUMENT
I. The standard of review.
Where the trial court issues findings of fact and conclusions of law, the
appellate court should apply a sufficiency of the evidence review to the factual
findings and review the conclusions of law de novo. Black v. City of Killeen, 78
S.W.3d 686, 691 (Tex. App.—Austin 2002, pet. denied). Under the de novo
standard, the appellate court conducts an independent analysis of the record and
does not defer to the trial court’s conclusions; instead, it reaches its own
conclusions and can substitute those conclusions for those of the trial court. Quick
v. City of Austin, 7 S.W.3d 109, 116 (Tex. 2004). The issue of whether a municipal
fee is valid is a question of law. Black, 78 S.W.3d at 691.
II. Issue No. 1: The trial court erred in finding that res judicata did not apply and entering findings and conclusions that conflicted with the findings and conclusions of a federal judge entered after a full trial on a stipulated record.
Prior to trial, Reagan filed a motion for summary judgment on whether
Judge’s Yeakel’s ruling in the Federal Action based on the Tax Injunction Act was
res judicata to this suit. CR 27. The trial court denied that motion. CR 197. Reagan
raised the issue again at trial. CR 323. The trial court entered a Conclusion of Law
that “Judge Yeakel’s ruling based on the Tax Injunction Act is not res judicata as
to this suit.” CR 565. The trial court erred on that conclusion of law. 90 Res judicata
90 Reagan proposed the following conclusion of law: “Res judicata bars relitigation of Plaintiff’s claims.” CR 369. After the trial court entered its judgment, Reagan submitted a request for
21 should have barred re-litigation of the issue. See Igal v. Brightstar Info. Tech., 250
S.W.3d 78, 86 (Tex. 2008).
Whether the City’s registration fee is a tax was previously decided by Judge
Yeakel in the Federal Action. Judge Yeakel dismissed the Federal Action for lack
of subject matter jurisdiction based on the Tax Injunction Act, which prevents
federal courts from enjoining, suspending, or restraining assessment, levy or
collection of any tax under state law, as long as a plain, speedy, and efficient
remedy may be had in the courts of the state. See 28 U.S.C. § 1341, Appendix C.
In determining the Tax Injunction Act applied to bar the federal court’s
jurisdiction, Judge Yeakel decided that the registration fee ordinance at issue
imposed a tax. Because it imposed a tax, the federal court lacked jurisdiction under
the Tax Injunction Act. He also found that that the City’s fee did more than defray
the reasonable cost of registering billboards and that looking at what comparable
jurisdictions charge could be useful in assessing the fee.
Under Texas law, for res judicata to apply, there must have been a final
judgment on the merits by a court of competent jurisdiction, the parties in the first
suit must have been the same as in the second suit, and the second suit must be
based on claims that were raised or could have been raised in the first suit. Citizens
Ins. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007). Reagan acknowledges that,
findings of fact and conclusions of law that included the following: “Res judicata does not bar relitigation of Plaintiff’s claims.” CR 522. However, Reagan pointed out that it did not agree with or consent to the proposed finding. CR 515.
22 under Texas law, “[a]lthough a dismissal for lack of subject matter jurisdiction
does not preclude a party from litigating the merits in a court of competent
jurisdiction, it is res judicata as to the issue of whether the first court had
jurisdiction.” Butler v. Continental Airlines, Inc., 116 S.W.3d 286, 287 (Tex.
App.—Houston 2003, pet. denied).
Ordinarily, a dismissal for lack of subject matter jurisdiction would not bar
re-litigation of claims. However, in this case, after trial, the federal court sua
sponte raised a question about jurisdiction. 91 To decide whether it had jurisdiction,
the federal court had to determine whether the registration fee was a fee or a tax.
The parties were identical, the claims were identical, and the federal court entered
a final judgment dismissing for lack of jurisdiction based on its determination that
the registration fee was actually a tax. On a stipulated record involving identical
claims and identical parties, the federal court also decided after a trial that the
billboard registration fee exceeded what was reasonably necessary to cover the cost
of regulation. The trial court, having fully retried that issue, now says it disagrees
with the federal court’s conclusion. In expressing that disagreement prior to
entering a judgment, the trial court cited the differences in the burdens under the
federal analysis and the state analysis. In a letter that the trial court specifically said
did not amount to findings of fact or conclusions of law, the trial court noted that,
91 CR 531.
23 “between the Tax Injunction Act and the Texas constitutional prohibition on
municipal occupation taxes, the questions are not the same and the burdens are
reversed.” CR 384.
But the questions are the same. The federal court had to examine whether
the registration fee’s primary purpose was for regulation or for raising revenue.
Hill v. Kemp, 478 F.3d 1236, 1244 (10th Cir. 2007). The Texas Constitution
requires the same test: “whether an exaction authorized by statute or ordinance
constitutes an occupation tax or a license fee, the test is whether the primary
purpose of the exaction, when the statute or ordinance is considered as a whole, is
for regulation or for raising revenue.” City of Houston v. Harris County Outdoor
Advertising Assoc., 879 S.W.2d 322, 326 (Tex. App. – Houston [14th Dist.] 1994,
writ denied). Further, even if the burdens differ and a record “devoid of proof”
would fall in favor of the taxpayer in federal court but the municipality in state
court, as the trial judge indicated in his letter of December 24, 2014, the Federal
Action was not decided on a record devoid of proof. The federal court made that
ruling after a full trial based on “conflicting evidence presented about the
reasonable cost of registering billboards.” 92
Res judicata has multiple purposes, including the need to maintain the
stability of court decisions and promote judicial economy. Barr v. Resolution Trust
92 RR3, PE 15, p. 13.
24 Corp., 837 S.W.2d 627, 629 (Tex. 1992). The trial court’s retrial and subsequent
ruling in this case has resulted in the type of conflict and instability in court
decisions that res judicata principles were intended to avoid. To avoid that conflict,
the trial court should have honored the specific factual findings and the
conclusions of the federal court. Alternatively, the trial court should have honored
at least the specific factual findings made by the federal court in the previous trial
of these claims as it determined the merits of this case. Instead, in finding that res
judicata did not apply, the trial court gave the City a second shot at litigating the
reasonableness of its fee, creating a conflicting result.
III. Issue No. 2: The trial court erred in concluding that the City’s billboard registration fee was a fee rather than a tax, given the arbitrary near doubling of the fee, the absence of any assessment of costs until after the fee was increased, and the unreliable and imprecise assessment of costs performed by the City’s expert.
The trial court also should be reversed because the evidence does not
support the trial court’s findings and conclusions about whether the billboard
registration fee was a permissible fee or an unconstitutional tax. CR 565,
Conclusions of Law 3-5; CR 564-565, Findings of Fact 45-52.
A. Under Texas law, a municipality cannot impose an occupation tax on a particular industry if the State of Texas has not imposed an occupation tax.
The parties in this case do not differ on the law applicable to the
municipality’s imposition of an occupation tax. The Texas Constitution states:
25 The occupation tax levied by any county, city or town for any year on persons or corporations pursuing any profession or business, shall not exceed one half of the tax levied by the State for the same period on such profession or business.
Tex. Const. art. VIII, § 1(f); see Appendix D. This provision prohibits a
municipality from levying an occupation tax where no such tax has been
previously levied by the State. City of Houston v. Harris County Outdoor
Advertising Assoc., 879 S.W.2d 322, 326 (Tex. App. – Houston [14th Dist.] 1994,
writ denied), cert. denied, 516 U.S. 822 (1995)(citing Hoefling v. City of San
Antonio, 20 S.W. 85, 88-89 (Tex. 1892) and Pierce v. City of Stephenville, 206
S.W.2d 848, 850 (Tex. Civ. App. – Eastland 1947, no writ)). The State of Texas
has not levied an occupation tax on the off-premise sign industry. City of Houston,
879 S.W.2d at 326; see generally Tex. Occ. Code. The City, therefore, cannot
impose an occupation tax on the off-premise sign industry. If the City’s billboard
registration fee is an occupation tax, then the City violated – and continues to
violate – article VIII, § 1(f). 93
93 Not disputed before the trial court is that the Due Process Clause applies to any unlawful collection of taxes, including ones that violate state law or provisions of the State Constitution. City of Houston, 879 S.W.2d at 333 (citing Smith v. Travis County Educ. Dist., 791 F. Supp. 1170, 1178 n.5 (W.D. Tex.), vacated on other grounds, 968 F.2d 453 (5th Cir. 1992)). A state must provide procedural safeguards against unlawful tax exactions to satisfy the Due Process Clause. McKesson Corp. v. Division of Alcohol Beverages and Tobacco, Dept. of Business Regulation of Florida, 496 U.S. 18 (1990). When the state places a taxpayer under duress to pay a tax promptly when due and relegates the taxpayer to a post-payment refund action to challenge the tax’s legality, the Due Process clause obligates the state to provide meaningful backward- looking relief to rectify any unconstitutional deprivation that occurs. Id. Failure to register a sign and pay the fee is a punishable offense and affects relocation rights. Austin City Code Section
26 B. To determine whether the fee is a permissible fee or an unconstitutional tax, the trial court was required to consider whether the purpose of the fee was regulation or revenue and whether the fee was more than reasonably necessary to cover the cost of regulation.
Whether an exaction is an occupation tax or a license fee depends on
whether its primary purpose is regulation or raising revenue. City of Houston, 879
S.W.2d at 326 (citing Hurt v. Cooper, 110 S.W.2d 896, 899 (Tex. 1937) and City
of Fort Worth v. Gulf Refining Co., 83 S.W.2d 610, 617 (Tex. 1935)). If the
primary purpose is for regulation, then it is a license fee; if the primary purpose is
to raise revenue, then it is an occupation tax. Id. In making this determination, the
Court must consider the reasonableness of the fee. Id. “[A] license fee cannot be
excessive nor more than reasonably necessary to cover the cost of granting the
license and of exercising proper police regulation, or it must bear some reasonable
relationship to the legitimate object of the licensing ordinance.” Id. at 326-27. The
nature of the business to be controlled and the necessity and character of the
regulations are what the court should look at in determining the reasonableness of
the fees imposed. City of Houston, 879 S.W.2d at 327. Municipal fees are prima
facie valid and presumed reasonable; to overcome that presumption is an
extraordinary burden. City of Brookside Village v. Comeau, 633 S.W.2d 790, 792
25-10-152(F)(1)(d) and (e), 25-10-237. Here, the evidence is undisputed that Reagan paid the fees under protest. CR 362, SF # 38 – #43.
27 (Tex. 1982); City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 805
(Tex. 1984).
C. This appeal challenges the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee is a fee.
In this case, the trial judge concluded that the City’s billboard registration
fee is a permissible fee rather than a tax. On this issue, the trial court issued the
following Conclusions of law:
3. There is a reasonable relationship between the amount of the fee and the City’s costs. 4. The primary purpose of the fee, in light of the ordinance that authorizes the fee as a whole, is for regulation. 5. The City’s fee is reasonable and constitutional.
CR 565. The trial court also entered the eight following Additional Findings of
Fact:
45. Registration and regulation program consists of review of billboard records and details, inspection, enforcement, correspondence, legal assistance, financial activities, and data entry. 46. Ms. Whitaker’s methodology was to determine the City’s salary costs by calculating the average amount of time employees spent on activities related to the billboard registration program and then determine the overhead rates (non-salary costs) allocated by employee based on four cost factors. 47. Ms. Whitaker’s study demonstrates that the billboard registration fee covers salary costs, fringe benefits (for employees), direct costs, internal indirect costs, and external indirect costs for each department involved in the billboard registration program. 48. Ms. Whitaker’s study found City’s cost is $193.46 per sign per year.
28 49. On April 5, 2012, Council found that (A) the City has the authority to regulate billboards; (B) the City’s ability to enforce regulations have been hampered; (C) it is necessary to require registration for effective enforcement of all current non- conforming off-premises sign regulations; (D) registration information must be collected, verified, and on-site inspections should be conducted; and (E) that the City’s costs are $190 per sign per year. 50. City Council relied on a “cost of service” study conducted in 2011 and the study is referenced in the ordinance. 51. The activities performed for the billboard registration program are related to the program. 52. The fee is based on the City’s costs for actual activities performed.
