STEPHAN, J.
In this appeal, United States Cold Storage, Inc. (Cold Storage), and Sanitary and Improvement District No. 59 of Sarpy County (SID 59) contend that the district court for Sarpy County erred in rejecting their challenges to separate annexation ordinances enacted by the City of La Vista. We affirm the judgment of the district court.
Cold Storage is a New Jersey corporation that owns and operates a public refrigerator warehouse facility located in Sarpy County, Nebraska. The City of La Vista is a Nebraska municipal corporation of the first class located in Sarpy County. Doug Kindig is the mayor of La Vista, and Brenda Carlisle, Ron Sheehan, Alan Ronan, Mark Ellerbeck, Mike Crawford, Terrilyn Quick, Kelly Sell, and Anthony Gowan are members of the La Vista City Council. We shall refer to the city and its officers collectively as "La Vista."
In 1969, the owner of a contiguous 210-acre tract of land in Sarpy County petitioned the Sarpy County Board of Commissioners to designate the tract as an industrial area and the board complied.
SID 59 was created in 1971 to provide utilities and services to the industrial area. The area of SID 59 is greater than, but includes, the entire industrial area.
On October 6, 2009, La Vista resolved to annex SID 59. On October 8, it sent written notices to the property owners within SID 59 of an October 22 city planning commission public hearing on the proposed annexation. On November 3, La Vista sent written notice to the property owners within SID 59 of a November 17 city council hearing also regarding the annexation of SID 59. On December 1, after conducting the public hearings, La Vista approved an ordinance (ordinance 1107) purporting to annex SID 59 in its entirety.
On December 16, 2009, Cold Storage filed a class action complaint challenging the validity of ordinance 1107 on behalf of itself and all landowners in SID 59. Named defendants were La Vista and SID 59. The complaint alleged that ordinance 1107 was invalid because (1) La Vista failed to comply with statutory notice requirements
On January 18, 2011, while Cold Storage's challenge to the validity of ordinance 1107 was pending in district court, La Vista directed its planning commission to consider the annexation of only a portion of SID 59; specifically, that portion that did not include the industrial area. On April 19, after giving proper statutory notice of this proposed annexation, La Vista adopted an ordinance (ordinance 1142) purporting to annex the portion of SID 59 that did not include the industrial area.
On April 27, 2011, SID 59 filed a cross-claim in the original action filed by Cold Storage. The cross-claim named La Vista as defendant and challenged the validity of ordinance 1142. Specifically, the cross-claim asserted that La Vista was barred by Neb.Rev.Stat. § 31-765 (Reissue 2008) from attempting a partial annexation of SID 59 via ordinance 1142 while Cold Storage's challenge to the validity of La Vista's total annexation of SID 59 via ordinance 1107 was pending in the courts.
A bench trial on all claims was held in January 2012. On March 6, the district court entered orders finding in favor of La Vista on all claims. Both Cold Storage and SID 59 filed timely notices of appeal, and we granted SID 59's petition to bypass the Court of Appeals. Because SID 59 filed the initial notice of appeal, Cold Storage is designated as an appellee asserting a cross-appeal pursuant to Neb. Ct. R. App. P. § 2-101(C) (rev.2010).
SID 59 assigns, restated and consolidated, that ordinance 1142 is invalid because § 31-765 prohibits a city from passing a partial annexation ordinance involving the same area already included within a prior total annexation ordinance when the validity of the prior ordinance has not been finally determined.
Cold Storage assigns that the district court, with respect to ordinance 1107, erred in (1) finding La Vista properly complied with the statutory notice provisions, (2) not finding Neb.Rev.Stat. § 19-5001(5) (Reissue 2012) unconstitutional, (3) finding La Vista could annex the industrial area without the consent of a majority in value of its property owners, (4) failing to find a 1991 amendment to § 13-1115 unconstitutional as special legislation, and (5) failing to find that La Vista annexed SID 59 for revenue purposes only.
An action to determine the validity of an annexation ordinance and enjoin its enforcement sounds in equity.
Statutory interpretation is a question of law, which an appellate court resolves independently of the trial court.
In its cross-appeal, Cold Storage asserts five reasons why the district court erred in
Cold Storage contends that ordinance 1107 is invalid because La Vista failed to comply with the statutory notice requirements set forth in § 19-5001. These requirements were enacted in 2009.
