State law lets fire districts impose fees on new construction to help offset costs of providing emergency services, a state appellate court has ruled.
The Court of Appeals reversed a Pima County Superior Court judge and instead ruled in favor of the Northwest Fire District in a lawsuit filed against a major homebuilder, U.S. Home Corp.
U.S. Home, a unit of Miami-based Lennar Corp., refused to pass a new “facilities benefit assessment” charged by the fire district to help pay for new facilities to provide fire and other emergency services.
The district began billing homebuilders for the fee after the district responded to fires in 2003 of three partially constructed homes not yet on property tax rolls that provide the district’s main funding source.
The district sued in 2005, contending that its $387 fee for each new single-family home and similar assessments for other types of construction were permitted under state law, and the appellate court agreed in a ruling issued Sept. 29 by a three-judge panel in Tucson.
The company had argued that the district was acting outside its authority, and the trial judge ruled that the district had exceeded its authority.
Instead of adopting a fee schedule for services rendered, the district effectively was imposing a tax masquerading as a fee, Judge Carmine Cornelio said.
However, the Court of Appeals said Judge Cornelio’s ruling had overlooked that the district does provide U.S. Home’s projects with fire and emergency medical service in return for the assessment.
The company pays property taxes only on raw land during construction, Court of Appeals Judge Peter J. Eckerstrom wrote. “Thus, the district could have reasonably concluded that the property taxes paid by builders on previously vacant land does not cover the elevated level of service required during the construction process.”
Northwest Fire District’s 140-square-mile service territory is located in a high-growth area northwest of Tucson. According to its Web site, www.northwestfire.org , the district provides services to 114,000 residents and 1,900 commercial establishments.
Fire districts serving areas in or near Sun City, Sun City West, Green Valley, Apache Junction and Tucson filed a legal brief supporting the Northwest Fire District’s legal position.
The Arizona Tax Research Association, a statewide business-supported taxpayers group, also filed a brief in the case.
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