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No.

83-324

I N THE SUPREME COURT O THE STATE O MONTANA F F

1983

CITY O SHELBY, a m u n i c i p a l F corporation, P l a i n t i f f and Respondent,

GLORIA SANDHOLM, e t a l . , Defendants and A p p e l l a n t s .

APPEAL FROM:

D i s t r i c t Court of t h e Ninth J u d i c i a l D i s t r i c t ,
I n a n d f o r t h e County o f T o o l e , The H o n o r a b l e R. D . J  l c P h i l l i p s , J u d g e p r e s i d i n g .

COUNSEL O RECORD: F

For Appellants:
J. V.

B a r r o n , G r e a t F a l l s , Montana

For Respondent: Aronow, A n d e r s o n , B e a t t y & Lee, S h e l b y , Flontana

S u b m i t t e d on B r i e f s : Decided:

S e p t e m b e r 1 5 , 1983 J a n u a r y 26, 1984

Filed:

In-f

Clerk

Mr. Justice Daniel J. Court.

Shea delivered the Opinion of the

Gloria Sandholm, et all protesting the creation of a special improvement district, appeal from an order of the Toole County District Court declaring invalid their petition to place on the election ballot for all the registered voters of Shelby, the question of whether a special improvement district created by the city cou.nci1, should be approved by all the registered voters in Shelby. We affirm.

Although the issues are presented in different ways, the dispositive issue, and one not raised in the trial court, is whether a city council resolution creating a special

improvement district consisting of less than the entire city is subject to repeal by referendum procedure. We hold that

it is not and therefore affirm the District Court. Authority for cities to create special improvement

districts is provided by sections 7-12-4101. et seq., MCA. Three resolutions are involved. Shelby validly passed On June 7, 1982, the City of 907, a resolution of

Resolution

intention to create Special Improvement District No. 53 to construct and install a storm sewer system that involved most of the property within the boundaries of the city. Protest

of such a resolution is permitted by section 7-12-4110, MCA, and although days, a protest was it was lodged within the to statutory bar the

fifteen

insufficient. protest

proceedings under section 7-12-4113, MCA.

The City then

passed Resolution 908 which created the special improvement district and which also contained the procedures owners for

assessment of

costs against

the property

in the

improvement district.

Finally, on October 18, 1982, the City

passed the third resolution, Resolution 916, which permitted

the sale of serial bonds to the highest bidder for cash, the bonds to be paid from the funds of the special improvement district. The protestors challenged the resolution creating the special improvement district (Resolution 908) by placing a petition before the Toole County election administrator At

seeking a referendum on the action taken by the City.

this point, the Shelby city attorney requested an opinj-on from the attorney general as to whether a city council special improvement district under

resolution creating a

section 7-12-4102, MCA, is subject to repeal by referendum. When the attorney general issued his opinion that the

resolution was not subject to repeal by referendum, the Toole County election administrator rejected protestors' petition. The protestors then filed action in District Court asking for a temporary restraining order, injunction, and writ of

mandamus to compel the election administrator to rescind her decision rejecting the ballot referendum petition. The

protestors al-ternatively asked that the City file a petition for declaratory judgment to determine the validity of the protestors' petition. The City compl-ied with this request

and filed a petition for declaratory judgment in the Toole County District Court. The trial court held that the City's

action in creating a special improvement district was not a legislative act subject to referendum. This appeal followed.

We agree, under the facts of this case, that the City's action creating a special- improvement district, was not a legislative act subject to referendum. However, we hold also

that referendum is not a permissible procedure to challenge the creation of a special improvement district where the

district encompasses less than the entire area within the city limits. The special improvement district involved here

encompasses approximately two-thirds of the real property within the City. If referendum were a permissible procedure

in this situation, there would be qualified voters within the city limits who would be qualified to vote on the proposed referendum but who did not own property within the boundaries of the special improvement district. Referendum procedures

were not intended to cover this situation. The Montana Constitution places limits on the use of referendum. people may Art. 111, 5 5, provides in part that "[tlhe approve or reject any act of the Legislature

except an appropriation of money extends the power

. . ."

And Art. XI,

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Montana Law