This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
FEES -- Imposition of (solid waste generation fee); (retroactively)
LANDFILL -- Town (imposition of solid waste generation fee)
LOCAL LAWS -- Fees (imposition of solid waste generation fee by town)
REAL PROPERTY TAXES AND ASSESSMENTS -- Assessments (imposition of solid waste generation fee as assessment)
REFUSE AND GARBAGE -- Solid Waste Facility (financing through imposition of solid waste generation fee)
MUNICIPAL HOME RULE LAW, §10(1)(ii)(a)(9-a); TOWN LAW, §§81[h], 220, 221: A town which provides solid waste disposal facilities as a town-wide function and has enacted legislation which requires solid waste to be processed at the town's facilities may finance the facilities through the imposition of a "solid waste generation fee" as a user fee on the owners of all improved properties within the town that generate solid waste. The fee may be imposed retroactively for a short period of time unless the retroactivity would be so harsh and oppressive as to violate constitutional due process guarantees.
This is in reply to your request for our opinion concerning a proposed town local law that would establish a "solid waste generation fee". The proposed local law provides that the fee would be charged annually to all owners of improved property within the town and establishes a fee schedule containing four categories of improved property with a different fixed dollar fee for each category. You state that "the basis for the fee is that all improved properties generate solid waste and, pursuant to [the town's State and local] waste flow control legislation, that solid waste must be processed at the [town's] facility".
You also indicate that the solid waste generation fee is intended to "make up the difference between the actual per ton cost of solid waste disposal facilities and the revenue realized by way of 'tipping fees' charged for each ton disposed". It appears from your letter that despite the town's waste flow control legislation, private carters have used lower cost facilities located outside the town and that the town has been unable to fix a tipping fee at an amount adequate to cover the costs of its own solid waste facilities. To attract private carters, you state that the town recently reduced its tipping fee.
The proposed local law also provides that the amount of the fee attributable to the improved property included in each of the town's three refuse districts must be charged to, and paid by, the districts. You state that two of these districts impose an ad valorem assessment for all garbage collection disposal services and that the third imposes a "flat" assessment for the same services.
In the case of properties not included in one of the refuse districts, (i.e., certain commercial properties and the properties located in the four villages within the town), the proposed local law provides for the fee to be billed annually as a separate line on the real property tax bill, except that for 1992 the fee would be billed at a different time than the real property tax. You state the residents of the villages have their garbage collected by the village or village-contracted private carters or make their own arrangements with private carters. The commercial property owners make their own arrangements with private carters.
With reference to the foregoing, you ask whether the town, by local law, may impose the "solid waste generation fee" as either a user charge or a benefit assessment. If the fee may be imposed as a benefit assessment, you ask whether it is permissible to charge the fee to owners of only improved real property. You also ask whether the fee may be billed separately for the period beginning January 1, 1992 or, if the fee may not be billed retroactively, whether the fee may be billed separately for the period May 1 through December 31, 1992.
Initially, we note that a charge, although denominated a user fee or benefit assessment, is considered a tax when it is imposed for the support of government without regard to particular benefits received by a taxpayer (see Watergate II Apartments v Buffalo Sewer Authority, 46 NY2d 52, 412 NYS2d 821; Roosevelt Hospital v Mayor 84 NY 108; Church of Christ the King v City of Yonkers, 115 Misc 2d 461, 454 NYS2d 273; New York Telephone Co. v Common Council and Assessor of the City of Rye, 43 Misc 2d 668, 252 NYS2d 126, affd 25 AD2d 682, 269 NYS2d 692; County of Westchester v Town of Harrison, 201 Misc 211, 114 NYS2d 492), and it is in no way dependent upon the will or contract, express or implied, of the persons charged (see Legum v Goldin, 55 NY2d 104, 447 NYS2d 900; see also New York University v American Book Co. 197 NY 294; Silkman v Water Commissioners of Yonkers, 152 NY 327). Thus, a charge to finance a municipal service, imposed without regard to whether the persons required to pay the charge are particularly benefited by the service or actually use the service, is generally considered a tax. A tax may not be imposed by a municipality without express statutory authority (see NY Const., art XVI, §1; Sonmax v City of New York, 43 NY2d 253, 401 NYS2d 173; Mobil Oil Corporation v Town of Huntington, 85 Misc 2d 800, 380 NYS2d 466; Municipal Home Rule Law, §10[ii][a], authorizing local governments to adopt and amend local laws relative to the levy and administration of local taxes "authorized by the legislature"). Therefore, if the proposed "solid waste generation fee" is a tax, it may not be imposed in the absence of express statutory authority. We are not aware of any such authority.