CR 564-565.
All of these findings and conclusions were attempts to show that the City’s
fee was reasonable. The problem is that there is no evidence to support these
findings and conclusions. The City did nothing to determine whether there was a
reasonable relationship between the amount of the fee and the City’s costs until
after the City had nearly doubled the fee. The City initially acknowledged that the
fee was approximately $60 too high. Later analyses by the City were based on
costs that were not reasonable or necessary towards the implementation of the
billboard registration program call for by the 2008 Ordinance. Finally, the City’s
expert, retained for the purpose of litigation, delivered a “point in time” analysis
that was based on arbitrary estimates with no consideration for whether the
program, as administered by the City, was consistent with the program called for
by the 2008 Ordinance. Each of these issues is addressed in turn.
29 1. The City did no assessment of its costs prior to raising the fee, and, before any lawsuit was filed, the City acknowledged that its increased fee was approximately $60 too high.
No one disputes that the City did not assess its costs before raising the
billboard registration fee from $220 every two years to $200 each year. CR 360,
SF #21. In fact, before any lawsuit was filed, the City’s accounting department
acknowledged the existence of a “gap between the revenue and expenditures of
running this program” and concluded “we can lower to rate to $140, which will
accomplish [the] goal” of closing the gap. Id. Even at $140, the City’s revenue
would exceed its costs by approximately $2500. Id. (analysis attached to email).
2. Early attempts to justify the fee included actions and programs beyond those authorized by the enacting ordinance.
After the City’s initial analysis resulted in a recommendation of a reduction
of the fee by $60, the City, through Mr. Cardenas, an Assistant Director of the
Austin Code Department, performed two other internal analyses that concluded the
per billboard costs were $242 or $352 per billboard per year. RR3, PE 10 and PE
11. Those analyses both included costs not authorized by the 2008 Ordinance.
The 2008 Ordinance called for the City to (a) receive bulk registrations
annually from a small number of billboard companies, (b) verify the information
on those registrations, (c) notify the sign owner of pending expiration of
registrations, (d) restrict relocation of signs if the registration requirements were
not met, (e) punish those who failed to register with a fine, and (f) create an online
30 database of billboard inventory. See Statement of Facts, Part 1 above and
Appendix F (RR3, PE 2).
As indicated in Statement of Facts, Part 3 above, Mr. Cardenas did not
review budget documents or get assistance from the City’s Budget Office. He
assumed the need for 21 staff positions, two full-time vehicles, and over 500
mailings (even though the 2008 Ordinance no longer called for communication
with over 500 landowners but only a handful of billboard companies). He assumed
administration of the sign relocation process, which has its own permit process and
fees, entirely separate from the billboard registration fee. He also assumed the
costs of enforcement, which also has its own process and fees. Even requests for
changes to billboards have their own fees associated with them. Additionally, his
analysis included costs that have not been incurred – the creation of a searchable
database and a $20,000 violation placard contract. The costs determined by Mr.
Cardenas are not reasonably related to the requirements of the 2008 Ordinance or
accurately reflective of the City’s actual costs of administering the billboard
registration program.
3. In litigation, the City’s retained expert’s analysis was based on imprecise and arbitrary estimates and looked at the City’s program as implemented, rather than as authorized by the 2008 ordinance.
Even the City’s retained litigation expert did not reach a conclusion of costs
anywhere near the costs determined by Mr. Cardenas, with or without the input of
31 his Director, Mr. Rhodes. In January of 2011, well into litigation with Reagan, the
City’s expert, Ms. Whitaker, performed a “point in time” analysis on which the
City relied in lowering its billboard registration fee for 2013 and 2014 to $190 per
billboard per year. The Whitaker Report does not support the Additional Findings
of Fact and Conclusions of Law entered in this case and should have been
excluded by the trial court based on Reagan’s objections of relevance and
unreliability. CR 246.
Ms. Whitaker data was unreliable. She based her analysis largely on Mr.
Boas’s estimate that he spent two hours per sign per year. She did nothing to verify
that estimate (or any estimate provided), and the lack of verification as to Mr. Boas
is particularly significant because his was the largest labor component to the
billboard registration fee determined by Ms. Whitaker. The fee determined by Ms.
Whitaker is based on five components: labor, fringe benefits, direct costs, internal
costs and external costs, all of which flow from the amount of labor required. CR
247-248. Any errors made in the labor allocations have a ripple effect on the rest of
the analysis and the fee. At trial, Ms. Whitaker acknowledged that a fifteen-minute
variance on Mr. Boas’s two-hour estimate could have a 12.5% impact on the final
cost – an amount that Reagan contends is material. RR2 181:16-182:9.
Further, the Whitaker Report is not relevant. Ms. Whitaker analyzed “what it
costs to administer the fee” as done by the City at a particular point in time. She
32 did not consider whether the employees’ activities included in her assessment were
reasonably necessary in light of what the 2008 Ordinance requires. CR 248. Ms.
Whitaker did not know the requirements of the 2008 Ordinance, and she did not
consult with anyone at the City about whether Mr. Boas’s daily work was required
by the 2008 Ordinance. CR 248-249. Like the analysis done by Mr. Cardenas, the
Whitaker Report included requirements for legal opinions, trainee review of
applications, and a Class C inspector to review everything, even though the 2008
Ordinance does not require those activities. CR 249. Additionally, the Whitaker
Report’s “point in time” analysis assumed that Mr. Boas’s two-hour per year
estimate would apply in perpetuity, but Mr. Boas himself testified that he expected
that the amount of time it would take to do the work required by the 2008
Ordinance would decrease over time, as much of the initial labor went towards
initial verification of the details reported by the billboard owners. RR2 130:7-
131:18. The City’s cost at that “point in time” is not the same as the City’s actual
ongoing cost of administering the billboard registration program.
4. The evidence is insufficient to support the trial court’s Additional Findings of Fact and Conclusions of Law related to the issue of whether the billboard registration fee.
The contested findings and conclusions are not supported by the evidence.
• Additional Finding of Fact #45 is vague, does not clearly identify the “registration and regulation program” to which it refers, and fails to accurately identify all of the aspects of the program as implemented
33 by the City, which exceed the requirements of the enacting ordinance. CR 541-542.
• Additional Finding of Fact #46 does not address the entirety of Ms. Whitaker’s methodology and says she “calculated” the average time spent by employees, when in fact she estimated that time based on estimates provided to her by the two employees she interviewed. Double estimates are not calculations. CR 542.
• Additional Finding of Fact #47 does not acknowledge that the estimates made by Ms. Whitaker pertain to the billboard registration program as implemented by the City, regardless of whether the activities are called for by the 2008 Ordinance, and are limited to a “point in time.” The Whitaker Report does not address the actual costs of the program as identified in the 2008 Ordinance, nor does it reflect the City’s ongoing cost of implementation. CR 542-543.
• Additional Finding of Fact #48 does not reflect the City’s ongoing cost of implementation or recognize the limitation of the Whitaker Report as a “point in time” analysis” Nothing in the record supports a finding that the cost to the City remains $193.46 now or will remain that amount in perpetuity. CR 543.
• Additional Finding of Fact #49 appears to be based on Defendants’ Exhibit 2, which says that the City Council “previously found that the City’s ability to enforce billboard regulations has been hampered.” RR4, DE2. The exclusion of the words “previously found” suggests the City made the finding on April 5, 2012, which is not accurate. Additionally, the City did not independently determine on April 5, 2012, that the City’s costs were $190 per sign per year. The City’s determination was based on the Whitaker Report. Parts (B) and (E) of this Additional Finding of Fact are, therefore, inaccurate. CR 543-544.
• Additional Finding of Fact #50 does not reference the ordinance to which it refers and vaguely asserts that the City Council “relied” on the Whitaker Report without any indication of what it did as a result of that reliance. CR 544.
• Additional Finding of Fact #51 fails to acknowledge that the activities performed by the City for the billboard registration program are
34 related to the program, as implemented by the City, but they are not related to the program as called for by the 2008 Ordinance. CR 544.
• Additional Finding of Fact #52 does not specify the fee to which it refers – the $200 fee or the $190 fee. Additionally, it fails to acknowledge that the City’s analysis was based on estimated costs, rather than actual costs. Further, it fails to acknowledge that the actual activities performed by the City do not all pertain to the program as outlined in the 2008 Ordinance. CR 544.
Similarly, Conclusions of Law #3, #4 and #5 are not supported by the
evidence or the law. The evidence is that the City knew its fee was too high before
the litigation started. The subsequent Cardenas analyses and the Whitaker Report
were deficient for all the reasons stated in Part III(C)(2) above. Further, all of the
analysis done by the City was an after-the-fact effort to justify its near doubling of
the billboard registration fee. While the trial court concluded that the fees were
reasonably necessary to the City’s costs, the evidence actually showed no
reasonable relationship. The fee is unreasonable and an unconstitutional tax.
D. Case law on the assessment of a municipal fee gives the City discretion, but does not and should not allow for arbitrary fee increases and unsubstantiated after-the fact justifications.
Texas law does not allow a City to set or increase its fees arbitrarily. In City
of Houston v. Harris County Outdoor Advertising Assoc., City of Houston doubled
the fee for an off-premise sign operating permit and was sued for charging an
excessive and unconstitutional fee. 879 S.W.2d 322, 325-26 (Tex. App. – Houston
[14th Dist.] 1994, writ denied), cert. denied, 516 U.S. 822 (1995). After a trial, the
35 court found that the fee was “unreasonably high, unconstitutionally excessive, and
that $40.00 was a reasonable and constitutional fee.” Id. at 326. The court awarded
over a $1 million as damages, attorneys’ fees, postjudgment interest and court
costs. Id.
City of Houston notes that courts ordinarily do not interfere with a
municipality’s imposition of license fees under their police power, but that
intervention is appropriate when the “unreasonable and oppressive nature of the
exaction [is] clearly apparent from the record.” City of Houston, 879 S.W.2d at
326. The court found the licensee had met the burden of proving unreasonableness
and oppressiveness where there was no direct relationship between the fee and the
receipt of services and where the revenue from the fee exceeded the reasonable
costs of regulation. Id. at 327. The Houston court specifically rejected the City’s
argument that any assessment of a fee “no matter how prohibitive or tenuously
connected to regulation is reasonable as long as it relates to regulation.” City of
Houston, 879 S.W.2d at 328-29. In rejecting that assertion, the Houston Court of
Appeals said, “Were we to accept the City’s position, any review of whether the
assessment is in fact reasonably necessary to cover the cost of regulation would be
prohibited. That is not the state of the law.” Id. at 329.
The facts in City of Houston included the following:
36 (a) The City of Houston increased the fee six times between 1980 and
1989. Id. at 328.
(b) Prior to making the final increase, the City of Houston commissioned
a study by an accounting firm to assist the city in assessing its
administration costs. Id. at 328.
(c) The commissioned study included two assessments of costs. It
initially concluded that the City’s costs associated with an off-premise
operative permit was $19.73; then it found a higher cost after indirect
department costs and costs associated with real estate signs were
included, even though the City of Houston charged a separate fee for
real estate signs. Id. at 329.
(d) The proposal made to City Council, which was based in part on the
commissioned study, “projected $184.00 in costs associated with a
three-year off-premise permit and recommended a fee increase from
an average of $89.50 to $179.00.” Id. at 328.
(e) The parties stipulated that the work directly connected to the issuance
of an off-premise sign permit took about 45 minutes and included
inspection, issuance of the permit and initial record keeping. Id. at
330.
37 (f) Evidence presented included evidence that the Sign Administration
organization was “characterized by waste, mismanagement and
inefficiency” such that the trial court could reasonably have concluded
that the fees were merely to raise revenue. Id. at 332.
With these facts, the trial court found the fees were not reasonably necessary to
cover the cost of litigation, and the Houston Court of Appeals affirmed. Id. at 332.
