NLC Argues for City Discretion Before Supreme Court

June 13, 2012
by Lars Etzkorn

Last week, NLC signed on to an amicus curiae brief filed by the State and Local Legal Center in a U.S. Supreme Court case to decide whether the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution allows a city to forgive tax obligations to be paid in installments over time, while not refunding payments made by those who paid their tax assessments in full.

In 2001, the City of Indianapolis notified property owners in the Northern Estates neighborhood that they would be required to connect to the city's sewer system rather than use their septic systems. Then, in 2004, the city imposed a $9,278 property tax assessment against each parcel that would be hooked to the sewer system and gave property owners the option of paying the full amount up front or in installments over 10, 20 or 30 years with annual interest charges of 3.5 percent.

Christine Armour and 30 other owners paid their assessments in full, while 142 decided to pay in installments.

In 2005, however, the Indianapolis Board of Public Works decided it would forgive the existing tax obligations of those who were paying in installments but it refused to refund payments made by those who had already paid in full. The case then headed to the courts.

The Indiana Supreme Court ultimately upheld the city's decision to only forgive debt. It held that Indianapolis did not violate the Equal Protection Clause because it had rational reasons for only forgiving debt, including the city's need to reduce administrative costs and conserve its limited resources.

The brief argues that the city's decision passes the required rational basis test. If not, numerous economic policy decisions of local governments could be challenged as unconstitutional.

The brief in Armour v. Indianapolis was drafted by Jon Laramore and Scott Chinn of Faegre Baker Daniels in Indianapolis. In addition to NLC, the brief was signed by the International City/County Management Association, the National Association of Counties, the National Conference of State Legislatures and the U.S. Conference of Mayors.

A hearing before the U.S. Supreme Court is expected in the spring.