Benefit assessments are distinguishable from taxes in that they are ". . . impositions for improvements which are specially beneficial to particular individuals or property and which are imposed in proportion to the particular benefits supposed to be conferred" (Roosevelt Hospital, supra at 112; see also, e.g., Church of Christ the King, supra; New York Telephone Co., supra; County of Westchester, supra; Real Property Tax Law, §102). In evaluating whether a particular property is benefited by a public improvement, ". . . the test to be applied is not how the land is presently being used, but whether the improvement generally enhances the value of the property" (DWS New York Holdings Inc v County of Dutchess, 110 AD2d 837 at 838, 487 NYS2d 870 at 872; see also, e.g., Baglivi v Town of Highlands, 147 AD2d 432, 537 NYS2d 552). Moreover, "[i]t is settled law that all properties within an area served by an improvement 'are to some extent at least actually benefitted, and, therefore, assessable'" (Skinner v Village of Sylvan Beach, 113 AD2d 1000 at 1002, 494 NYS2d 580 at 582, appeal discontinued and withdrawn 67 NY2d 758, 500 NYS2d 1029).
Although towns are authorized to provide for the collection and disposal of solid waste as a town-wide function paid for by general town taxes (see Town Law, §§81[h], 220, 221,; General Municipal Law, §120-w; see also 1986 Opns St Comp No. 86-88, p 135), there is no statute which expressly authorizes a town to finance solid waste disposal facilities operated as a town-wide function through the imposition of benefit assessments (cf. Town Law, articles 12 and 12-A, authorizing the creation of refuse and garbage districts financed through, inter alia, the imposition of benefit assessments). We need not consider, however, whether a town may adopt a local law imposing benefit assessments to finance solid waste disposal facilities provided town-wide as a town function (see Municipal Home Rule Law, §10[ii][d]; 1988 Opns St Comp No. 88-2, p 3; but cf. Town Law, articles 12 and 12-A; Coconato v Town of Esopus, 152 AD2d 39, 547 NYS2d 953, lv denied 76 NY2d 701, 558 NYS2d 891; Albany Area Builders Association v Town of Guilderland, 74 NY2d 372, 547 NYS2d 627), because for the reasons stated below it is our view that the proposed "solid waste generation fee" would not constitute a benefit assessment.
The imposition of the proposed "solid waste generation fee" is apparently based on a determination that all improved properties generate solid waste and that such waste, consistent with the town's flow control legislation, must be processed at the town's disposal facilities. The proposed fee, therefore, does not appear to be based on a determination that the disposal facilities particularly enhance the value of properties within the town. Consequently, the rationale for the proposed fee is inconsistent with the concept of benefit assessments. Also, as noted, it appears that the disposal facilities are provided as a town-wide function to serve the entire town. Thus, even if the town were to determine that the facilities enhance property values, the town would also have to determine that the benefit is conferred upon all properties, not just improved properties. Therefore, a benefit assessment to finance these facilities could not be imposed upon only improved properties.
With respect to whether the proposed "solid waste generation fee" may be imposed as a user fee, we note that user fees are contractual in nature and a charge for the actual use of a service (see Silkman, supra; see also, e.g., New York University, supra; State University of New York v Patterson, 42 AD2d 328, 346 NYS2d 888; City of New York v Steinfeld, 126 Misc 2d 934, 486 NYS2d 598). Although user fees must bear a "direct relationship" to the cost of furnishing a service, they need not consist of a single component based on the actual use of the service, but may also contain other components so long as there exists some "rational underpinning" for the charge (see Elmwood - Utica Houses Inc. v Buffalo Sewer Authority, 65 NY2d 489, 492 NYS2d 931; Watergate II Apartments, supra). Since a user fee must be directly related to the cost of providing the service, the fee may not be imposed to generate revenue to offset the cost of governmental functions generally (cf., C.I.D. Landfill Inc. v New York State Department of Environmental Conservation, 167 AD2d 827, 561 NYS2d 936; Torsoe Bros. Construction v Board of Trustees, 49 AD2d 461, 375 NYS2d 612; Rauscher v Village of Booneville, 131 Misc 2d 264, 499 NYS2d 832; Mobil Oil Corporation, supra).
Town Law, §221(2) authorizes a town which has acquired "solid waste management facilities" pursuant to section 221(1) to contract for the disposal by the town of solid waste accumulated or collected by any municipality, special district, corporation, partnership or individual. Since a user fee is in the nature of a contractual charge specified in advance, we believe that section 221(2) authorizes a town to establish fees for the disposal of solid waste at such facilities (cf. Opn No. 86-88, supra, pertaining to user fees for town-wide solid waste collection service). Moreover, even if section 221 is not applicable, it is our opinion that a town may adopt a local law establishing fees for the use of town-wide solid waste disposal facilities (see Municipal Home Rule, §10[ii][a][9-a]; Opn No. 86-88, supra).