According to § 19-5001(1), "A city of the first or second class or village shall provide written notice of a proposed annexation to the owners of property within the area proposed for annexation...." Section 19-5001(2) requires that notice be sent "by regular United States mail" postmarked "at least ten working days prior to the planning commission's public hearing" on the annexation and that a "certified letter" be sent to the clerk of any affected sanitary and improvement district. Section 19-5001(2) requires that such notice include "the telephone number of the pertinent city or village official and an electronic mail or Internet address if available." Section 19-5001(3) requires that a second notice be sent to the same parties "postmarked at least ten working days prior to the public hearing of the city council or village board on the annexation." This notice also must include the telephone number "and an electronic mail or Internet address if available."
It is undisputed that La Vista did not strictly comply with these notice requirements. It sent notices of the public hearing of the planning commission on October 8, 2009, which date was fewer than 10 working days prior to the hearing on October 22. It then sent notices of the city council meeting on November 3, which date was fewer than 10 working days prior to the meeting on November 17. La Vista also sent the certified letter to an individual that was not the clerk of SID 59. In addition, the notices included the telephone number of the pertinent city official but did not also include an electronic mail or Internet address.
At trial, city officials explained that the notices were slightly late because they relied on an electronic calendar to determine the 10-day notice period and that the calendar used did not consider either the Columbus Day holiday on October 12 or the Veterans Day holiday on November 11. La Vista also presented evidence that the clerk of SID 59 had actual notice of the planning commission hearing and attended it. And the community development director testified that she misread the statute and thought it required a telephone number or an e-mail or Internet address.
La Vista contends that its failure to strictly comply with the requirements of § 19-5001(1) to (3) is forgiven by § 19-5001(5), which provides in part:
Based upon our de novo review of the record, we agree. La Vista offered a reasonable explanation as to why the notices were not sent 10 working days prior to the hearings. It is also clear that the notices were sent 9 working days prior to the hearing, and thus everyone affected had reasonable notice. Although the clerk of SID 59 did not receive the proper written notice, he had actual notice of and attended the planning commission hearing, and thus there was no prejudice to SID 59. In addition, the items that were omitted from the notices, including e-mail and Internet addresses, were relatively minor, in that a telephone number was provided and thus there was an expedient way to contact the relevant official. Although clearly La Vista made numerous errors with respect to the notices, nothing in the evidence supports any finding that it did so willfully or deliberately. The situation before us appears to be precisely the type of notice disparity meant to be resolved by § 19-5001(5). We therefore conclude that ordinance 1107 is not void for lack of notice to the affected property owners.
In its brief on cross-appeal, Cold Storage argues that § 19-5001(5) is unconstitutional because it allows a city to annex an area without strictly complying with the annexation statutes. It argues that a municipal corporation has only that power provided by legislative enactment to extend its boundaries and that La Vista thus has to strictly comply with the notice statutes in order to exercise its annexation powers. We need not address this argument, as it was not presented to or decided by the district court. A constitutional issue not presented to or passed upon by the trial court is not appropriate for consideration on appeal.
Cold Storage argues that the district court erred in rejecting its claim that La Vista enacted ordinance 1107 solely for the purpose of obtaining revenue. A municipality may not annex property for revenue purposes only.
Our cases recognize that the legal proscription against annexation for revenue purposes only does not mean that a municipality cannot consider potential revenues in deciding whether to proceed with an annexation. As we noted in SID No. 57 v. City of Elkhorn,
In this case, the record reflects that prior to enacting ordinance 1107, La Vista amended its comprehensive plan to include a new chapter entitled "Annexation Plan." The annexation plan sets forth general considerations for annexation of land within La Vista's extraterritorial jurisdiction and adopts specific annexation policies. Those policies include that La Vista will pursue an annexation program that "adds to the economic stability of the city, protects and enhances its quality of life, and protects its environmental resources." The annexation policies also include the promotion of "orderly growth and the provision of municipal services" and preservation of the city's "fiscal position." The annexation plan specifies an annexation study process which includes the preparation of "a plan with complete information on [La Vista's] intentions for extending city services to the land proposed for annexation."
Pursuant to this annexation plan and Neb.Rev.Stat. § 16-117(4) (Reissue 2012), the city's community development director prepared a staff report for the proposed annexation of SID 59 which was submitted to the city council on October 6, 2009. The report identified the street and sewer improvements La Vista would become responsible for in the event of annexation and estimated the maintenance expenses related to those improvements. The report also analyzed how police and fire services would be provided by La Vista to the area under consideration for annexation. It noted that with additional staff, police response time to the annexed areas would improve, and that fire service could be provided with current staff.