The facts surrounding the City of Austin are, in some respects, even more
egregious than those in the City of Houston case. The City of Austin nearly
doubled its fee with no assessment of costs prior to the agreement – not even a
basic inquiry of the employee charged with implementing the billboard registration
program. The City of Austin, back in 2009, acknowledged that its fee was at least
$60 too high. It conducted other internal examinations that included activities not
authorized by the ordinance and activities with their own fees, which should not
have been included in an assessment of costs. The only evidence in support of the
City’s fee is a brief study conducted by an expert after litigation was filed, and that
study is largely based on an imprecise and unsupported estimate by the
administrator of the billboard registration program that he spends two hours per
sign per year. Aside from that study – which was defective because it looked at
how the City administered the program rather than what activities are required by
the enacting ordinance – there was no evidence to support the trial court’s findings.
38 Nothing supports the conclusion that the City’s fee was reasonably related to its
costs or that the primary purpose of the fee was regulation, and, under City of
Houston, it should have been found unreasonable.
E. The trial judge in this case deferred to the City’s exercise of its discretion more than the evidence warranted.
The trial judge’s letter contains two statements showing his hesitancy to
interfere with the City’s regulation. In addressing whether the Houston court, in
City of Houston, had properly considered the Sign Administration department’s
inefficiency, waste and mismanagement, the trial judge said:
[T]he only question for the court is the relationship of those incurred costs to the amount charged the licensee. The rest is for the electorate. Through the guise of prohibiting an unconstitutional occupation tax, the courts cannot sit in judgment of the management of a city. The constitutional prohibition does not make city councils and managers beholden to a court of law to prove their good government. [Nor are courts equipped or inclined to accept that responsibility.]
CR 385. The trial judge also criticized the Houston Court of Appeals for affirming
in the absence of information as to how the trial court arrived at the $40 figure it
ultimately decided was a reasonable fee:
The appellate court left it entirely to the trial judge to pick a cost, without explanation, anywhere in that broad range. Surely a trial judge has at least as much discretion and should employ it in a manner that, if possible, avoids declaring an ordinance unconstitutional. As one court noted, mathematical precision is not required. Nor should it be lest constitutionality turn on a battle of experts estimating and crunching numbers that are inherently uncertain. No governmental entity acting in good faith should have to gamble on those terms.
39 CR 385.
The standard set out in City of Houston requires a trial judge to assess the
purpose and reasonableness of a municipal fee, and such a judge should intervene
to protect a constituency that is being unconstitutionally taxed. The court can and
should sit in judgment consistent with the standard set by Texas law. When is court
intervention warranted if it is not appropriate in a case such as this where a city
does no analysis prior to doubling a fee, acknowledges internally that its fee is too
high, and then attempts to justify a fee based on arbitrary and unverified estimates
with no consideration for whether the costs incurred are relevant to the related
ordinance? Reagan requests that the Court reverse the trial court on these facts and
order a refund to Reagan of $198,450.00 – the amount it paid for 2009 through
2014 in excess of $115, which Mr. Granger calculated as a neutral fee. See
Statement of Facts, Part 4. Alternatively, Reagan requests a refund of $116,350.00
– the amount it paid for 2009 through 2014 in excess of $140, the amount
recognized even by City to be a more reasonable fee.94
94 Reagan’s damage calculation, assuming a $115.00 per-sign-per-year fee, was explained at CR 329-330. Damages assuming $140 were calculated in the same manner. Year Fee # of Signs Amount Overcharged - $115 Amount Overcharged - $140 2009 $200 389 $33,065.00 $23,340.00 2010 $200 376 $31,960.00 $22,560.00 2011 $200 417 $35,445.00 $25,020.00 2012 $200 408 $34,680.00 $24,480.00 2013 $190 425 $31,875.00 $21.250.00 2014 $190 419 $31,425.00 $20,950.00 TOTALS: $198,450.00 $116,350.00
40 IV. Issue No. 3: Because Reagan filed this case within 60 days of the dismissal of the Federal Action becoming final, the trial court erred as a matter of law in concluding that Reagan’s claims for fees paid for 2009 and 2010 are time barred.
Section 16.064 of the Texas Civil Practice & Remedies Code says the
limitations period is tolled where a lawsuit is timely filed but dismissed for lack of
jurisdiction and a new lawsuit in the proper court is filed within 60 days “after the
date the dismissal or other disposition becomes final.” TEX. CIV. PRAC. & REM
CODE § 16.064(a)(2)(emphasis added); See Appendix E. Reagan’s claims were
timely because it filed the state court lawsuit within 60 days of the federal
judgment becoming final.
A. Section 16.064 of the Texas Civil Practice & Remedies Code and case law show Reagan was timely because it filed the second lawsuit without 60 days of the federal court losing its power to alter its judgment.
Reagan’s Federal Action was filed in April of 2010. It was dismissed for
lack of jurisdiction on November 30, 2011. Reagan filed this case on April 25,
2012. Judge John Dietz determined, after a summary judgment hearing, that
Reagan’s second lawsuit was timely:
A motion for reconsideration could have been filed within 28 days – or by March 5, 2012. Sixty days from March 5 was May 4, 2012. The suit was filed on April 25, 2012, so it was timely under CPRC § 16.064.
CR 197-198. Judge Dietz’s analysis comports with Texas law.
41 Texas law is clear that “a judgment of dismissal becomes final for purposes
of section 16.064 when it disposes of all issues and parties in the case and the
court’s power to alter the judgment has ended.” Oscar Renda Contracting, Inc. v.
H&S Supply Co., Inc., 195 S.W.3d 772, 776 (Tex. App.—Waco 2006, pet. denied)
(emphasis added). Texas law is clear that Section 16.064 is to be “liberally
construed to effectuate its manifest objective – relief from penalty of limitation bar
to one who has mistakenly brought his action in the wrong court.” See Chacon v.
Andrews Distributing Co. Ltd., 295 S.W.3d 715, 722 (Tex. App.—Corpus Christi
2009, pet. denied); see also Vale v. Ryan, 809 S.W.2d 324, 327 (Tex. App.—
Austin 1991, no writ)(60 day clock under Section 16.064 did not run until federal
court of appeal ruled).
The federal court did not lose plenary power to alter its judgment the day the
judgment was entered. CR 110. It could grant a motion for new trial under FED. R.
CIV. P. 59. Under Rule 60, the federal court retained power to grant relief from a
final judgment for a reasonable time, which for specific grounds is defined as up to
a year after the entry of the judgment or order or the date of the proceeding. See
FED. R. CIV. P. 60(c)(1). It also retained jurisdiction to act in various ways until an
appeal was docketed or pending.95 See FED. R. CIV. P. 62.1(a). Judge Dietz was
95 An appeal is not due in federal court until 30 days after entry of the judgment or order. See FED. R. CIV. P. 4(a)(1)(A).
42 right – Reagan’s state suit was timely because Reagan was within 60 days of the
federal court losing its plenary power.
B. The City’s restrictive reading of Section 16.064 is inconsistent with Texas law.
The City contends that the current lawsuit was untimely as to claims for fees
paid for 2009 and 2010 because it was filed more than 60 days after November 30,
2011 –the date the Federal Action was dismissed. SCR 9. But the 60-day period in
Section 16.064 does not begin to run on the day the judgment or order denying the
City’s motion for new trial was entered by the federal court. In making that
argument, the City relied on Ruiz v. Austin Indep. Sch. Dist., 2004 WL 1171666
(Tex. App.—Austin 2004, no pet.), in which a case was dismissed because it was
filed 79 days after the federal court’s dismissal.
Ruiz did not consider the argument made by Reagan regarding the ongoing
ability of the federal court to alter its judgment. Additionally, Oscar Renda
Contracting, relied on by Reagan, better tracks the language of Section 16.064 of
the Texas Civil Practice & Remedies Code in recognizing that the 60-day period
does not run until the court’s power to alter the judgment has ended. Oscar Renda
Contracting, 195 S.W.3d at 776. Further, Oscar Renda Contracting is the more
recent case. It was decided in 2006. Ruiz was decided two years earlier. If Oscar
Renda Contracting is applied, Reagan’s claims are not time barred.
43 C. The trial judge initially rejected the City’s limitations argument, but he subsequently entered a conclusion of law on the issue that was inconsistent with his stated intended ruling.
After losing the issue on summary judgment, the City raised the issue of
limitations a second time through a trial brief and cited Ruiz once again. CR 351-
52. The trial judge, in his letter of December 24, 2014, agreed with Judge Dietz
and said that the limitations defense had no merit. “[W]hen dismissal by one court
begins the running of a deadline to file suit in another court, it only makes sense to
begin the deadline when the first court has lost plenary power.” CR 383. The final
judgment denying Plaintiff’s claims did not address the City’s limitations defense,
but concluded: “All relief not expressly granted herein is hereby denied.” CR 508.
Shortly after trial and before the December 24, 2014 letter, the parties
submitted their proposed findings of fact and conclusions of law. Reagan requested
a request for a conclusion that its claims were not barred by limitations and noted
in a footnote that the issue had been decided by Judge Dietz in his order on the
parties’ motions for summary judgment. CR 369 #3 and fn. 2. The City asked for a
conclusion that the claims were time-barred but appropriately noted in a footnote
that its Conclusion of Law was included “out of an abundance of caution and to
preserve the issue for appeal.” CR 381 #1, fn. 2. In other words, the City
recognized it had lost this argument.
44 Despite the prior summary judgment order, the trial court’s own decision
that the limitations defense did not have merit, and the parties’ acknowledgment of
the court’s intended ruling, the trial court entered a Conclusion of Law that
“Reagan’s claims for fees paid in August of 2009 and March of 2010 are time
barred.” CR 539 #1. Reagan asked the trial court to amend its Conclusion of Law
to reflect the court’s previously stated determination that the claims were not time
barred. CR 541. However, the trial court refused that request. CR 565, #1.
Given the federal court’s ongoing ability to alter its judgment, the intended
liberal construction of section 16.064, the decision by Judge Dietz, and the trial
judge’s own conclusions in the December 24, 2014 letter, it was error for the trial
judge to enter a conclusion of law that Reagan’s claims for 2009 and 2010 fees
were time barred.
V. Issue No. 4: Alternatively, the trial court erred in failing to order that Reagan was entitled, at a minimum, to a return of the amounts it paid in excess of $190 for the four years that the City charged a fee of $200 and in failing to grant attorneys’ fees.
Reagan maintains that the City’s billboard registration fee was an
unconstitutional tax rather than a permissible fee, and that Reagan should have
been awarded a reimbursement of the portion of the fees it paid that amounted to
an unconstitutional tax, as well as attorneys’ fees. However, even assuming that the
City’s expert Ms. Whitaker was correct and that a reasonable fee was $190 per
billboard per year, Reagan should have been awarded a refund of a portion of the
45 fees it paid for 2009, 2010, 2011 and 2012, when the City was charging $200 per
billboard per fee.
Although Ms. Whitaker concluded in January 2011 that a reasonable fee was
$190, the City did not reduce its $200 per billboard per year fee until 2013.
Reagan, therefore, paid a total of $15,900 in excess of what even the City’s expert
characterized as a reasonable fee. That amount was calculated as follows:
Year Number of Signs Amount Overcharged 2009 389 $3890 2010 376 $3760 2011 417 $4170 2012 408 $4080
The trial court erred in failing to award Reagan at least a judgment of $15,900.
The trial court also erred in failing to award Reagan attorneys’ fees in the
amount of $151,075.78 for the Federal Action and the present case, plus $15,000
for this appeal and another $5,000 in the event of an appeal to the Texas Supreme
Court if it denies review and $10,000 if the Supreme Court grants review. CR 391,
¶¶ 7 and 8. Alternatively, the trial court erred in failing to award Reagan attorneys’
fees in the amount of $69,525.28 (which are Reagan’s fees for the present case
alone), plus $15,000 for this appeal and another $5,000 in the event of an appeal to
the Texas Supreme Court if it denies review and $10,000 if the Supreme Court
grants review.
46 PRAYER
Reagan requests that this Court reverse the trial court and enter an order
declaring that the City’s billboard registration fee was an unconstitutional tax and
that Reagan is entitled to a refund of $198,450.00, calculated using $115 per year
as the permissible fee, (or alternatively, a refund of $116,350.00, calculated using
$140 per billboard per year as the permissible fee) and attorneys’ fees.
Alternatively, Reagan requests that the Court reverse and order that the City refund
$15,900.00 (the amount Reagan paid in excess of what even the City’s expert
characterized as a reasonable fee) and pay Reagan’s attorneys’ fees.
