Heartland Apartment Association, Inc., et al., Appellants/Cross-appellees,
City of Mission, Kansas, Appellee/Cross-appellant.
BY THE COURT
tax is a forced contribution to pay for the government's
general services, that is, services that benefit the members
of the public at large, regardless of whether any particular
person has paid the tax. A fee, on the other hand, is not a
revenue measure. It is assessed against those who gain the
exclusive benefit of the service or, if a regulatory fee,
those who are the subject of the regulation.
excise tax is a tax imposed on performance of an act,
engagement in an occupation, or enjoyment of a privilege. The
Transportation User Fee, or TUF, adopted by the City of
Mission is a tax on real property owners based on the use of
their property, rather than a tax on the property itself. As
such, it is a tax on the enjoyment of a privilege, and it
qualifies as a prohibited excise tax under K.S.A. 2016 Supp.
of the judgment of the Court of Appeals in 51 Kan.App.2d 699,
352 P.3d 1073 (2015). Appeal from Johnson District Court;
James F. Vano, judge. Opinion filed April 7, 2017. Judgment
of the Court of Appeals reversing and remanding to the
district court is affirmed. Judgment of the district court is
reversed and remanded with directions.
Jo Shaney, of White Goss, a Professional Corporation, of
Kansas City, Missouri, argued the cause, and James C. Bowers,
Jr., Daniel P. Goldberg, and Bryant E. Parker, of the same
firm, were with her on the briefs for
V. Murray, of Lathrop & Gage LLP, of Overland Park,
argued the cause, and Mark A. Samsel, of the same firm, was
with him on the briefs for appellee/cross-appellant.
Athena E. Andaya, deputy attorney general, for amicus curiae
Office of Kansas Attorney General.
A. Donley, of Devine and Donley, LLC, of Topeka, for amicus
curiae National Federation of Independent Business Small
Business Legal Center.
Bell, of Topeka, for amicus curiae Kansas Association of
2010, the City of Mission passed a Transportation User Fee
(TUF). The TUF is assessed on all developed real property
based on a formula that attempts to estimate the number of
vehicle "trips" a particular property generates.
The revenue raised by the TUF, according to the enacting
ordinance, is used for maintenance and upkeep of
Heartland Apartment Association, Inc., an association whose
members own or operate multifamily retail housing; Building
Owners and Managers Association of Metropolitan Kansas City,
an association whose members own commercial buildings; and
several individual owners of developed property challenged
the TUF as an impermissible excise tax levied by Mission in
violation of K.S.A. 2016 Supp. 12-194.
district court judge granted summary judgment to Mission. On
appeal, a panel of the Court of Appeals reversed, holding
that the TUF is an impermissible excise tax under K.S.A. 2016
Supp. 12-194. We granted Mission's petition for review.
reasons outlined below, we affirm the decision of the Court
of Appeals and reverse the judgment of the district court.
and Procedural Background
August 2010, Mission's City Council adopted Ordinance No.
1332, which established the TUF and created a
"transportation utility" "for the purpose of
maintenance of City streets." Mission City Code
§145.030. The ordinance "imposed and levied"
the TUF on "the owners of all developed property within
the City of [Mission]." Mission City Code §145.070.
The ordinance does not cover real property exempt from
taxation under K.S.A. 79-201 (exempting religious,
educational, similar property from all property, ad valorem
taxes). Mission City Code §145.071.
is based on the "direct and indirect use of or benefit
derived from the use of public streets, bicycle lanes and
sidewalks generated by the developed property." Mission
City Code §145.070. It identifies three basic factors to
be used in determining the amount of the fee:
"1. The developed use of the property which includes the
amount of vehicular traffic generated by the property, as
determined by [Mission's] City Administrator.
"2. For non-residential uses the developed square
footage on the property or parcel.
