Budgets are shrinking and money is tight — that's no secret to anyone. In response to this challenge, municipalities are looking for alternative ways to finance municipal services, including fire protection. One of the options that many municipalities turn to is the imposition of special assessments that charge for certain services. While this approach holds some appeal, it shouldn't be equated with simply imposing a tax.

In June 1996, the City of North Lauderdale, Fla., attempted to impose a special assessment on owners of improved property within the city for the purpose of providing an “integrated fire-rescue program.” The city adopted an ordinance that authorized funding the cost of an integrated fire, rescue and emergency medical service program through a special assessment levied on all property owners in the city. This integrated fire-rescue program included fire suppression, first-response medical aid and emergency medical services. A group of commercial property owners (referred to in the opinion as the “opponents”) filed suit against the city opposing the special assessment, and the case of City of North Lauderdale v. SMM Properties, Inc., et al, No. SC00-1555, began its trip to the Supreme Court of Florida.

The commercial property owners conceded that the portion of the special assessment that provided fire suppression and first-response medical aid services conferred a special benefit on their properties and consequently did not oppose it. However, they objected to that portion of the special assessment which provided for emergency medical services, arguing that it was improper because their properties did not derive a special benefit from this service. They argued that the assessment for emergency medical services instead provided a service to all citizens in the city.

It appeared that the city had a strong argument in support of the special assessment. An earlier Florida case, Lake County v. Water Oak Management Corp., 695 So. 2d 667 (Fla. 1997), offered a two-prong test to be used in reviewing the validity of special assessments. The first prong was whether the services at issue provided a special benefit to the assessed property. The second prong was whether the assessment for the services was properly apportioned. In the City of North Lauderdale case, there was no issue as to the proper apportionment of the special assessment. The only prong of the test to be reviewed by the court was the determination of whether the emergency medical services provided a special benefit to the property.

In Lake County, the court had upheld a special assessment imposed for fire protection services. The “fire protection services” in question included fire suppression activities, first-response medical aid, educational programs and inspections. The first-response medical aid teams stabilized patients and provided them with initial medical care. The City of North Lauderdale argued that Lake County's fire-rescue program was similar to its own. Both were consolidated programs funding more than just fire protection and suppression activities.

The commercial property owners, on the other hand, responded that Lake County's program involved only first-response medical aid, not emergency medical services. The opponents further argued that because first-response medical aid is a function provided by firefighters as part of their normal duties, the property owners in Lake County were really only paying for fire protection, and the special assessment in Lake County did not assess property owners for services outside the firefighters' regular jobs, such as emergency medical services.

The court then examined the differences between the Lake County program and the North Lauderdale program. It noted that Lake County provided only first-response medical aid. Under Florida law, “first-response medical aid” is considered to be one of the routine duties of firefighters. It requires a 40-hour training course and is routinely provided by police officers, firefighters, lifeguards and the like as necessary on-scene patient care before emergency medical technicians or paramedics arrive. First-response medical aid makes no provision for emergency medical transportation. “Emergency medical services,” on the other hand, involve both the provision of emergency medical care and prehospital emergency medical transportation.

Based on these differences, the court concluded that the medical services provided for by the City of North Lauderdale were clearly distinguishable from those provided by Lake County. The City of North Lauderdale's special assessment provided for emergency medical services, while Lake County's did not.

Having made this determination, the court then moved on to determining whether the special assessment in question nonetheless met the first prong of the test by providing a special benefit to the assessed property. The court noted that it traditionally deferred to the legislative body's determination of special benefits. This is a reflection of the basic tenet of separation of powers, one of the fundamental principles upon which our government is founded. In other words, the judicial branch of government typically does not second-guess such determinations made by the legislative branch.

When the City of North Lauderdale created its Fire Rescue Assessment Ordinance, it made certain findings of fact. It declared that the fire-rescue service provides a special benefit to property because it, among other things:

• Protects the value of improvements and structures.
• Protects the life and safety of the intended occupants.
• Lowers the cost of fire insurance.
• Contains the spread of fire incidents.