Respectfully submitted,
/s/ B. Russell Horton B. Russell Horton State Bar No. 10014450 rhorton@gbkh.com George Brothers Kincaid & Horton, L.L.P. 114 West 7th Street, Suite 1100 Austin, Texas 78701 (512) 495-1400 (512) 499-0094 FACSIMILE ATTORNEY FOR APPELLANT
47 CERTIFICATE OF COMPLIANCE
The undersigned certifies that the word count of this document is 10,464 according to the Word Count feature in Microsoft Word.
/s/ B. Russell Horton B. Russell Horton
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of this motion was served on September 24, 2015, on the following through the court’s e-filing system:
Patricia L. Link Gray Laird City of Austin-Law Department PO Box 1546 Austin, TX 78767-1546 512-974-1311 (facsimile) patricia.link@austintexas.gov
/s/ B. Russell Horton B. Russell Horton
48 -' --- -~ --! -- -- ----- ---- r - ----------~-'- __ _; ______ -_ -- ----•
APPENDIX A DC BK15093 PG84
CAUSE NO. D-1-GN-12-001211
REAGAN NATIONAL ADVERTISING § IN THE DISTRICT COURT OF OF AUSTIN, INC. § Plaintiff § § v. § TRAVIS COUNTY, TEXAS § CITY OF AUSTIN and MARC A. OTI, § in his official capacity, § Defendants. § 200TH JUDICIAL DISTRICT
FINAL JUDGMENT
On the 15th day of December, 2014, all parties and their counsel appeared for a bench
trial in this case. After reviewing the pleadings on file and considering the arguments, witness
testimony, evidence, and authority presented, the Court renders this Final Judgment.
IT IS ORDERED, ADJUDGED, AND DECLARED that that Plaintiffs request for
declaratory judgment, injunctive relief, and damages is denied and Plaintiff takes nothing. All
relief not expressly granted herein is hereby denied. Tills judgment is final and disposes of all
claims and all parties .and :..appeal~.
SIGNED t b i a day of~· 2015.
B. Russell Horton Patricia Taline Manassian H. Gray Laird GEORGE, BROTHERS, KINCAID & Assistant City Attorneys HORTON, L.L.P City of Austin Law Department
ATTORNEYSFORPLAlNTffF ATTORNEYS FOR DEFENDANTS
Page J oft
~i~~ i1f1\iU1i\i~\i1\ii \1111 IIIII IIIIIIll\Ill\ 003959127 508 APPENDIX B ---------- ____ _!
Filed in The District Court of Travls County, Texas
MAY 27 2015 CJu ~~t 3~ ='~ I r-.t CAUSE NO. D-1-GN-12-001211 '/.)IVa L. Pri~o. O!;;tr;.:.t C: REAGAN NATIONAL ADVERTISING § IN THE DISTRICT COURT OF AUSTIN, INC. § Plaintiff § § v. § TRAVIS COUNTY, TEXAS § CITY OF AUSTfN and MARC A. OTT, § in his official capacity, § Defendants. § 200TH JUDICIAL DISTRICT AMENDED FINDINGS OF FACT AND CONCLUSIONS 0~~ LAW STIPULATED FACTS: 2. Reagan National Advertising of Austin, Inc. d/b/a Reagan National Advertising ("Reagan") is a Delaware corporation doing business in Austin, Travis County, Texas and sun·ounding areas. 3. The City of Austin, Texas, is a home-rule municipality located in Travis, Hays, and Williamson Counties. 4. Marc A. Ott is the City Manager of the City of Austin. 5. Reagan is in the business of outdoor advertising, which includes the ownership and operation of billboards. Reagan engages in outdoor advertising within the City of Austin and the surrounding area. 7. The City of Austin regulates off-premise signs in Chapter 25-10 ofthe Austin City Code. 8. Off-premise signs are only allowed ifthey qualify as a legal non-conforming use. 10. Reagan and its billboards are required to comply with Chapter 25-10 of the Austin City Code. 11. On November 8, 2007, the Austin City Council ("Council") approved Resolution No. 20071108-128 ("Resolution") related to non-conforming off-premise signs 561 "1 -------- (billboards). This Resolution also initiated the code amendment process for billboard regulations. 12. Before the Council amended the City's billboard regulations in June of 2008, the City Code required landowners to register billboards on their land every other year. 13. The registration fee prior to 2009 was $220 per billboard every two years. 14. Austin City Ordinance No. 20080605-076, adopted on June 5, 2008, amended the City's billboard regulations. 15. The Council adopted a registration fee of $200 per billboard per year during the annual budget process for fiscal year 2008-2009. 16. For the years 2009,2010,2011, and 2012, the City required billboard owners (rather than lando"'11ers) to register their billboards annually and to pay a registration fee of $200 per billboard per year. 17. On April 5, 2012, the Council adopted Ordinance No. 20120405-007, which reduced the registration fee from $200 per billboard per year to $190 per billboard per year. 18. For the years 2013 and 2014, the City required billboard owners to register their billboards annually and to pay a registration fee of $190 per billboard per year. 19. Currently, the City requires billboard owners to pay a registration fee of $190 per billboard per year. 20. The Austin Code Department is responsible for billboard registration. 21. Prior to adopting the $200 per billboard per year fee, the City did not prepare a study, budget, or survey to detem1ine the City's cost to implement the registration program. 22. After the City had implemented the $200 per billboard per year fee, Robert. Rowan did an analysis of the costs of the program and sent the November 9, 2009, email reflected in Plaintiffs Exhibit 8. 23. Plaintiff's Exhibits 10 and II were prepared by Daniel Cardenas, an Assistant Director of the Austin Code Department (as it existed in 2009), at the request of Willie Rhodes, Mr. Cardenas's Director at the time. 24. Mr. Rhodes asked Mr. Cardenas to analyze the cost to deliver the billboard registration program. 25. The email in Plaintiff's Exhibit 8 was sent prior to the time when Exhibits 10 and 11 were completed. 562 --- ____ I 39. In March of2010, Reagan tendered a check in the amount of$75,221.40 as payment of the 2010 Registration Fee. This payment was made under protest and was made based on a $200 per billboard per year fee. 40. In December of 2010, Reagan tendered a check in the amount of $83,400.00 as payment of the 2011 registration fee. This payment was made under protest and was made based on a $200 per billboard per year fee. 41. In December of 20 II, Reagan tendered a check in the amount of $81,600.00 as payment of the 2012 registration fee. This payment was made under protest and was made based on a $200 per billboard per year fee. 42. In December of 20 I 2, Reagan tendered a check in the amount of $80,750.00 as payment of the 20 I 3 registration fee. This payment was made under protest and was made based on a$ I 90 per billboard per year fee. 43. In December of 2013, Reagan tendered a check in the amow1t of $79,610.00 as payment of the 20 14 registration fee. This payment was made under protest and was made based on a$ I 90 per billboard per year fee. 44. Robert Rowan's spreadsheet concerning the registration program (attached to the email dated November 9, 2009 to Dan Cardenas and Matt Christianson- Plaintiff's Exhibit 8) and Dan Cardenas' spreadsheets concerning the registration program (Plaintiff's Exhibits 10 and 11) were created after the Fiscal Year 2009-2010 budget was adopted by the Austin City Council. ADDITIONAL FINDINGS OF FACT: 45. Registration and regulation program consists of review of billboard records and details, inspection, enforcement, correspondence, legal assistance, financial activities, and data entry. 46. Ms. Whitaker's methodology was to deteemine the City's salary costs by calculating the average amount of time employees spent on activities related to the billboard registration program and then determine the overhead rates (non-salary costs) allocated by employee based on four cost factors. 47. Ms. Whitaker's study demonstrates that the billboard registration fee covers salary costs, fringe benefits (for employees), direct costs, internal indirect costs, and external indirect costs for each department involved in the billboard registration program. 48. Ms. Whitaker's study found City's cost is $193.46 per sign per year 49. On April 5, 2012, Council found that (A) the City has the authority to regulate billboards; (B) the City's ability to enforce regulations have been hampered; (C) it is necessary to require registration for effective enforcement of all current non-conforming off- 564 premises sign regulations; (D) registration information must be collected, verified, and on-site inspections should be conducted; and (E) that the City's costs are $190 per sign per year. 50. City Council relied on a "cost of service" study conducted in 2011 and the study is referenced in the ordinance. 51. The activities performed for the billboard registration program are related to the program. 52. The fee is based on the City's costs for actual activities performed. CONCLUSIONS OF LAW: 1. Reagan's claims for fees paid in August of2009 and March of2010 are time-barred. 2. Judge Yeakel's ruling based on the Tax Injunction Act is not rtlsjudicata as to this suit. 3. There is a reasonable relationship between the amount of the fee and the City's costs. 4. The primary purpose of the fee, in light of the ordinance that authorizes the fee as a whole, is for regulation. SIGNED on May 27,2015. -- 565 ' - - ~- - ____ [ - - __ [- --- ~-- - ' _-_ ! -- APPENDIX C § 1341. Taxes by States, 28 USCA § 1341 United States Code Annotated Title 28. Judiciary and Judicial Procedure (Refs & Annos) Part IV. Jurisdiction and Venue (Refs & Annos) Chapter 85. District Courts; Jurisdiction (Refs & Annas) 28 U.S.C.A. § 1341 § 1341. Taxes by States Currentness The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State. CREDIT(S) (June 25, 1948, c. 646, 62 Stat. 932.) 28 U.S.C.A. § 1341,28 USCA § 1341 Current through P.L. 114-49 approved 8-7-2015 ------------------------------ End nf Dnrunu:n! .,, 20 IS llh APPENDIX D . __-__ ] § 1. Equality and uniformity; tax in proportion to value; ... , TX CONST Art. 8, § 1 Vernon's Texas Statutes and Codes Annotated Constitution of the State of Texas 1876 (Refs & Annas) Article VIII. Taxation and Revenue Vernon's Ann. Texas Canst. Art. 8, § 1 § 1. Equality and uniformity; tax in proportion to value; income tax; exemption of certain tangible personal property from ad valorem taxation Effective: December 1, 2009 Currentness Sec. 1. (a) Taxation shall be equal and uniform. (b) All real property and tangible personal property in this State, unless exempt as required or permitted by this Constitution, whether owned by natural persons or corporations, other than municipal, shall be taxed in proportion to its value, which shall be ascertained as may be provided by law. (c) The Legislature may provide for the taxation of intangible property and may also impose occupation taxes, both upon natural persons and upon corporations, other than municipal, doing any business in this State. Subject to the restrictions of Section 24 of this article, it may also tax incomes of both natural persons and corporations other than municipal. Persons engaged in mechanical and agricultural pursuits shall never be required to pay an occupation tax. (d) The Legislature by general law shall exempt from ad valorem taxation household goods not held or used for the production of income and personal effects not held or used for the production of income. The Legislature by general law may exempt from ad valorem taxation: ( l) all or part of the personal property homestead of a family or single adult, "personal property homestead" meaning that personal property exempt by law from forced sale for debt; (2) subject to Subsections (e) and (g) of this section, all other tangible personal property, except structures which are substantially affixed to real estate and are used or occupied as residential dwellings and except property held or used for the production of income; (3) subject to Subsection (e) of this section, a leased motor vehicle that is not held primarily for the production of income by the lessee and that otherwise qualifies under general law for exemption; and (4) one motor vehicle, as defined by general law, owned by an individual that is used in the course ofthe individual's occupation or profession and is also used for personal activities of the owner that do not involve the production of income. (e) The governing body of a political subdivision may provide for the taxation of all property exempt under a law adopted under Subdivision (2) or (3) of Subsection (d) of this section and not exempt from ad valorem taxation by any other law. The § 1. Equality and uniformity; tax in proportion to value; ... , TX CONST Art. 8, § 1 Legislature by general law may provide limitations to the application of this subsection to the taxation of vehicles exempted under the authority of Subdivision (3) of Subsection (d) of this section. (f) The occupation tax levied by any county, city or town for any year on persons or corporations pursuing any profession or business, shall not exceed one half of the tax levied by the State for the same period