Area Plan Commission of Evansville v. Evansville Outdoor Advertising, Inc.

Citations: 789 N.E.2d 96; 2003 Ind. App. LEXIS 903; 2003 WL 21246233Docket: No. 65A01-0205-CV-161

Court: Indiana Court of Appeals; May 30, 2003; Indiana; State Appellate Court

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Evansville Outdoor Advertising, Inc. initiated a declaratory judgment action against the Area Plan Commission of Evansville and Vanderburgh County, the City of Evansville, and the Board of Commissioners of Vanderburgh County, seeking to invalidate four ordinances related to building permit fees for off-premises signs. The trial court ruled in favor of Evansville Outdoor, leading to an appeal from the Appellants regarding the validity of the ordinances. 

The Area Plan Commission (APC) had reviewed its fee schedule in 1997, noting that fees had not been increased in a long time and were lower than those of neighboring counties. To address rising operational costs, the APC proposed fee increases and the establishment of new fees. Consequently, local legislative bodies amended ordinances in late 1997 to empower the APC to set and collect reasonable fees. The APC implemented a new fee schedule effective January 1, 1998, which notably increased the billboard permit fee from $100 to $1 per square foot (with a minimum charge of $100), marking an approximate 600% rise for average-size billboards.

Despite the fee increase, there was a surge in billboard permit applications in 1999 due to anticipated stricter regulations. Subsequently, comprehensive changes to zoning ordinances were adopted in the summer of 1999, complicating the billboard application process and stipulating that permit fees be based on total display area without specifying the amounts. Evansville Outdoor filed its initial complaint on August 22, 2000, and an amended complaint on March 27, 2001, seeking to declare specific ordinances invalid.

Evansville Outdoor contended that certain ordinances improperly delegated the authority to set fees for improvement location permits to the Area Plan Commission (APC), violating Indiana Code IC 36-1-3-1 et seq., which governs municipal and county fee-setting powers. In Count II of the amended complaint, it sought a declaration that Vanderburgh County Code 17.27.50(D) and Evansville Code 15.153.07.124(D) were legally invalid, arguing that these ordinances allowed the APC to determine fees based on the total display area of proposed signs. The complaint asserted that this fee structure lacked any connection to the APC's administrative responsibilities in issuing permits, contravening Indiana law prohibiting fees not aligned with the administrative costs associated with permits as per IC 36-1-3-8(a)(5). Count III requested damages for overpayment of fees, along with attorney fees and costs. 

Following a bench trial on October 30, 2001, the trial court issued a declaratory judgment on February 4, 2002. The findings included testimony from Barbara L. Cunningham, the Executive Director of the APC, who presented evidence supporting a proposed fee increase initiated in 1997. The new fee structure raised the cost for billboard permits from a flat fee of $100 to a variable rate of one dollar per square foot per side, imposing additional costs for surveys and site plans that were previously the government's responsibility. This change resulted in a 600% fee increase for one-sided billboards. Cunningham noted that 80% of the APC's legal expenses were related to billboard issues post-amendment, contrasting with minimal litigation before the new ordinances. Despite these claims, no evidence was provided to establish a relationship between billboard size and the costs incurred by the government for regulation. The APC noted that rising operational costs were attributed to technology and legal fees unrelated to billboard permits.

The Amended Code aims to set reasonable standards for off-premise advertising signs, discouraging their excessive presence and deterioration. However, evidence indicates no relationship between the costs of regulating billboards and the current fee assessment method, with fees appearing to serve primarily as a deterrent against erecting billboards. Consequently, the fee structure for billboard permits by the APC is deemed unrelated to administrative costs, effectively functioning as a revenue-generating tax, which is impermissible under Indiana law, as established in City of Portage v. Harrington.

The court acknowledges the need for deference to legislative bodies and asserts that while Evansville and Vanderburgh County can establish building codes and reasonable fees for property compliance aimed at welfare and safety, any fees must be tied to actual administrative costs and uniformly applied unless a rational basis for differentiation exists. Specific sections of the Evansville Code and Vanderburgh County Code regarding building permit fees for off-premises signs are declared void as a matter of law.

In the judgment, the court finds that these ordinances are invalid as applied to Evansville Outdoor Advertising and similarly situated entities. The Appellants’ motion to correct error, which argued against the facial invalidity of the ordinances, was denied, leading to their appeal. There is disagreement regarding the trial court’s ruling, with the Appellants believing it invalidated the ordinances outright, while Evansville Outdoor contends that only the fee itself was found invalid. The trial court's judgment indeed addressed the validity of the ordinances in relation to billboard permit fees, prompting a review of each ordinance's validity.

The ordinances grant the Advisory Plan Commission (APC) the authority to set reasonable fees for administrative functions, codifying Indiana Code Ann. 36-7-4-411, which permits fee schedules for processing administrative appeals, issuing permits, and other official actions. The trial court erred in declaring certain city and county ordinances void, as they were part of comprehensive billboard zoning law changes adopted after the APC established the current fee schedule. Although these ordinances state that billboard permit fees are based on total display area, they do not specify the fee amounts. 

The trial court found insufficient evidence of a correlation between billboard size and the administrative costs of regulation, requiring empirical data to support the fee structure. However, it is established that courts should not question the legislative motives of local bodies when a rational basis exists for their actions. The APC provided testimony indicating that larger signs lead to more regulatory challenges, requiring more staff time and resources for compliance checks. APC Executive Director Barbara Cunningham highlighted the increased enforcement complexities associated with larger signs, while another staff member noted that multiple employees may be involved in processing a billboard permit and ongoing compliance inspections. This testimony supports the notion that the fee structure has a rational basis related to the administrative costs incurred by the APC.

Beverly Behne, the zoning administrator for the APC, testified that billboards are the most common zoning issue, requiring considerable staff time for compliance litigation. The trial court erred by demanding empirical evidence to support this testimony. The local legislative bodies had a rational basis for setting billboard permit fees based on total display area, as larger signs are likely to incur greater administrative costs. The trial court incorrectly ruled Vanderburgh County, Ind. Code 17.27.50(D) and Evansville, Ind. Code 15.153.07.124(D) void. Instead, the court should have evaluated whether the APC's fees violated Ind. Code Ann. 36-1-3-8(a)(5), which restricts local governments from imposing fees exceeding the administrative costs of regulation. The Home Rule Act mandates that regulatory fees must reflect the actual costs of licensing, inspecting, and regulating activities, and any fee deemed excessive could be classified as a revenue measure. The court typically defers to the legislative branch regarding fee amounts and does not calculate the difference between costs and collected amounts unless clearly excessive. The trial court did not assess whether Evansville Outdoor demonstrated that the APC's fees were excessively above necessary regulatory costs, focusing instead on the fee assessment method. The decision to base fees on sign size was found rational, and the court remanded the case for further proceedings to determine if a fee of one dollar per square foot is excessive. The judgment was reversed, and further proceedings were ordered. The case originated in Vanderburgh County and involved amendments to billboard ordinances adopted by local authorities in 1997 and 1999, with Evansville Outdoor challenging the validity of the ordinance at trial.