"3. The traffic generation factor for each use category
of developed property." Mission City Code
calculate the fee, the ordinance requires the use of
"Trip Generation, 8th Edition, published by the
Institute of Transportation Administrators ('ITE
Manual'), " Mission City Code §145.020D, and
outlines the following procedure:
"[Mission's] City Administrator shall determine the
category of use from the ITE Manual that shall apply to each
developed lot or parcel within the City [of Mission]. In the
absence of a specific use category from within the ITE Manual
for a particular developed use, [Mission's] City
Administrator shall determine the appropriate category by
interpreting the ITE Manual and assigning the category which
most accurately reflects the traffic generated by the
particular developed use. After determining the appropriate
use category for a developed parcel, [Mission's] City
Administrator shall use the estimated vehicle trip generation
figures for the assigned use category from the ITE Manual to
compute an estimate of annual trips related to the parcel and
assign the parcel to a group of similarly used properties
('customer group')." Mission City Code
three customer groups are: single-family residential,
multi-family residential, and non-residential use. Mission
City Code §145.080B.
ordinance does not set out the charge to be assessed, instead
leaving that to "be as fixed from time to time in
[Mission's] annual budget." Mission City Code
§145.080D. The billing and collection of the fee is
accomplished in conjunction "with ad valorem real estate
taxes annually." Mission City Code §145.090.
TUF Administrative Manual provides further details about the
calculation of the fee. The 2012 manual is included in the
record on appeal. According to this version of the manual,
the TUF that is actually assessed depends on five factors:
"1. That property's estimated trip generation over a
period of time.
"2. A split trip rate that includes a 1-cent base charge
and a differentiated commercial and residential property
component. The residential per trip rate is 2.076 cents and
the commercial per trip rate is 1.490 cents.
"3. Special consideration is given for specific trip
generation data that better refines or defines the trips a
particular land use generates.
"4. The jurisdiction's total annual transportation
"5. The share of that budget to be generated through the
TUF system versus other sources."
manual also contains Land Use classification data from the
ITE Manual for all property in Mission. The data is broken
down into various categories, such as "Animal
Hospital/Vet Clinic, " "Fast-Food Restaurant
(w/Drive-through Window), " "Gasoline/Service
Station with Convenience Market and Car Wash, " and
"Gasoline/Service Station with Convenience Market."
Each classification includes data such as the average trips
generated each day of the week and the total weekly trips for
a particular usage. The per-day and per-week trips are based
on a unit that varies, depending on the use. For example, an
animal clinic's trip generation is based on 1000 square
feet gross floor area, a hotel on its number of rooms, and a
gas station on "vehicle fueling positions."
March 2012, plaintiffs filed suit against Mission, seeking a
declaratory judgment and preliminary and permanent
injunctions. Plaintiffs had paid the TUF in 2010 in amounts
ranging from $72.00 to $16, 159.87.
plaintiffs asserted five claims in district court. In Claim
I, the two associations asked for a declaratory judgment that
the TUF was an impermissible excise tax violating K.S.A. 2016
Supp. 12-194 and that Mission must stop "assessing,
billing, and collecting the TUF"; return fees
"collected illegally with pre- and post-judgment
interest"; and pay the associations' reasonable
attorney fees and costs. In Claim II, the individual
plaintiffs sought the same relief as the associations had
sought in Claim I. In Claim III, plaintiffs asked for both a
preliminary and a permanent injunction to prevent Mission
from enforcing the TUF and for an order requiring Mission to
reimburse plaintiffs for TUF amounts they had already paid,
to pay pre- and post-judgment interest, and to pay
plaintiffs' reasonable attorney fees and costs. In Claim
IV, the individual plaintiffs asked the district court to
order Mission to reimburse each individual plaintiff for the
TUF amount each had paid in 2010 and 2011, including
interest, attorney fees, and costs. In Claim V, plaintiffs
alleged due process and equal protection violations because
Mission "has enacted an illegal and discriminatory tax,
has treated similarly situated persons and entities
differently without a rational basis, and has infringed on
the political power and privileges of property owners in the
City of Mission, Kansas."
individual plaintiffs and Heartland filed a motion for
summary judgment on Claims I, II, and III. Mission filed its
own motion for summary judgment against all plaintiffs on all
reviewing the motions and supporting memoranda, the district
judge issued his memorandum decision granting summary
judgment to Mission and denying summary judgment to
judge began his analysis with acknowledgment of Mission's
constitutional "home rule" power to determine its
local affairs, including "'the levying of taxes[, ]
excises, fees, charges and other exactions except when . . .
limited or prohibited by enactment of the legislature
applicable uniformly to all cities of the same
class.'" He then noted that under K.S.A. 2016 Supp.