on such profession or business. (g) The Legislature may exempt from ad valorem taxation tangible personal property that is held or used for the production of income and has a taxable value of less than the minimum amount sufficient to recover the costs of the administration of the taxes on the property, as determined by or under the general law granting the exemption. (h) The Legislature may exempt from ad valorem taxation a mineral interest that has a taxable value of less than the minimum amount sufficient to recover the costs of the administration of the taxes on the interest, as determined by or under the general law granting the exemption. (i) Notwithstanding Subsections (a) and (b) of this section, the Legislature by general law may limit the maximum appraised value of a residence homestead for ad valorem tax purposes in a tax year to the lesser of the most recent market value of the residence homestead as determined by the appraisal entity or 110 percent, or a greater percentage, of the appraised value of the residence homestead for the preceding tax year. A limitation on appraised values authorized by this subsection: (1) takes effect as to a residence homestead on the later of the effective date of the law imposing the limitation or January I of the tax year following the first tax year the owner qualifies the property for an exemption under Section 1-b of this article; and (2) expires on January I of the first tax year that neither the owner of the property when the limitation took effect nor the owner's spouse or surviving spouse qualifies for an exemption under Section 1-b of this article. (i-1) Expired. U) The Legislature by general law may provide for the taxation of real property that is the residence homestead of the property owner solely on the basis of the property's value as a residence homestead, regardless of whether the residential use of the property by the owner is considered to be the highest and best use of the property. U-1) Expired. Credits Amended Nov. 7, 1978, eff. Jan. 1, 1979; Nov. 3, 1987; Nov. 7, 1989; Aug. 10, 1991; Nov. 2, 1993; Nov. 7, 1995; Nov. 4, 1997; Nov. 2, 1999; Nov. 6, 2001, eff. Nov. 26, 2001; Sept. 13, 2003, eff. Sept. 29, 2003; Nov. 6, 2007, eff. Dec. 4, 2007; Nov. 3, 2009, eff. Dec. 1, 2009. Vernon's Ann. Texas Const. Art. 8, § 1, TX CONST Art. 8, § 1 Current through the end of the 2015 Regular Session of the 84th Legislature :> ----------' - __ I § 1. Equality and uniformity; tax in proportion to value; ... , TX CONST Art. 8, § 1 End of [)(l(:um~nt ;c ::'0 15 rl1omsoo R<:ol<:rs. No claim lo original US (iovCl nmcnl Worb. APPENDIX E ___ , _ __; _ _! - ___ -_I § 16.064. Effect of Lack of Jurisdiction, TX CIV PRAC & REM§ 16.064 Vernon's Texas Statutes and Codes Annotated Civil Practice and Remedies Code (Refs & Annos) Title 2. Trial, Judgment, and Appeal Subtitle B. Trial Matters Chapter 16. Limitations Subchapter D. Miscellaneous Provisions § 16.064. Effect of Lack of Jurisdiction Currentness (a) The period between the date of filing an action in a trial court and the date of a second filing of the same action in a different court suspends the running of the applicable statute of limitations for the period if: ( 1) because of lack of jurisdiction in the trial court where the action was first filed, the action is dismissed or the judgment is set aside or annulled in a direct proceeding; and (2) not later than the 60th day after the date the dismissal or other disposition becomes final, the action is commenced in a court of proper jurisdiction. (b) This section does not apply if the adverse party has shown in abatement that the first filing was made with intentional disregard of proper jurisdiction. Credits Acts 1985, 69th Leg., ch. 959, §I, eff. Sept. 1, 1985. V. T. C. A., Civil Practice & Remedies Code§ 16.064, TX CIV PRAC & REM§ 16.064 Current through the end of the 2015 Regular Session of the 84th Legislature ErH.l or Document t cOl" Tho;mon Rcnl\:rs. No claim lo original\ r.s. Govnnmcnl Work>. :n \: ' '~I ) I ( ; ; \ ' - 1 I APPENDIX F ____ I ----I PLAINTIFF'S EXHIBIT NO.2 * D-1-* *5411 * *ALBERTALVAREZ* -------- __-_I ORDINANCE NO. 20080605-076 AN ORDINANCE AMENDING CITY CODE SECTION 25-10-3 TO DEFINE MOBILE BILLBOARDS; AMENDING CITY CODE SECTION 25-10-102 TO PROHIBIT MOBILE BILLBOARDS; AMENDING CITY CODE SECTION 25-10- 152 RELATING TO REQUIREMENTS FOR NON-CONFORMING SIGNS; AND ADDING A NEW CITY CODE SECTION 25-10-237 TO IMPOSE A PENALTY FOR VIOLATION OF REGISTRATION REQUIREMENTS. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF AUSTIN: PART 1. The czty councll makes the followmg fzndmgs· (A) The baste purpose of mobtle billboards ts to dtsplay commercml adverttsrng on public streets By theu nature, mobtle billboards are mtended to attract the attention of cztzzens on pubhc streets and adJacent nght-of-way, mcludmg dnvers, pedestnans, brcycltsts, and others (B) Veh1cles that dtsplay commercial adverttsmg f10m a mobile platform, whtch can stop, start, and tum abruptly, accentuate the tendency of commerctal advert1smg to setze attention and distract dnvers and pedestJ wns (C) The use of motor vehicles to d1splay commercta! adverttsmg creates exhaust emiSSions and adds to traffic congestion by placmg add1t10nal motor veh1cles on C1ty streets for the sole purpose of advert1smg A1r quahty m the C1ty of Austm metropolitan plannmg area has detenorated such that the area may be categonzed as a "non-attamment" area m the near future under EnvJronmental ProtectiOn Agency regulattons (D) For these reasons, mob1le billboards create aesthetic bhght and VIsual clutter, as well as potenttal and actual traff1c, health, and safety hazard~ Prohtblttng mobJie b1!lboards will promote the pubhc health, safety and welfare of motonsts, · pedestnans, b1cycl!sts and others usmg publ1c streets and roadways m the C1ty and adJommg areas, by eltmmatmg aesthettc bltght and v1sual clutter and potential traffic and safety hazards caused by the operation of mobJle b11lboards A prohJbJt!On wdl also reduce traff1c congestion and exhaust enllSSlOOS by ehmmatmg an emiSSion source that reqUJres and encourages contmuous and extenstve operat1on of motor vehtcle engmes Fmally, a proh1b1t1on of mobtle billboards Will protect the pub he mvestment m and the character and d1gmty of the Ctty's streets Puge I of 10 COA 0018 PART 2. C1ty Code SectiOn 25-10-3 (DefinlftOilS) JS amended to read § 25-10-3 DEFINITIONS. In th1s chapter- (I) ADVERTISING SEARCHLIGHT means a searchlight used to d1rect beams of hght upward for advertismg purposes (2) COl'vtMERCIAL FLAG means a piece of fabnc or other flexible matenal displayed for commercJal purposes, but excludmg the official flag of a nation or of a state (3) FREESTANDING SIGN means a s1gn not attached to a bmldmg, but permanently supported by a structtll e extendmg from the gJOund and permanently attached to the ground (4) MAINTENANCE means the cleanmg, pamtmg, •epalTlng, or replacmg of defecttve parts of a stgn m a manner that does not alter the bas1c copy, desrgn, or structure of the s1gn, but does not mclude changmg the des1gn of the sign's support construction, changing the type of component matenals, or mcreasmg the rllummatiOn. (5) MOBILE BILLBOARD means a stgn mstalled or d1splayed on a veh1cle operatmg m the public nght-of-way for the purpose of advert1smg a busmess or ent:Jty that IS unrelaled to the owner of the veh1cle's pnmary busmess The term does not Include a s1gn that rs displayed or mstalled on. (a) a non-motonzed vehtcle, mclud~ng but not llm1ted to ped1-cabs, (b) a bus that IS used pnmanly for the pumose of transportmg multmle passengers, (c) a taxrcab, 1f the stgn complies With the requtremenls of City Code Section 13-2-388, or (d) a veh1cle operated m the normal course of the vehrcle owner's busmess, 1f the srgn contams advernsmg or 1denufymg mfonnat!On dtrectly related to the busmess and 1s not used to drsplay adverttsmg that 1s unrelated to the busmess (6) MDLTI-TENANT CENTER SIGN means a sign advemsmg rwo or more uses w1th common fac1ltt1es Page 2 of 10 COA 0019 __ I ill[E61J NONCONFORMING SIGN means a s1gn that was lawfully mstalled at 1ts current location but does not comply With the reqmrements of thts chapter. ffi[E+J] OFF-PREMISE SIGN means a srgn advertJsmg a busmess, person, actJVJty, goods, products, or services not located on the s1te where the srgn IS mstalled, or that dtrects persons to any locatlon not on that stte .(22(E&j] PROJECT£NG SIGN means a wall s1gn that extends over street nght-of- way for a dtstance of more than 18 perpendtcular mches from the bulldmg facade Q.ill[f91] PUBLIC RIGHT-OF-WAY means land dedtcated or reserved for street nght-of-way, uti!Jties,or other pubhc facllttJes fl.l2[f!-9j] ROOF SIGN means a Sign mstalled over or on the roof of a blllldmg @[t-H-1} SJDEWALK SIGN means a s1gn located on a s1dewalk, e1ther wtthm street nght-of-way or on pnvate property Wllhm a umfted development, advert:Ismg the busmess abuttmg the stdewalk where the s1gn IS located f112(~] STREET BANNER means a tabnc sign hung over a street mamtamed by the C1ty. (ill(f-87] STREET RIGHT-OF-WAY means the entirety of a pubhc street nght- of-way, mcludmg the roadway and pedestnan way. @[f-!41] WALL SIGN means a s1gn attached to the extenor of a buildmg or a freestandmg structure With a roof but not walls PART 3. Ctry Code Section 25-10-102 (S1gn:, ProlubiTed m All S1gn DlStncts) IS amended to read § 25-10-102 SIGNS PROHIBITED IN ALL SIGN DISTRICTS. Unless the bUJ!dmg offiCial determmes that the s1gn 1s a nonconformmg sign, the followmg signs are proh1b1ted. (1) an off-prem1se s.tgn, unless the s1gn 1s authonzed by another provJston of thts chapter, (2) a s1gn placed on a vehicle or trailer that IS parked or located for the pnmary purpose of displaymg the sign, P~ge 3 of 10 COA 0020 - -- -------- j (3) a festoon, mcludmg tmsel, stnngs of nbbon, small commercial flags, streamers, and pmwheels, (4) a s1gn not permanently aff1xed to a bulldmg, structure, or the ground that IS des1gned or mstalled m a manner allowmg the s1gn to be moved or relocated Without any structural or support changes, excludmg a ~1dewalk s1gn descnbed 111 Section 25-10~153 (Srdewalk Srgn In Dowmow11 S1gn Drstrrct);_[-] (5) a tethered, pllotless balloon or other gas-f1lled devtce used as a s1gn, [ami] (6) a s1gn that uses an mterm1ttent or flashmg hght source to attract attentiOn, excludmg an electromcally controlled changeable-copy Sign, and[-] (1) a mobile billboard w1thm the City's full-purpose !Unsd1ctmn. except that a mobtle b11lboard operator With an office located Withm the boundanes of the Capitol Area Metropolitan Plannmg Orgamzatton on the effectiVe date of Ordmance No 20080605-076 IS not subJect to the prohibitiOn until two years after the effectwe date of the ordmance PART 4. SubsectiOn (B) of City Code Sectton 25-10-152 IS amended to read; (B) A person may not change or alter a nonconformwg sign except as provtded m this subsection (I) The face of the stgn may be changed (2) The stgn may be changed or altered tf the change or alteratiOn does not (a) mcrease the degree of the ex1stmg nonconformity, (b) change the method or technology used to convey a message, or (c) tncrease the Jllummatton of the s1gn (3) The s1gn may be relocated on a tract, 1f the bmldmg offtcml determmes that the relocated s1gn Will not be hazardous, and the srgn 1s: (a) located on a tract that 1s part1ally taken by condemnatton or partially conveyed under threat of condemnation, or (b) moved to comply wtth other regulatwns (4) [Encept as plOYJded m Subseetwn (B)(5), a] A nonconformwg s1gn may be modifted or replaced m the same location, tf the modtfJcation or replacement reduces' Page4 of 10 COA 0021 (a) the Sign area by at least 20 percent, (b) the herght of the s1gn by at least 20 percent, or (c) both s1gn area and hetght of the stgn by an amount whtch, combmed, rs equal to at least 20 percent o'f the s1gn area and he1ght [(5) A nonconformmg off premises s1gn may be replaced rf (a) each owner of a property f10m whtch a sign JS to be removed or on whwh a s1gn rs tO be replaced agrees ~o ~he s1gn remoyaf or replacemen~. as !ippheable, (b) eacH owner of a property from WHICH a srgn IS to be removed destgnate:; ~he person who 1s responsible for removmg the stgn, and (c) the replacement stgn (1) does f!Ot dtrect tllumm!ltron onto a property zoned or used for a resrdenttal use; (11) does Aot eJcceed t!:te hetght of the srgn 1t replaces, and (m) IS constFI:lcted m the same locatron w1th same type of matenals and constructiOn destgn as the s1gn Jt replaces, and the face hetght and Vr'ldth of the replacement srgn are each at least 25 percent less tHan the face herght and Width of the stgn bemg replaced, or 2 the replacement stgn IS not located lA, or wrthlA 500 feet of, a histone sign d1stnct, Its s1gn area 1S at