Filed: June 12, 2003

GORDON R. MARTIN
and GORDON S. MARTIN, JR.,

Appellants,

v.

CITY OF TIGARD,

Respondent.

(OTC 4308; SC S46329)

On review from the Oregon Tax Court.*

Carl N. Byers, Judge.

Argued and submitted September 11, 2000.

Douglas V. Van Dyk, of Tarlow, Jordan & Schrader, Portland, argued the cause for appellants. With him on the brief was Edward H. Trompke.

James M. Coleman, of Ramis, Crew, Corrigan & Bachrach, LLP, Portland, argued the cause and filed the brief for respondent.

Before Carson, Chief Justice, and Gillette, Durham, and Riggs, Justices.**

CARSON, C.J.

The judgment of the Tax Court is affirmed.

*14 OTR 517 (1999).

**Leeson, J., resigned January 31, 2003, and did not participate in the decision of this case. De Muniz and Balmer, JJ., did not participate in the consideration or decision of this case.

CARSON, C.J.

In this direct appeal from the Tax Court, we must decide whether a charge by the City of Tigard (the city) against taxpayers' property qualifies as an assessment for a local improvement, which is exempt from the property tax limitations set out in Article XI, section 11b, of the Oregon Constitution or, instead, constitutes a "tax" subject to those limitations. (1) The Tax Court determined that the charge qualified as an assessment for a local improvement under Article XI, section 11b, and granted summary judgment in the city's favor. Martin v. City of Tigard, 14 OTR 517 (1999).

On review, taxpayers contend that the charge at issue does not qualify as an assessment for a local improvement, as Article XI, section 11b, defines that term, for three reasons: (1) the city requires taxpayers to waive all irregularities or defects in the local improvement proceedings and cost apportionment in order to exercise the option of paying the charge over a ten-year period; (2) the city did not assess other properties that taxpayers contend also received a special benefit from the project; and (3) the city included attorney fees and litigation costs related to the project in its costs. We review for errors of law. ORS 305.445. For the reasons set out below, we conclude that the city's charge against taxpayers falls within the meaning of an assessment for a local improvement under Article XI, section 11b, and, therefore, is not a "tax" subject to the dollar limits of that provision. Accordingly, we affirm the judgment of the Tax Court.

The following facts are taken from the Tax Court's summary judgment order and the parties' affidavits and exhibits in support of their respective motions for summary judgment. In 1984, the city formed the Dartmouth Street Local Improvement District No. 40 (the Dartmouth LID) to pay for the construction of an extension of Dartmouth Street (the project). Taxpayers own approximately 25 acres of property located within the Dartmouth LID boundary. The city began construction on the project in 1992. After completing condemnation proceedings necessary to acquire property from another landowner in the LID boundary, the city finished the project in 1994.

In 1993, before completion of the project, but after the city had drawn the Dartmouth LID boundary, the city granted Waremart, Inc., and Costco, two merchant corporations, access to Dartmouth Street. Both Waremart and Costco built sales facilities largely outside the LID boundary, but they constructed parking lots within the LID boundary and placed the entrances to their facilities on Dartmouth Street. Once finished, the sales facilities caused increased traffic on Dartmouth Street.

In 1998, the city enacted Ordinance 98-12, which proposed final assessments against the properties located within the Dartmouth LID for the cost of the project. The city included attorney fees and litigation costs associated with the project in its total costs, including attorney fees and litigation costs stemming from the condemnation proceeding. The city proposed to make a final assessment of $1,947,677 against taxpayers' property. However, because the entire Waremart structure and the majority of the Costco structure were located outside the Dartmouth LID boundary, the city did not assess those parts of the Costco and Waremart parcels. The city also did not assess three residential parcels of land located within the LID boundary -- including taxpayers' residence -- that had gained access to Dartmouth Street as a result of the project. Finally, as part of the findings that it adopted in Ordinance 98-12, the city stated that it would not accept taxpayers' application to extend payment of the charge for the Dartmouth LID over a ten-year period unless taxpayers agreed to waive all irregularities or defects in the local improvement proceedings and cost apportionment, as required by ORS 223.215(1)(a) and former Tigard Municipal Code (TMC) 13.04.070(b)(3)(A) (1996), renumbered as TMC 13.04.070(2)(c)(1) (2002). (2)

In June 1998, taxpayers brought this claim in the Tax Court under ORS 305.583(1), (3) seeking a determination that the charge for the Dartmouth LID was actually a "tax" under Article XI, section 11b, rather than an assessment for a local improvement. In addition, taxpayers claimed that the waiver requirements of ORS 223.215(1)(a) and former TMC 13.04.070(b)(3)(A) (1996) violated their right to petition the government for redress of grievances under Article I, section 10, of the Oregon Constitution and the First and Fourteenth Amendments to the United States Constitution.

