March 22, 2004
Re: Legality of Fire Department Fees
Dear Fire Chief:
Your MTAS consultant asked me to give you an opinion on the legality of certain fees to be charged for inspections and services performed by the Fire Department. In my opinion these fees are legal if they are reasonably related to the cost of doing the inspection or providing the service. Fees that go beyond recovering these costs may be attacked as unauthorized tax measures.
You should also note that some versions of some fire codes have a suggested fee schedule that is normally amended when the code is adopted by ordinance as authorized in Tennessee Code Annotated, § 6-54-502. Since the fire code must be adopted by ordinance, any amendment must also be adopted by ordinance. I do not know what fire code your City has adopted, but to the extent the fees proposed overlap any suggested fees in the code, and to give the fees greater dignity and enforcibility in general, it might be better to adopt the fee schedule by ordinance.
Your City is incorporated under a private act charter (Ch. 380, Pr. Acts of 1972, as amended). Section 1.04 of the Charter gives the City the same powers conferred on cities by general law, particularly present T.C.A. § 6-19-101. Particularly pertinent to this inquiry are items (20), (22), and (26), which provide that the City may:
(20) License and regulate all persons, firms, corporations, companies and associations engaged in any business, occupation, calling, profession, or trade not forbidden by law;
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(22) Define, prohibit, abate, suppress, prevent and regulate all acts, practices, conduct, business, occupations, callings, trades, uses of property and all other things whatsoever detrimental, or liable to be detrimental, to the health, morals, comfort, safety, convenience, or welfare of the inhabitants of the city, and to exercise general police powers;
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(26) * * * [I]nspect all buildings, lands and places as to their condition for health, cleanliness and safety, and when necessary, prevent the use thereof and require any alteration or changes necessary to make them healthful, clean, or safe;
These provisions and T.C.A. § 6-54-502 authorize the adoption of the codes and inspection ordinances on which the fees in your schedule are based. These provisions say nothing, however, about the charging of fees for these inspections. But as a general proposition of law, the right to do an inspection implies the right to charge a fee to offset the cost of the inspection. A legal encyclopedia states the rule this way:
The power to pass an inspection ordinance carries with it the right to charge a fee to defray the cost of the inspection. 42 Am. Jur.2d Inspection Laws § 13.
2A McQuillin Mun. Corp. § 10.12.50(3rd. Ed.) states the rule similarly:
Express authority conferred on a municipality to enact inspection ordinances includes the incidental power to charge a fee for the inspection.
Tennessee courts appear to follow the general rule. In Porter v. City of Paris, 201 S.W.2d 688 (Tenn. 1947), a group of taxpayers challenged the ability of Paris to charge a fee for parking through parking meters. The Court in upholding the parking fees quoted from an Idaho case, Foster’s, Inc. v. Boise City, 118 P.2d 721 at 728, which in turn had quoted from two (2) treatises:
Effective exercise of the police power necessarily involves expenditures in many ways. The means and instrumentalities, by and through which the supervising powers of the policing authority are brought to bear on the subject to be regulated, involve costs and expenses. It is only reasonable and fair to require the business, traffic, act, or thing that necessitates policing, to pay this expense. To do so has been uniformly upheld by the courts. On the other hand, this power may not be resorted to as a shield or subterfuge, under which to enact and enforce a revenue raising ordinance or statute. Cooley on Taxation, 4th Ed. Sec. 1680; 3 McQuillin Mun. Corp. sec. 987.
The fact, that the fees charged produce more than the actual cost and expense of the enforcement and supervision, is not an adequate objection to the exaction of the fees. The charge made, however, must bear a reasonable relation to the thing to be accomplished. 201 S.W.2d at 691.
See also Memphis Retail Liquor Dealers’ Association, Inc. v. City of Memphis, 547 S.W.2d 244 (Tenn. 1977); Miller v. City of Memphis, 181 Tenn. 15 (1944); and Op. Tenn. Att’y Gen. 97-057 (April 28, 1997).
In addition to regulatory fees, your schedule contains some service fees, such as the one for extrications. Although there are no Tennessee cases on this specific point, the general rule appears to be the same as for regulatory fees. See Vandiver v. Washington County, 628 S.W.2d 1 (Ark. 1982) and Bloom v. City of Fort Collins, 784 P.2d 3011 (Colo. 1989). For those cities that finance the purchase of equipment and facilities through bonds or capital outlay notes, the Local Government Public Obligations Act (T.C.A. § 9-21-101, et seq.) provides specific authority to charge fees for the use of the facilities or equipment. T.C.A. § 9-21-105 (21)(A) defines a “public works project” that may be financed under that act as including “fire department equipment and buildings” and “law enforcement and emergency services equipment.” § 9-21-107(8) authorizes any city to “Fix, levy and collect fees, rents, tolls, or other charges for the use of or in connection with any public works project... .” Therefore, if the purchase of the emergency equipment was financed under the LGPOA, the city has specific statutory authority to charge fees for use of the equipment.
Some of the charges in the schedule, such as training and certain haz-mat fees, appear to imply a contract between the city and another municipality or a business. The city has the authority to “contract and be contracted with” (T.C.A. § 6-19-101(4)). T.C.A. § 12-9-108, part of the Interlocal Cooperation Act, authorizes contracts between or among local governments for the provision of services. A normal incident of a contract is a provision for payment for services rendered. Therefore, a reasonable charge for providing these services to another governmental entity or a business is defensible and in my opinion would be upheld.
Most of the discussions of fees in cases and other legal writings involve the question whether the fee is actually a fee or an unauthorized and illegal tax. To levy a tax, a municipality must have specific statutory authority. Fees can normally be justified by showing authority to regulate or provide a service and showing a cost associated with the regulation or service that is equitably apportioned among the regulated persons or service users. A fee does not have to be exact in relation to the cost, but the closer the better. A fee that produced revenue greatly in excess of the cost of providing the regulation or service could be construed as a tax and ruled invalid. Therefore, the City should have some documented cost basis for levying the fee.
I hope this is helpful. If you have further questions, please feel free to contact us.