least 25 percent smaller than the stgn area of the s1gn 1t replaces, and a one other noHcoaformJHg off premises srgn rs permanently' remoYed, the locanon of tA.e s1gn to be temoyed JS not mcluded tn a Site plan that IS pendmg apprm•al, and rf, before removal, the stgn to be removed 1s. 1. located 1n a seemc road way sign d1stnct, 11 located 1n, or w1thm 500 feet of, a histone srgn dtstnct; or 111 of monopole constructron; or Page 5 of 10 COA 0022 -"-- ___ _[ \ / b two other non conformmg off premJses signs are permanently remo'.'ed, and the locatron of a Sign to be removed 1s not lllcluded 1ft a s1te plan that IS pendmg approyaJ ] .2_ [E6J] The owner of a nonconformmg off-premtse stgn may relocate the stgn to another tract under these provlstons 1f the reqUirements of tl11s paragraph are met (a) The ongmallocat10n of the stgn must be (1) m the area bounded by H1ghway 183 from Burnet Road to H1ghway 71, Htghway 71 from fhghway 183 to Lamar Boulevard, Lamar Boulevard from H1ghway 7 I to 45th Street, 45th Street from Lamar Boulevard to Burnet Road, and Burnet Road from 45th Street to Highway J 83, or on a tract that abuts the street nght-of-way of a boundary street, (u) m a scemc roadway sign d1stnct, (m) w1thm 500 feet of a h1stonc s1gn drstnct, or 2 a res1dent1al structure located m a restdenttal base zonmg d1stnct, or (1v) wtthm the boundanes of a registered neighborhood assoc1at1on that has requested removal of the stgn (b) The stgn must be permanently removed from the ongmal tract and may not be replaced Any tract upon wh1ch an off-premise sign has been unlawfully replaced shall not be ehglble as a s1te f01 o.l.Ielocated sign (c) The tract to wh1ch the s1gn IS relocated (1) must be m. nn expressway comdor s1gn d1stnct, or 2 for a s1gn With a s1gn area of 300 square feet or less, an expressway corndor stgn distnct or a commercial s1gn d1stnct, (n) may not be on a scemc roadway; (Ill) may not be w1thm 500 feet of Page 6 of 10 _) COA 0023 a htstonc stgn dt':>tnct, or 2 a restdenttal structure located m a residential base zonmg distnct, and (tv) 1f the tract ts wrthtn the zonmg JUnsdrctwn, It must be zoned as a commerctal or rndustnal base dtstnct (d) Srgn drstuct rest11ctwns on s1gn he1ght and face SIZe otherw1se applrcable to the relocatton tract do not apply to the relocated sign, but the s1gn height of the relocated stgn may not exceed 42 feet above ground level street pavement. (e) A relocated sign must be permanently removed from the new location not later than 25 years afte1 the date the relocatton appl1catton IS approved unless w1thtn the 25 year tJme penod the stgn owner permanently removes and does not relocate a second nonconformmg off~premtse stgn from a locatiOn descnbed m Paragraph ~ fWWJ (f) The council may wmve or modify, with or Without condtttons, a ) reqwrement of Paragraph (S)(a)-(e) [(6)(a) (e)] tf the counctl detennmes that the waxver or modlftcatlon 1s JUStified by the aesthetiC beneftt to the C1ty. (1) In makmg the determmatlon, the counctl may consider the number of nonconforrmng off-premtses signs to be removed, 2 the charactensttcs of the s1tes from wh1ch the signs are to be removed, 3 the charactensttcs of the s1te on whtch the s1gn tS to be relocated, and 4 other relevant factors (n) The council shall hold a public heanng before actmg on a proposed wa1ver or modtf1catwn (til) The dtrector of the Watershed Protectton and Development Rev1ew Department shall gtve nottce of the heanng m accordance With Section 25-1-132(£) (Nonce Of Pubtzc Heanng) Page 7 of 10 COA 0024 (-· (g) A stgn may not be relocated or removed under rhts paragraph unless the sign xs reg1stered and all registratiOn fees are patd as requrred by SubsectiOn (F) (h) For each non-confonnmg off-prem1se stgn relocated under this sect1on, the s1gn owner must mstall hghtmg that IS ene1 gy effie tent, as deternuned by Austm Energy, and meets or exceeds lntemahonal Dark Sky standards for pollutwn reducnon The hghtmg regmred under th1s subsection must be mstalled ( 1) no later than SIX months after the effective date of Ordmance No 20080605-076, If the s1gn was relocated pnor to that date, (n) upon mstallat10n of the telocated stgn, 1f the relocatiOn occurs after the effecuve date of Ordmance No 20080605-076, or (m) for all other off-prem1se s1gns, w1thm 36 months after the s1gn IS registered rn acco1dance w1th SubsectiOn (F) {!l[Efl1] An applicant must (!l[t-] be the owner of each s1gn to be relocated or removed, .ill}[tt-1file an apphcat1on for s1gn relocation With the d1rector [ef..-tfle Watershed Protectmfl and Development Rcvtev.· Department] at least 90 days before relocatmg the s1gn, and illJ.)[ttt-] mclude With the applrcatJOn I. a statement from the owner of each tract from wh1ch the s1gn IS to be removed agreemg to the permanent removal of the stgn, or 2 a document approved by the ctty attorney mdemnifymg the c1ty for all costs and clauns ansmg from the s1gn relocatwn, sign removal, or permtt Issuance and prov1drng that the c1ty attorney may hne counsel for and shall dtrect the defense of the claims .W.[ft1] An applicant must relocate a Sign not later than one year after the date the d1rector of the Watershed Protection and Development RevieW Department approves the apphcation. [(J) An applJcatton Uflder this paragraph supersedes an apphcatwn under Paragraph (5)]. Page 8 of 10 COA 0025 _"__ _________ ] PART 5. SubsectJOn (F) of C1ty Code SectJOn 25-10-152 JS amended to read (F) This subsectiOn apphes to an off-prem1se sign ( 1) Th1s paragraph prescnbes registratwn and IdentJflcatwn requirements (a) The owner of the [property on •,vhtch the] s1gn [ts located] must regtster the sign every year [tvto years] wtth the director (b) The stgn [property} owner shall, on a form prescnbed by the d1rector, provide: (1) mformat10n regardmg the sign locat1on, he1ght, sJZe, constructiOn type, matenals, setback from property boundanes, and Illummatwn; and (u) the name and address of the sign owner[, Jf the stgn IS ovmed by a persOl~ other than the property owner] (c) The sign [property] owner shall initially register the sign by August 31, 1999, or WJthm 180 days after the date the s1gn becomes subJect to the Crty's planmng JUnsdrctJOn, as applicable, and sbalJ pay a reg1strabon fee set by separate ordmance. (d) A person who fa1ls to reg1ster a s1gn as reqmred by th1s paragraph comrruts an offense (e) A s1gn owner lS prohibited from relocatmg a Sign If the s1gn owner IS m vwlatJOn of the registration reqUirements for any s1gn owned by that stgn owner .w1thm the City's JUnsdictiOn m The Sign owner shall place Jdenttfymg markers on the SJgn as reqmred by the director Such markers shall mclude, but not be hmlted to, the applicable registration number and measurement pomts to ass1st m venfymg the he1ght of a sign ·{g) A s1gn owner shall, m a manner prescnbed by the duector, prov1de an annual mventory of all signs owned by that s1gn owner, mcludmg bul not hm1ted to a descnpt10n of the s1gn, the location of the s1gn, and the owner of the property on which the sign IS located (h) The butldmg offrcJal shall not1fy the property owner of the pendmg expiration of a sign registratiOn. no earher than 90 days and no later than 30 days pnor to the exmrat1on. The director shall prov1de the same notice to the sign owner 1f the mventory required under subsection (f) has been provided Page 9 of 10 COA 0026 ______ ! .... ) (2) The dtrector shall mull not1ce of an appllcut10n to repair or replace a s1gn not later than the 71n day after the apphcatJOn 1s filed to the (a) applicant, (b) neighborhood orgamzat10n, and (c) s1gn owner, 1f a s1gn owner 1s 1dent1 f1ed 111 accordance With Paragraph ( J) PART 6. Art1cle J 2 of City Code Chapter 25-J 0 (Stgn Regulatrons) IS amended to add a new Sect1on 25-l 0-237 to read· § 25-10-237 PENALTY FOR FAILURE TO REGISTER. A person who fa1ls to reg1ster a stgn as requ1red by sectiOn 25-l 0-t52(F) comm1ts an offense pumshable by a fme of up to $500 per day for each day that the offense contmues, and for each s1gn that IS not reg1stered. A person who v1olates sect1on 25-l 0- 152(B)(6)(b) commits an offense pumshable by a fme of up to $500 per day for each day the vwlatmn contmues PART 7. The C1ty Manager IS dtrected to create and mamtam an accessible on! me database contauung mformatlon prov1ded by s1gn owners as part of the btllboard mventory reqUired tmder Subsecuon 25-1 O-l52(F) (Nonconfonnmg Stgns) PART 8. Th1s ordmance takes effect on June 16, 2008 PASSED AND APPROVED § ~-----"-"Ju=n=e=5_ _ _ _ , 2008 : _ _ _ __JV&b--...:..:._W.JI.---!h'+.'=,_-.;_:__ __ Wrll WyKTI Mayor Page 10 of 10 COA 0027 -- -- ~- _l '--- -- - _l -- _- ~- - ! ' -- -- _I APPENDIX G THESTATEOFTEXAS § COUNTY OF TRAVIS § I, J annette S_ Goodall, City Clerk of the City of Austin, Texas, do hereby certify that the foregoing instrument is a true and correct copy of Ordinance No. 20120405-007 consisting of two (2) pages, and exhibits consisting of 0 pages, for a total of 2 pages, as approved by the City Council of Austin, Texas, at a Regular Meeting on the 5m day of April 2012, as on file in the Office of the City Clerk. WITNESS my hand and official seal of the City of Austin at Austin, Texas, this 4th day of April2013. cr .L.t= 1:-. ~ JANNEITE ...... s_ GOODALL~ CITY CLERK CITY OF AUSTIN, TEXAS ··········· .·-.··-;";;'-·:·.-.-:·:·.·.:-;:·-·. . -·- - ------- ·;--,-,.-.:-:-·--.,...-:-·-:::--: . .------~--~---------~"-'"7'~·-·:-.·· ... _.. .·. ·;.:.:..:._·; ~·-~-.:~.:; :_ ..:._ .: ..:.::·_...:....;_.:_·.:.:...:- ORDINANCE NO. 20120405-007 AN ORDINANCE AMENDING THE FISCAL YEAR 2011-2012 SCHEDULE OF FEES, FINES, AND OTHER CHARGES {ORDINANCE NO. 20110912-007) TO REDUCE THE FEE FOR BILLBOARD REGISTRATION. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF AUSTIN: PART 1. Findings. {A) The City has the authority, pursuant to its police power and Chapter 216 of the Texas Local Government Code, to regulate non-conforming off-premise signs (commonly referred to as ..billboards"). (B) As reflected in Resolution No. 20071108-128. Council previously found that the City's ability to enforce billboard regulations has been hampered.Jn Ordinance No. 20080605-076, the Council reiterated the City's requirement to register billboards. (C) The Council finds that it is necessary to require registration of billboards for effective enforcement of all current non-conforming off-premise sign regulations. (D) The Council finds that billboard registration infom1ation must, at a minimum, be colJected and verified. The Council further finds, as part of the billboard regisrrat~on program, that the City should conduct on-site inspections of biiJboards ro verify that the information provided by the registrant is accurate and up-to-date. (E) At this time, the Council finds that the City's costs are $190 per sign per year. This finding is based on the. "cost of service' study completed in 2011 by an outside entity. PART 2. The 2011-12 Fee Schedule attached as Exhibit «A" to Ordinance No. 20110912-007 is amended to reduce the "Bj]]board Registration Fee" to $190 for the Code Compliance Department, as foJlows: Approved Approved 2010-11 2011-12 Change Code Compliance Departll:ent- General Fund Billboard Registration Fee $200 once a year $190 [;wg] once a year ($1 0) Page 1 of2 -- ---------------·---·- ·~...,.... ------------ -~--------- -- PART 3. This ordinance takes effect on April 16,2012. PASSED AND APPROVED * A~ --------~A~p=l=·i1~5~______ ,2012 *----~------~~~---------- § ~~e]] Mayor APPRO Page 2 of2 ------------ --- -------·--··-. ·~--~·-:-:-:~·.-.:-:-·-:-·:-:-:::~·-. :··;-;···-::-~~---.-:.