On opposing motions for summary judgment, the Tax Court concluded that the charge for the Dartmouth LID was not a "tax" under Article XI, section 11b, because the charge conformed to the exemption under that section for an assessment for a local improvement. Martin, 14 OTR 517. The Tax Court further concluded that, because the charge did not constitute a tax, the court lacked jurisdiction to hear taxpayers' constitutional challenges to the waiver requirements of ORS 223.215(1)(a) and former TMC 13.04.070(b)(3)(A) (1996). Id. at 523. The Tax Court granted summary judgment in favor of the city. Id. at 524.

On appeal, taxpayers assign as error the Tax Court's denial of their motion for summary judgment and its grant of the city's opposing motion for summary judgment. (4) We review the Tax Court's ruling to determine whether either party is entitled to judgment as a matter of law. See TCR 47 C (summary judgment appropriate when no genuine issue as to any material fact exists and moving party entitled to judgment as matter of law). We begin with those issues that arise under Article XI, section 11b, of the Oregon Constitution.

As noted, Article XI, section 11b, is a constitutional provision that the voters adopted by initiative petition that sets dollar limits upon taxes that government imposes upon real property. Under Article XI, section 11b(2)(b), a "tax" is

"any charge imposed by a governmental unit upon property or upon a property owner as a direct consequence of ownership of that property except incurred charges and assessments for local improvements."(Emphasis added.) Article XI, section 11b(2)(d), defines a "local improvement" as

"a capital construction project undertaken by a governmental unit

"(i) which provides a special benefit only to specific properties or rectifies a problem caused by specific properties, and

"(ii) the costs of which are assessed against those properties in a single assessment upon the completion of the project, and

"(iii) for which the payment of the assessment plus appropriate interest may be spread over a period of at least ten years.

"The total of all assessments for a local improvement shall not exceed the actual costs incurred by the governmental unit in designing, constructing and financing the project."

Taxpayers do not dispute that the charge for the Dartmouth LID resulted from a capital construction project that provided a special benefit to specific properties, including their property. For the reasons detailed below, however, taxpayers argue that the charge for the Dartmouth LID does not satisfy other criteria set out in the foregoing definition of "local improvement" and, thus, constitutes a "tax" subject to the limits of Article XI, section 11b. We address each of taxpayers' arguments in turn.

Citing Article XI, section 11b(2)(d)(iii), taxpayers first contend that the charge for the Dartmouth LID does not qualify under the exemption for an assessment for a local improvement because the city will not permit taxpayers to pay that charge over a ten-year period unless taxpayers waive all irregularities or defects in the local improvement proceedings and cost apportionment, as required under ORS 223.215(1)(a). (5) The city responds that, in Ester v. Monmouth, 322 Or 1, 903 P2d 344 (1995), this court specifically held that, in adopting Article XI, section 11b, the voters did not intend to change the law governing local improvements. Thus, the city argues, under Ester, because the waiver requirement of ORS 223.215(1)(a) long has been a condition to the option to pay an assessment for a local improvement in installments under statutory law, the voters did not intend to preclude the application of that condition in incorporating the option to pay an assessment in installments as a constitutional requirement for a project to qualify as a "local improvement" under Article XI, section 11b(2)(d).

Because the city asserts that Ester resolves taxpayers' claim, we begin our discussion by examining the holding of Ester. In Ester, this court considered whether, by including the phrase "which provides a special benefit only to specific properties" in the definition of local improvement in Article XI, section 11b(2)(d)(i), the voters intended to exclude from that definition any project that also provided a general benefit to the community. 322 Or at 8. Respecting that phrase, this court concluded that the voters did not intend to alter the historical understanding that local improvements ordinarily provide both a special benefit to certain properties and a general benefit to the community. Id. at 13. In Ester, however, the court did not consider whether the other criteria set out in Article XI, section 11b(2)(d), altered the meaning of the term "local improvement." Thus, in asserting that Ester stands for the proposition that Article XI, section 11b, did not change the law governing local improvements in any respect, the city overstates this court's holding in that case. (6)

Having explained that Ester does not dispose of taxpayers' claim, we turn to the question whether the city's imposition of the waiver requirement set out in ORS 223.215(1)(a) prevents the charge for the Dartmouth LID from qualifying as an assessment for a local improvement under Article XI, section 11b. Because Article XI, section 11b, is a voter-initiated constitutional provision, our task in interpreting the meaning of that provision is to discern the intent of the voters. Roseburg School Dist. v. City of Roseburg, 316 Or 374, 378, 851 P2d 595 (1993). The text of the provision itself provides the best evidence of the voters' intent. Id. In addition, this court also considers the context of the provision, including other relevant constitutional provisions, case law from this court, and any relevant statutory framework in effect at the time when the voters adopted the provision. See Flavorland Foods v. Washington County Assessor, 334 Or 562, 569-75, 54 P3d 582 (2002) (considering those as part of context of initiated constitutional provision). If the voters' intent is clear from the text and context of the initiated constitutional provision, then the court does not look further. Roseburg School Dist., 316 Or at 378.

Article XI, section 11b(2)(d)(iii), identifies one criterion for a charge to qualify as an assessment for a local improvement, namely that "the payment of the assessment plus appropriate interest may be spread over a period of at least ten years." Or Const, Art XI,