In order for the proposed solid waste generation fee to constitute a user fee, the owners of improved properties within the town must be considered users of the town's solid waste disposal facilities. Assuming that the town's solid waste flow control legislation is constitutional (see Waste Stream Management Inc. v St. Lawrence County, 156 AD2d 111, 555 NYS2d 213; Vinne Montes Waste System v Town of Oyster Bay, 150 Misc 2d 109, 567 NYS2d 335; but see Town of North Hempstead v Incorporated Village of Westbury, ___ Misc 2d ___, 581 NYS2d 536, appeal pending) and that it imposes a legal duty to dispose of solid waste at the town's facilities, the effect of the legislation is to require the owners of improved properties which generate solid waste to use the town's disposal facilities. Thus, in our view, the solid waste flow control legislation renders the owners of improved properties which generate solid waste mandatory users of the town's solid waste facilities and provides a basis for concluding that the proposed fee is a charge for the use of the town's facilities (see Kootenai County Property Association v Kootenai County, 115 Idaho 676, 769 P2d 553).
As previously discussed, user fees must also bear a "direct relationship" to the cost of providing the service and have a "rational underpinning" (see Elmwood-Utica House, supra; Watergate II Apartments, supra). A system of user fees may be established with varying rates to be charged to different classes of users related to the varying benefits received by each class of user, so long as, in accordance with constitutional equal protection guarantees, there is a rational basis for distinguishing among the various classes of users (see NY Const., art I, §11; Elmwood-Utica House, supra; Opn No. 88-2, supra; Opn No. 86-88, supra; see also Foss v City of Rochester, 65 NY2d 247, 491 NYS2d 128). Subject to these general requirements, a user fee may be imposed as a flat unit charge (see 1979 Opn St Comp No. 79-792, p 170).
We express no opinion with respect to either the relationship between the proposed "solid waste generation fee" and the cost to the town of providing solid waste disposal services, or on the propriety of the classifications and unit charges to be established in this instance. Resolution of these issues depends on factual determinations which initially must be made by the town.
We note, however, that to the extent the proposed local law provides that the solid waste generation fee must be imposed upon and paid by the refuse districts (see Town Law, §221; see also Town Law, §198[a] authorizing a town board acting with respect to refuse and garbage districts to award contracts for the disposal of solid waste), the owners of property within the ad valorem districts, and possibly the "flat" assessment district, will be charged for the use of the town's solid waste facilities on a different basis than the owners of similarly situated properties located outside these districts. Further, given the apparent rationale for the proposed law, it would appear that the owners of the property which generate the waste, and not the districts which collect it, are the users of the town's solid waste facilities. We also note that it appears that the proposed fee would be imposed irrespective of whether an improved property actually generates solid waste. In our view, these provisions may cause the fee to be imposed inequitably or characterized as something other than a user fee. Therefore, we believe that the town should impose the proposed fee directly on the properties within the districts and not as a district charge. We also believe that for purposes of imposing the fee, the term "improved property" should encompass only properties that may be reasonably expected to generate solid waste during the period for which the fee is billed.
As to billing the proposed "solid waste generation fee", we note that there is no requirement that a user fee be placed on the real property tax bill (see Opn No. 86-88, supra, concluding that, by local law, current user fees may be placed as a separate item on tax bills; see also Tax Law, §1826[b]). Thus, the proposed fee need not be billed at the same time as the real property tax.
Finally, with respect to whether the proposed "solid waste generation fee" may be imposed retroactively, we note that a fee may be imposed retroactively under the same circumstances in which a tax may be imposed retroactively (see Wittenberg v City of New York, 135 AD2d 132, 523 NYS2d 1003, affd 73 NY2d 753, 536 NYS2d 57; see also Litod Paper Stock Corp. v City of New York, 154 AD2d 280, 546 NYS2d 361, lv denied 75 NY2d 709, 555 NYS2d 692). The retroactive imposition of a tax and, hence, a fee, for a short period is generally valid unless, in light of the nature of the fee and the circumstances in which it is imposed, the retroactivity is so harsh and oppressive as to violate constitutional due process guarantees (see Replan Development Inc. v Department of Housing Preservation and Development of the City of New York, 70 NY2d 451, 522 NYS2d 485, appeal dismissed 485 US 950, 108 S Ct 1207, 99 L Ed 2d 409). Whether the retroactive imposition of a fee is "harsh and oppressive" is a question of degree, requiring a balancing of the equities (id.). In balancing the equities, the factors that may be considered are the forewarning to the persons required to pay the fee of a change in law and the reasonableness of their reliance on the old law; the length of the retroactive period; and the public purpose for retroactive application (id.; see also Wittenberg, supra). Therefore, the propriety of retroactively imposing the proposed solid waste generation fee involves questions of fact which, in the first instance, must be resolved at the local level.
June 29, 1992
Robert DeGregorio, Esq., Town Attorney
Town of Huntington