-:-- ---------- --~-- -~- -~- ---- ----~----- [_ __ _ __ _ __ _ __ _ _ I , ___ __ _ _ __ _ _ _ _ _ --'---] -~- _ ! APPENDIX H § 25-10-152- NONCONFORMING SIGNS. (A) A person may continue or maintain a nonconforming sign at its existing location. (B) A person may not change or alter a nonconforming sign except as provided in this subsection. ( 1) The face of the sign may be changed. (2) The sign may be changed or altered if the change or alteration does not: (a) increase the degree of the existing nonconformity; (b) change the method or technology used to convey a message; or (c) increase the illumination of the sign. (3) The sign may be relocated on a tract, if the building official determines that the relocated sign will not be hazardous, and the sign is: (a) located on a tract that is partially taken by condemnation or partially conveyed under threat of condemnation; or (b) moved to comply with other regulations. (4) A nonconforming sign may be modified or replaced in the same location, if the modification or replacement reduces: (a) the sign area by at least 20 percent; (b) the height of the sign by at least 20 percent; or (c) both sign area and height of the sign by an amount which, combined, is equal to at least 20 percent of the sign area and height. (5) The owner of a nonconforming off-premise sign may relocate the sign to another tract under these provisions if the requirements of this paragraph are met. (a) The original location of the sign must be: (i) in the area bounded by Highway 183 from Burnet Road to Highway 71, Highway 71 from Highway 183 to Lamar Boulevard, Lamar Boulevard from Highway 71 to 45th Street, 45th Street from Lamar Boulevard to Burnet Road, and Burnet Road from 45th Street to Highway 183, or on a tract that abuts the street right-of-way of a boundary street; (ii) in a scenic roadway sign district; (iii) within 500 feet of: 1. a historic sign district; or 2. a residential structure located in a residential base zoning district; or (iv) within the boundaries of a registered neighborhood association that has requested removal of the sign. (b) The sign must be permanently removed from the original tract and may not be replaced. Any tract upon which an off-premise sign has been unlawfully replaced shall not be eligible as a site for a relocated sign. (c) The relocated sign: (i) must be in: 1. an expressway corridor sign district; or 2. for a sign with a sign area of 300 square feet or less, an expressway corridor sign district or a commercial sign district; Page 1 (ii) may not be on a tract located on a scenic roadway; (iii) may not be within 500 feet of: 1. a historic sign district; 2. a residential dwelling unit; 3. a tract located in a zoning district, other than an interim rural residence (RR) or commercial highway (CH) zoning district, in which: a. a single-family residential use, a multi-family residential use, or a mixed use development is a permitted use; and b. if the tract is developed, the existing uses on that tract include at least one dwelling unit; or 4. a residential lot in a residential subdivision in the extraterritorial jurisdiction; and (iv) if the sign is relocated within the zoning jurisdiction, it must be within a commercial or industrial base zoning district. (d) Sign district restrictions on sign height and face size otherwise applicable to the relocation tract do not apply to the relocated sign, but the face size of the relocated sign may not exceed that of the original sign, and the sign height of the relocated sign may not exceed 42 feet above ground level street pavement. (e) A relocated sign must be permanently removed from the new location not later than 25 years after the date the relocation application is approved unless within the 25 year time period the sign owner permanently removes and does not relocate a second nonconforming off-premise sign from a location described in Paragraph (5)(a). (f) The council may waive or modify, with or without conditions, a requirement of Paragraph (5)(a) - (e) if the council determines that the waiver or modification is justified by the aesthetic benefit to the City. (i) In making the determination, the council may consider: 1. the number of nonconforming off-premises signs to be removed; 2. the characteristics of the sites from which the signs are to be removed; 3. the characteristics of the site on which the sign is to be relocated; and 4. other relevant factors. (ii) The council shall hold a public hearing before acting on a proposed waiver or modification. (iii) The director of the Watershed Protection and Development Review Department shall give notice of the hearing in accordance with Section 25-1-132(8) (Notice Of Public Hearing). (g) A sign may not be relocated or removed under this paragraph unless the sign is registered and all registration fees are paid as required by Subsection (F). (h) For each non-conforming off-premise sign relocated under this section, the sign owner must install lighting that is energy efficient, as determined by Austin Energy, and meets or exceeds International Dark Sky standards for pollution reduction. The lighting required under this subsection must be installed: (i) no later than six months after the effective date of Ordinance No. 20080605-076, if the sign was relocated prior to that date; (ii) upon installation of the relocated sign, if the relocation occurs after the effective date of Ordinance No. 20080605-076; or Page 2 (iii) for all other off-premise signs, within 36 months after the sign is registered in accordance with Subsection (F). (i) An applicant must: (i) be the owner of each sign to be relocated or removed; (ii) file an application for sign relocation with the director at least 90 days before relocating the sign; and (iii) include with the application: 1. a statement from the owner of each tract from which the sign is to be removed agreeing to the permanent removal of the sign; or 2. a document approved by the city attorney indemnifying the city for all costs and claims arising from the sign relocation, sign removal, or permit issuance and providing that the city attorney may hire counsel for and shall direct the defense of the claims. U) An applicant must relocate a sign not later than one year after the date the director of the Watershed Protection and Development Review Department approves the application. (C) This subsection applies to a nonconforming sign that is damaged by accident, natural catastrophe, or the intentional act of a person other than the sign owner or land owner. (1) The sign owner or land owner may repair the damaged sign if the cost of repairing the sign does not exceed 60 percent of the cost of installing a new sign of the same type in the same location. Otherwise, the sign owner or land owner shall remove the sign. (2) The sign owner or land owner: (a) must apply to the building official for a repair permit not later than the 30th day after the date of damage, and shall finish the repairs not later than the 90th day after the date the building official approves the permit application; or (b) shall remove the sign. (D) This subsection applies to the replacement or relocation of a nonconforming sign under Subsections (8)(3) through (8)(5). ( 1) The sign owner or land owner may not replace or relocate the sign if it is dismantled before an application for a permit authorizing the replacement or relocation is filed. (2) The sign owner or land owner shall: (a) finish the replacement or relocation of the sign not later than the 90th day following the date of dismantling; or (b) remove the sign. (E) The building official may not issue a permit for maintenance of a nonconforming sign if the maintenance cost exceeds 60 percent of the cost of installing a new sign of the same type in the same location. (F) This subsection applies to an off-premise sign. (1) This paragraph prescribes registration and identification requirements. (a) The owner of the sign must register the sign every year with the director. (b) The sign owner shall, on a form prescribed by the director, provide: (i) information regarding the sign location, height, size, construction type, materials, setback from property boundaries, and illumination; and (ii) the name and address of the sign owner. Page 3 ____ I (c) The sign owner shall initially register the sign by August 31, 1999, or within 180 days after the date the sign becomes subject to the City's planning jurisdiction, as applicable, and shall pay a registration fee set by separate ordinance. (d) A person who fails to register a sign as required by this paragraph commits an offense. (e) A sign owner is prohibited from relocating a sign if the sign owner is in violation of the registration requirements for any sign owned by that sign owner within the City's jurisdiction. (f) The sign owner shall place identifying markers on the sign as required by the director. Such markers shall include, but not be limited to, the applicable registration number and measurement points to assist in verifying the height of a sign. (g) A sign owner shall, in a manner prescribed by the director, provide an annual inventory of all signs owned by that sign owner, including but not limited to a description of the sign, the location of the sign, and the owner of the property on which the sign is located. (h) The building official shall notify the property owner of the pending expiration of a sign registration, no earlier than 90 days and no later than 30 days prior to the expiration. The director shall provide the same notice to the sign owner if the inventory required under subsection (f) has been provided. (2) The director shall mail notice of an application to repair or replace a sign not later than the 7th day after the application is filed to the: (a) applicant; (b) neighborhood organization; and (c) sign owner, if a sign owner is identified in accordance with Paragraph (1 ). Source: Section 13-2-854; Ord. 990225-57; Ord. 990225-70; Ord. 010419-11; Ord. 020207-35; Ord. 031211-11; Ord. 040205-29; Ord. 20051117-041; Ord. 20080605-076; Ord. 20091217-141. Page 4 - -- - ~- - -- -- ! --- -- - --I ' --- ---- APPENDIX I PLAINTIFF'S EXHIBIT NO. 8 *D-1-* *5411* *ALBERTALVAREZ* '·..... ·From: Rowan, Robert Sent: Monday, November 09, 2009 4:58 PM To: Cardenas, Daniel; Christianson, Matt Subject: Billboard Registration ordinance spreadsheet_1.xls Attachments: Billboard Registration ordinance spreadsheet_ 1.xls Importance: High Based on last weeks meeting in regards to the current Billboard Registration fee of $200, we were asked to revieW the current fee and see if we can seriously look at lowering the fee to a more reasonable fee. As a result, this can close the gap between the revenue and expenditures of running this program. Just doing a quick overview, we can lower the rate to $140, which will accomplish this goal. · There Were also discussions about including a renewal fee. As of now, it doesn't seem feasible to implement a renewal fee since all billboards have not been registered at this time. It would seem best to wait until Code has verified the current inventory. Law Department is waiting to see something this week. If you're okay with this, let's quickly proceed and submit it back to them this week. Their concern is that if we don't move quickly, there's a potential lawsuit on the horizon. Robert . EXHIBIT . dt., 1 -·-- -- - -·- --·---·------ ·-~ -·----·--~-·~-~~-~--~·-~-·~···-··--··-~-----·~- ~~~-~----~--~----------------- ·····--:. Fringes & I Salaly~u Contractmils Indirect Total Related Function/purpose/responsibilities Job Title % (Annual) Commodities Cost Cost Collect payments, deposit paymems, maintain payment£ecords ~~==~~~tant 15% 53.668 8,050 !Inspect billboard sites for compliance lll"l!lQ_ector. 45% 48,255 -21,715 II nspeC"Cor -5% !50,877 2,5~ !Asst Div. Mgr. 5% 90,949 4,54~ !Division Mgr. 5% 104,545 5,227 Attorney Sr. 25% 74,355 18,589 Sub-Total 11?? mq I I l 60,671 l[)_ee_artmentallnd!rect costs 7.4%1 T I I 4,492 ICity ln-c.ljrect costs 3.8%1 ~ - I I 2,334 Total :ti 67,497 Code CityJ::iVV::i Compllarice I •-·"·--t costs [t:§£artmentalj11_df!_ect rate calculation: IFY10 Supp_o_rt_Services" 558,087 ?on nnr IFY10 Total Requlremems 7,538,397 -7.538,397 I% of Support Services cost to Total Requirements 7.4% -3.8"/~ •Note: Less Support Services cost Included In the "total related cost" calculatlonshown above: . :..:r·: '':~~~; ....... t~~~- -:.; ,' ) ·--J' Billboard Registration Revenue - ! Budgeted Revenue $0 Projected Revenue $70,000 Proposed Fee per billboard $140.00 $0.00 Total Requirements $67,497 Excess (Deficiency) of Total Revenue over : Total Requirements $2,503 )i~}~ tr _-"-- _ _ _____ r ' __ _ _ __ _ ~ __ 1 APPENDIX J DEFENDANT'S EXHIBIT NO. 10 *D-1-* *5411 * *ALBERTALVAREZ* - •. _I City of Austin Billboard Registration Fee Study January 21, 2011 The PFM Group 2600 Grand Avenue, Suite 214 Des Moines, lA 50312 (515) 243-2600 phone (515) 243-6994 fax Two Logan Square, Suite 1600 Philadelphia, PA 19103-2270 (215) 567-6100 phone (215) S67-4180fax --I I -' Table of Contents I. Executive Summary ................................................................................................................. 3 II. Methodology .......................................................................................................................... s· Ill. Cost of Service Analysis ......................................................................................................... 