The city went on to say that combining fire control and emergency medical services would enhance and strengthen the relationship of such services to the use and enjoyment of improved property in the city. This, in turn, would enhance the value of business and commercial property, and this enhanced value could be anticipated to be reflected in the rental charge for value of such business or commercial property.

The court disagreed, finding that the emergency medical services component of the fire-rescue service was not a special benefit to the property. There was no evidence in the record that the availability of emergency medical services decreased insurance premiums or enhanced the value of real property. The court noted that, on the whole, emergency medical transportation services benefit people, not property. The court held that the city's legislative determination that the assessment for emergency medical services conferred a special benefit on property was arbitrary, and therefore had the indicia of a tax because it was proposed to support many of the general sovereign functions contemplated within the definition of a tax.

The court acknowledged that the city did make general findings in its ordinance that there was a special benefit to the assessed property, but noted that there was nothing more in the record to support these findings. In other words, there was no evidence of the type of benefits that would inure to the property from the provision of emergency medical services, no studies were conducted by the city documenting any specific special benefit, and no testimony or expert opinion was offered to indicate how the portion of the assessment providing for emergency medical services would specifically benefit real property.

The test for determining whether a special benefit is conferred to property is not whether the services confer a “unique” benefit or are different in type or degree from the benefit provided to the community as a whole. Rather, the test is whether there is a “logical relationship” between the services provided and the benefit to real property.

I imagine that the commercial property owner opponents felt if it waddles like a duck and quacks like a duck, it's probably a duck. In other words, if it seems like a tax, it probably is a tax. However, there is in fact an important distinction between special assessments and taxes. As the court observed, a legally imposed special assessment is not a tax. While the payment of both taxes and special assessments is mandatory, there's no requirement that taxes provide any specific benefit to the property. Instead, they may be levied throughout the particular taxing unit for the general benefit of residents and property.

On the other hand, special assessments must confer a specific benefit upon the land burdened by the assessment. A tax is an enforced burden of contribution imposed by sovereign right for the support of the government, the administration of the law and the execution of the various functions the sovereign is called on to perform.

By distinction, a special assessment is like a tax in that it's an enforced contribution from the property owner and may possess other points of similarity to a tax. However, it is inherently different and governed by entirely different principles. It is imposed under the theory that the portion of the community required to bear it receives some special or peculiar benefit in the enhancement of value to the property against which it is imposed as a result of the improvement made with the proceeds of the special assessment.

The court concluded that the emergency medical services portion of the special assessment by the City of North Lauderdale had the indicia of a tax because it failed to provide a special benefit to real property. It ruled that there was no logical relationship between emergency medical services (the assessment, treatment, and transport of sick or injured people) and a special benefit to real property.

There was no indication from the city or in the record how the emergency medical services would indeed enhance the value of the property against which the assessment was imposed. Although emergency medical services may provide a sense of security to individuals, neither the service nor the sense of security is provided to the property itself. Consequently, the court concluded that the emergency medical services in question did not provide any special benefit to the property, and therefore that portion of the program could not be funded by a special assessment.

Tighter budgets will require greater creativity in funding. However, when considering the use of special assessments as a solution, keep the following in mind:

• Special assessments must provide a direct benefit to the property subject to the assessment.
• It won't be enough to simply state that such a benefit exists. The taxing authority must be able to demonstrate the relationship between the assessment and the benefit to property.

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Philip C. Stittleburg, MIFireE, is a Wisconsin attorney who has been chief of the La Farge (Wis.) Fire Department since 1977. He has been legal counsel for the Wisconsin State Fire Fighters Association, legal counsel and Wisconsin director for the National Volunteer Fire Council Inc., president of the NVFC Foundation, and current NVFC chair. Stittleburg sits on the NFPA board of directors and has served on the committee for NFPA 1500, Fire Department Occupational Safety and Health Program.