Opinion
C.A. No. 08T-02-057 MMJ.
Submitted: June 9, 2008.
Decided: August 26, 2008.
On Defendant Dorothy McDermott's Motion to Dismiss Monition and Quash Sheriff's Sale.
DENIED.Carol A. Casner, Esquire, Assistant City Solicitor, Wilmington, Delaware, Attorney for Plaintiff.
John R. Weaver, Esquire, Wilmington, Delaware, Attorney for Defendant.
OPINION
This case presents an issue of first impression. The question is whether the City of Wilmington can use monition and sheriff's sale to collect vacant property fees. By Order dated May 8, 2008, the Court stayed this action, pending resolution of defendant's Motion to Dismiss Monition and Quash Sheriff's Sale.
Defendant Dorothy McDermott is the owner of 1536 North Van Buren Street, Wilmington, Delaware. The City of Wilmington has assessed vacant property fees in the amount of $10,500.00. The State of Delaware has authorized the City of Wilmington to use monition "for the collection of taxes or special assessments."
36 Del. Laws Ch. 143.
Defendant argues that the vacant property fee is neither a tax nor a special assessment. Thus, defendant contends that the City is not authorized to use the monition process to collect unpaid vacant property fees. Plaintiff responds that vacant property assessments are a tax.
Purpose of Vacant Property Registration Fees
It is well-settled that the City has the authority to assess vacant property fees. This Court has found that the fees "bear a rational relationship to the City's legitimate interest in reducing the rental housing shortage as well as the numerous health, safety, and financial costs created by vacant dwellings."
Adjile, Inc. v. City of Wilmington, 2004 WL 2827893, at *2 (Del.Super.), aff'd, 2005 WL 1139577, at * 2 (Del.).
Section 125.0(b)(3) of the City of Wilmington Building Code provides:
Registration shall be required for all vacant buildings, whether vacant and secure, vacant and open or vacant and boarded, and shall be required whenever any building has remained vacant for 45 consecutive days or more. In no instance shall the registration of a vacant building and the payment of registration fees be construed to exonerate the owner, agent or responsible party from responsibility for compliance with any other building code or housing code requirement. One registration statement may be filed to include all vacant buildings of the owner so registering. The owner of the vacant property as of November 1 of each calendar year shall be responsible for the payment of the non-refundable registration fee.
1 Wilm C. § 4-27, 125.0(b)(3) (Ordinance No. 03-019).
Vacant buildings, without proper care, can be a nuisance, a haven for crime and a community eyesore. The City must expend funds for police oversight and for inspection by the Department of Licenses and Inspections. Fees also provide incentive to vacant property owners to rehabilitate and occupy vacant properties.
The purpose of annual registration and fees is set forth in section 125.0(a):
The purpose of this section requiring the registration of all vacant buildings, including dwellings that are subject to chapter 34 as referenced below, and the payment of registration fees is to assist the city government, particularly the department of licenses and inspections (DLI) in protecting the public health, safety and welfare, to monitor the number of vacant buildings in the city, particularly those that are located in the downtown business district (from Second to 16th and Walnut to West Streets), to assess the effects of the condition of those buildings on nearby businesses and the neighborhoods in which they are located, particularly in light of fire safety hazards and unlawful, temporary occupancy by transients, including illicit drug users and traffickers, and to require of the owners of such vacant buildings their registration and the payment of related fees, and to promote substantial efforts to rehabilitate such vacant buildings. The provisions of this section are applicable to the owners of such vacant buildings as set forth herein and are in addition to and not in lieu of any and all other applicable provisions of this chapter, the health and sanitation code, and any other applicable provisions of the Wilmington City Code.
Id.; Adjile, 2004 WL 2827839, at * 3.
The Purpose of Monition
Ownership of property requires proportional contribution to the public revenue as determined by the legislature. The legislature may prescribe the manner of collection of revenue. For the City, property tax collection is an in rem proceeding. Although a statement for sums owed to the City contains the name of the property owner, that designation is for the purpose of collection and does not change the character of the tax or assessment.Taxpayers receive benefits in return for taxation in the form of enforcement of laws, protection of life and property, and other services received by the public at large. Special assessments are imposed only to the extent of specific benefits received.
In City of Wilmington v. Wilmer, the Court of Chancery found that sewer and water services are special assessments (not taxes) as that term is used in the monition law. Therefore, the Wilmer Court determined that the City may collect delinquent water and sewer assessments by the monition process. The direct benefit to the property owner is obvious. The property owner is compensating the City for the amount of its individual use of water and sewer resources.
City of Wilmington v. Wilmer, 1997 WL 124151, at *5 (Del. Ch.).
An automatic lien is placed on real property for certain charges levied or imposed by the City. These charges include fees for registration of ownership of any vacant buildings. Service charges for maintenance or use of sewer and water systems also are subject to lien. The imposition of a lien does not affect or limit the ability of the City to collect charges through monition. Monition is the statutory framework for collecting taxes and special assessments.
25 Del. C. § 2901(a)(1)(c) and (d).
A tax is a pecuniary burden, exacted by legislative authority, upon individuals or property to support the government. A tax is an enforced contribution, not a voluntary payment. Taxes must be assessed in accordance with some reasonable rule or apportionment for the purpose of defraying a public expense.
"Taxes," as the term is generally used, are public burdens imposed generally upon the inhabitants of the whole state, or upon some civil division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property.
"Assessments" have reference to 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. They are justified only because the improvements confer special benefits, and are just only when they are divided in proportion to such benefits. As distinguished from other kinds of taxation, "assessments" are those special and local impositions upon property in the immediate vicinity of municipal improvements which are necessary to pay for the improvement, and are laid with reference to the special benefit which the property is supposed to have derived therefrom.
Black's Law Dictionary 1307 (5th ed. 1979).
It is clear that vacant buildings pose a real and substantial problem for communities. They are commonly used by vagrants and uniformly degrade surrounding property values. Uninhabited structures create targets for graffiti and vandalism, provide asylum for vermin, and harbor insidious illegal drug use and trafficking. It is inevitable that law enforcement, fire departments and other City services must expend precious resources, in disproportionate measure, to protect the general public in areas surrounding vacant buildings.
The Annual Registration of Vacant Buildings and Registration Fees City Ordinance has been found to be an effort by City Council to provide a form of taxation. The Ordinance is a proper exercise of the City's traditional powers to impose business excise taxes, authorized under the City Charter as well as pursuant to the City's general police powers. Registration fees have been found by Delaware courts not to be an unlawful tax.
Wilmington v. Goldstein, 1986 WL 7990, at *1 (Del.); Adjile, 2004 WL 2827893, at *2; City of Wilmington v. Ramunno, 1986 WL 2834, at *2 (Del.Super.).
Regardless of whether vacant property fees are taxes per se, vacant property fees plainly are special assessments. The funds collected from vacant property owners specifically benefit the owners by financing in part the additional City services required to protect the value and security of the vacant building. Vacant property fees are necessary to pay for the enhancement of public services to address problems created by vacant buildings.