8 Appendix A: Detailed Productive Hours Calculation Appendix B: Employee Names to Accompany Titles Appendix C: Payroll data for the Departments of Law, Code Compliance and Solid Waste Services Appendix D: Line-item budget data for the Departments of Law, Code Compliance and Solid Waste Services Appendix E: City of Austin's Personnel Policies Appendix F: City of Austin's FY2010 A-87 Cost Allocation Plan Appendix G: Number of Billboards used in Analysis Appendix H: City of Austin's Prior Internal Study for Cost of Service Appendix 1: Agreement between the City of Austin and Public Financial Management Inc. to perform the analysis and subsequent report for the cost of service of the Billboard Registration Fee. Appendix J: Nickle Whitaker's qualifications, list of publications and prior witness testimony information The following report has been created by Public Financial Management Inc. and is presented by Nickie Whitaker, Senior Managing Consultant. ___-_[ -- -- - r '. ____ / ____ I ____! Executive Summary The City of Austin (City} Law Department retained Public Financial Management, Inc., to conduct a cost of service study for the City's billboard registration fee. The purpose of this analysis is to determine the full cost of administering the billboard registration fee. The study includes all City departments that contribute to administering this fee. The Law Department provided leadership to the project and support in obtaining information. An in-depth analysis of individual municipal fees/permits requires a high level of data as well as technical knowledge from staff on the processes for administering them. PFM collaborated with each department involved to ascertain the fully loaded cost of service related to fees and permits. The resulting cost of service findings are reported in Section Ill Cost of Service Analysis of the report. Based on the results of the analysis, the cost of service for administering the billboard registration fee Is $190. The City is currently charging $200 for annual billboard registration. A cost of service analysis is based on the current fee policy and estimates the average time to administer an individual fee/permit. Over time, inflation or changes In the administration of the fee may impact the cost of service. PFM generally recommends that governments implement an inflationary adjustment to fees annually and complete a cost of service analysis once every four years. Inflation indices are commonly used to increase fees annually between comprehensive fee studies. 4 I. Executive Summary - -----'-1 _'_, - _j ' I ! Methodology PFM implemented a proven methodology to evaluate the cost of the City's billboard registration fee. This methodology Involved working closely with City staff to collect the most accurate data available and then organizing this data to calculate the cost ot-"service. The first step was to identify and confirm details related to the fee, such as fee title, number of permits issued in a given period and the ordinances related to the fee. Subject Matter Experts (SMEs) were then Identified from various departments within the City including: • Code Compliance • Law Department, Division of Land Use and Real Estate • Solid Waste Services Cost of Service Analysis Once the details of the fee were confirmed by City staff, PFM interviewed each of the SMEs to determine the best method for allocating employee time to each of the fees (i.e. labor allocation). Salary costs are the main indicator of total costs for providing permitting services; therefore, PFM's general methodology was to first estimate the average time spent on administering a permit. This method is called "manager's best estimate". Time allocation was calculated by determining the number of minutes or hours spent per fee or permit issued by each employee. The percent of total time spent for each permit type was calculated by multiplying the average time per fee/permit by the number of fees/permits (units) and then dividing by the average annual number of hours worked (productive hours). In line with the City's Human Resources guidelines, productive hours were based upon the total annual number of hours to be worked in a year adjusted for vacation, personal and other types of employee leave. Productive hours are used throughout the time allocation study portion of the fee study in order to convert time submitted in minutes per unit or hours per unit into a percentage of total time for the year. Table 1: Productive Hours Time Hours Base Hours per Year 2,080 Holiday/Personal -96 Vacation (WeiQhted AveraQe) Hours -153 Sick Leave (Average Comparable) Hours -96 Productive Hours 1,735 It is possible to determine the direct labor costs using the percent of total time worked, salary information and the annual number of fees/permits issued. In addition to direct personnel costs, though, the City also incurs a series of other costs as a result of offering services associated with fees. Four overhead rates were created based on each department's 6 II. Methodology expenditures to account for these other costs. The 2010 City budget, the City's 2010 A-87 Cost Allocation Plan, as well as actual line item expenditures were used in order to calculate these cost factors. There are four basic cost factors to consider when determining overhead rates: fringe benefits (e.g. cost for employee benefits), other costs (e.g. computers, paper, etc.}, internal indirect (e.g. division administrative time) and external indirect (e.g. central department service charges). These factors are shown in the Table below: Table II: Cost Factors Cost Factor Description Fringe Benefits Employee benefits including; health, pension, FICA, etc Direct Costs Materials, contracts, and supplies for the division Costs associated with the administration of the department or division, mostly Internal Indirect constituting administrative personnel and leadership Central services such as city-wide budget, finance or human resources; based on External Indirect rates from the Cost Allocation Plan Each overhead rate was used to calculate the portion of non-salary costs that should be allocated by employee providing each service. A summation of the total overhead costs and the direct labor costs provided the fully loaded cost of service. An average cost, or a cost per unit, was determined by dividing the fully loaded cost by the number of units In a twelve month period. This method was used to compute the average fully loaded cost of each fee. 7 II. Methodology Ill. Cost of Service Analysis Cost of Service Analysis The Department of Code Compliance administers the billboard registration permit for the City. This involves review of billboard records and details, on-site inspection, post-inspection verification, and data entry. A cost of service analysis is based on the current fee policy and estimates the average time to administer an individual fee/permit. PFM worked closely with departmental Subject Matter Experts to determine the average amount of time employees spend on each permit type in order to establish the average cost of providing a single permit. The time allocation for each department is presented In two distinct ways, the average time spent per permit and the total percent of time spent on all permits. The' following tables are broken down by department and lastly by employee title. Table Ill: Average Time per Billboard Registration Permit Position Title Hours per Unit Performance Consultant 0.002 Assistant Division Manager (Admin Support) 0.002 Assistant Code Compliance Director 0.051 Code Compliance Manager 0.068 \ Business Systems Analyst 0.102 Code Compliance Inspector 0.167 Assistant Division Manager (Training) 0.171 Code Inspector C 2.000 ;·Law.oepartme·nt\J.:;r:.::'.<-':,. //:,':<.·'.·;.:.>/., ·,;·>· ·: <; ;, ,~'.':',:, ~<~-;::.: Assistant Senior Attorney 0.171 Attorney Senior 0.171 .sou~W~"s~e:·s~tvi¢¢s)'/<::;}.'< ·. ···"<\: ; ·. . :: :_. . .. . : .:"~ <. Account Associate (Financial Specialist) 0.017 Table IV: Total Percent of Time on Billboard Registration Permits Position Title PercTe~tage of •me Performance Consultant 0.05% Assistant Division Manager (Admin Support) 0.05% Assistant Code Compliance Director 1.50% Code Compliance Manager 2.00% Business Systems Analyst 3.00% Code Compliance Inspector 4.88% Assistant Division Manager (Training) 5.00% Code Inspector C 58.57% 9 . /fl. Cost of Service Analysis After determining the average time spent on each permit, the average cost per permit was determined by using salary data as well as cost loading factors. Each of the cost loading factors addresses additional costs to the City that are a direct result of offering each service. There are four basic cost loading factors to consider: fringe benefit costs, other direct costs, internal indirect costs and external indirect costs. Each cost rate may also be interpreted as the cost per $1 of salary to the division. The rates for each department are outlined in the following table: Table V: Direct and Indirect Cost Rates Fringe Benefit Direct Cost Internal Indirect External Indirect Department Rate Rate Rate Rate Code Compliance 35.29% 61.42% 19.85% 8.30% Law Department 28.07% 7.86% 9.86% 7.67% Solid Waste Services 38.26% 49.07% 15.02% 8.30% The direct labor costs for each employee were summed to determine the total direct cost for each fee. Each overhead rate was then multiplied by to the total direct labor cost to determine the total departmental costs related to the service. The total cost calculation charts are in the following table: Table VI: Total Cost for Billboard Registration Fee Internal External Salary Fringe Direct Division Name Indirect Indirect Cost Cost Cost Cost Cost Code Compliance $38,308 $13,519 $7,604 $23,529 $3,180 Law Department $7,550 $2,119 $744 $593 $579 Solid Waste Services $261 $100 $39 $128 $22 A summation of the total overhead costs and the total direct labor cost provide the fully loaded cost of service. An average cost, or a cost per unit (or permit), is determined by dividing the fully loaded cost into the number of units (or permits) in a given year. The cost difference between the current fee and the cost per unit was calculated. The average cost per unit is: $190. 10 Ill. Cost of Service Analysis -- - ____:._J_- Table VII: Fee Recommendation The final recommended rate has been shown rounded: to the nearest 50 cent increment ($0.50) for fees under ten dollars; to the nearest dollar ($1.00) if the fee was under twenty-five dollars; to the nearest five dollar ($5.00) increment if the fee was less than one hundred dollars; and to the nearest ten dollar ($10.00) increment if the fee was one hundred dollars or more. Review of City Analysis of Billboard Registration Fee In July 2010, the City completed an internal analysis of the costs for administering the billboard registration fee. As part of this report, PFM was asked to review and comment upon the methodology and analysis completed by the City. A cost of service analysis is based on the current fee policy and estimates the average time to administer an individual fee/permit; it is a point in time analysis. Overall, the analysis is very detailed and reflects a great deal of research. PFM noted the following key differences which could influence the calculation of the cost of service: Indirect Labor Costs: PFM's methodology includes an Internal Indirect Cost rate, which addresses costs associated with the administration of the department, mostly constituting administrative personnel and leadership. Some of the internal management costs are specifically identified in the City's analysis. It is unclear if the City accounted for the general administration of the departments involved in addition to management directly associated with the fee. External Indirect Costs: Any government activity requires a minimum amount of core city services to function. These core city-wide services may include budget, finance or human resources, etc. PFM refers to the cost of these city-wide services as the External Indirect Rate. For example, the calculated External indirect Rate for the Code Compliance Department is $.08 for every $1 of salary related to the billboard registration fee. Because the City did not include these costs in their cost of service analysis, the estimated cost per unit may be understated. Productive Hours: Productive hours represent the actual hours worked during a year. In line with the City's Human Resources policies, productive hours were based upon the total annual number of hours to be worked In a year adjusted for vacation, personal and other types of employee leave. PFM identified the number of annual productive hours as 1,735. Because the City used 2,080 hours in their calculation, the cost per unit may be overstated. 11 Ill. Cost of Service Analysis1. Jurisdiction and venue is proper in this Court.
6. Reagan has standing to bring this suit.
9. Billboards are off-premise signs.
5. The City's fee is reasonable and constitutional.
V.T.C.A., Civil Practice & Remedies Code§ 16.064
I. Executive Summary
II. Methodology ----'--1 ------ [
Reagan National Advertising of Austin, Inc. D/B/A Reagan National Advertising v. City of Austin, Texas And Marc A. Ott, Being Sued in His Official Capacity (Reagan National Advertising of Austin, Inc. D/B/A Reagan National Advertising v. City of Austin, Texas And Marc A. Ott, Being Sued in His Official Capacity) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.