12-194, "'no city or county shall levy or impose an
excise tax or a tax in the nature of an excise'" and
that the "substance of both Motions is whether the TUF
is an unlawful excise tax."
judge next addressed whether the TUF qualified as a fee or a
tax, concluding that it is a tax, based on the definitions
used in Kansas.
"The TUF is not voluntary-all property owners generally
must pay it. The citizens who pay the TUF do not receive any
special benefit for it. There is no aspect of contract or
consent in payment of the fee. The money raised from the TUF
is used to pay for street improvements, which are used by
all. And the TUF is not a way to compensate the
government for regulating a specific service, benefit, or
judge then turned to the question of whether the TUF further
qualified as an excise tax. Relying on Kansas caselaw that
had defined an "excise tax" as one
"'imposed on the performance of an act, the engaging
in an occupation or the enjoyment of a privilege, '"
the district judge concluded that the TUF is not an excise
tax. According to the judge, "Mission determines the
charge for the tax based on the estimated number of trips a
property generates. Clearly, residents of Mission are not
charged based on the actual performance of any act, engaging
in an occupation, or the enjoyment of a particular
judge concluded that the "TUF, as it was enacted, was
within City of Mission's home rule authority and does not
offend the legislative limitation upon that power."
Based on his determination that the TUF is not an illegal
excise, the district judge deemed plaintiffs' due process
claim irrelevant and its equal protection claim without
merit. Plaintiffs moved to amend the district judge's
memorandum decision, and the judge denied the motion.
then appealed, raising four issues: (1) whether the TUF is an
impermissible excise tax; (2) whether Mission exceeded its
powers by passing the TUF through enactment of an ordinary
ordinance; (3) whether the district judge erred by granting
summary judgment on plaintiffs' due process, equal
protection, and reimbursement claims on controverted or
unconsidered facts; and (4) whether the district judge abused
his discretion in denying Plaintiffs' Motion to Amend.
Mission filed a cross-appeal, raising one issue: whether the
TUF is a special fee rather than a tax, under Kansas law.
reviewing Court of Appeals panel analyzed two issues. First,
the panel addressed whether the TUF is a tax. The panel
dismissed decisions from other jurisdictions that had
analyzed municipal exactions similar to the TUF as shedding
"little light on this dispute." Heartland
Apartment Ass'n v. City of Mission, 51 Kan.App.2d
699, 707, 352 P.3d 1073 (2015), rev. granted 303
Kan. 1077 (2016). Relying primarily on this court's
decision in Executive Aircraft Consulting, Inc. v City of
Newton, 252 Kan. 421, 845 P.2d 57 (1993), the panel
concluded that the TUF is a tax because it "is an annual
forced contribution from all improved real estate owners that
is used for the maintenance of a government service available
to the general public." 51 Kan.App.2d at 708.
panel then turned to the question of whether the TUF is an
impermissible excise tax under K.S.A. 2016 Supp. 12-194.
Through a 2006 amendment to the statute, the panel said
"the legislature has enlarged what taxes are prohibited
to such an extent that [the TUF] can be no other tax than an
excise tax and is thus prohibited by law, " and it
"is clearly assessed, in part, on how property owners
decide to use their property." 51 Kan.App.2d at 713,
717. Because it is an excise tax and does not fit any of the
exceptions listed in K.S.A. 2016 Supp. 12-194, the panel
ruled, Mission exceeded its home rule authority in enacting
the TUF. 51 Kan.App. at 717-18.
panel declined to address plaintiffs' due process and
equal protection arguments. 51 Kan.App.2d at 718. It also
declined to address plaintiffs' arguments raised after
the district judge had ruled on the motions for summary
judgment. 51 Kan.App.2d at 718.
petitioned this court for review of three aspects of the
panel's opinion: 1) the TUF's categorization as an
impermissible excise tax; 2) determination of the correct
standard of review for challenges to a City's tax measure
enacted under its home rule authority; and 3) the