In a section titled "Annexation Suitability," the report noted: "[SID 59] is bordered by the City limits on several sides of its perimeter. Annexation would be a logical extension of the city." The city administrator testified that SID 59 was "a big SID" situated "sort of as an island in the city's area." She noted that this had resulted in some confusion about who was responsible for providing certain services such as law enforcement and snow removal. She also explained that annexation of SID 59 was a component of the orderly growth of the city, noting that a portion of SID 59 had been previously annexed and that the city was already providing some services to areas within SID 59.
The report included an analysis of the fiscal impact of annexation prepared by the city's finance director. She testified that upon annexation, the city would assume all debts and obligations of SID 59, including approximately $2.1 million in net bonded debt, and would incur the expense of providing public services to the annexed area. The finance director's analysis included a comparison of the revenue stream which the city would realize from annexation compared to the expense it would incur in the assumption of SID 59's indebtedness. This analysis was favorable to the city, in that it reduced its net debt-to-valuation
The district court concluded that Cold Storage had failed to meet its burden of proving that the annexation was solely for the purpose of obtaining revenue, noting that "[t]he evidence indicates that several factors other than revenue were considered and used by La Vista when it decided to proceed forward with the annexation of SID 59." Based upon our review of the evidence, we agree. Revenue was surely a factor, but other factors included the indebtedness which the city would assume by annexation; La Vista's objective of orderly growth; and the perception that annexation of SID 59's territory, which was already surrounded by the city, would improve the provision of services by eliminating jurisdictional issues. Cold Storage argues that the testimony of city officials was inconsistent and therefore should not be given weight. Although our review of this equity matter is de novo, when credible evidence is in conflict on material issues of fact, an appellate court considers and may give weight to the fact the trial court observed the witnesses and accepted one version of the facts over another.
Cold Storage also argues that as the owner of property designated as an industrial area, its right to substantive due process would be violated by annexation pursuant to ordinance 1107.
The argument is premised on current and former Nebraska statutes
Upon the filing of such an application, the county clerk "shall notify such municipal legislative bodies in whose area of zoning jurisdiction" the proposed industrial area is located and "request approval or disapproval" of the designation of the tract as an industrial area.
Prior to 1991, § 13-1115 (Reissue 1987) provided that if a tract designated as an industrial area
But in 1991, § 13-1115 was amended to add a third circumstance which would permit annexation of an industrial area. The new language provided that an industrial area "regardless of actual valuation may be annexed if (1) it is located in a county with a population in excess of one hundred thousand persons and the city or village did not approve the original designation of such tract as an industrial area pursuant to section 13-1112."
Both conditions of § 13-1115(1) are met in this case. The parties have stipulated that Sarpy County, in which the industrial area is located, had a population in excess of 100,000 in both 1990 and 2010. Section 13-1112 provides that municipal legislative bodies "in whose area of zoning jurisdiction an industrial tract is located" must be given an opportunity to approve or disapprove of the formation of an industrial area. Because the property was not within the city's zoning jurisdiction at the time that the industrial area was formed, La Vista could not and therefore did not approve of the formation within the meaning of §§ 13-1112 and 13-1115. Accordingly, we agree with the district court that § 13-1115(1) would permit the annexation contemplated by ordinance 1107 if that statute can be constitutionally applied in this case. We turn, now, to that question.
It is undisputed that under § 13-1115 as it was written prior to 1991, La Vista could not have annexed the industrial area within SID 59, because the area had an actual valuation of more than $286,000 and there was neither a stipulation pursuant to § 13-1112 nor consent of the owners of a majority in value of the property. But as we have noted, the 1991 amendment to § 13-1115 would permit annexation of the industrial area at issue here without either the stipulation or the consent of the property owners. Cold Storage contends that it had a vested right under pre-1991 law that its property could not be annexed without its consent and that therefore, application of the 1991 amendment to § 13-1115 to justify annexation of the industrial area would deprive it of substantive due process.
The Legislature is free to create and abolish rights so long as no vested right is disturbed.
Cold Storage argues that its claimed right to be free from annexation is analogous to a property owner's right not to have existing zoning ordinances changed in a manner that alters the permissible use of the property. We have held that a zoning ordinance cannot take away a vested property right.
The principal effect of annexation on Cold Storage is that its property would no longer be subject to taxation by SID 59, but would instead become subject to taxation by La Vista. Thus, the true nature of the vested right claimed by Cold Storage is the "benefit," specifically lower taxes, accruing from not being subject to taxation by La Vista. The question, then, is whether a right to what is in essence a partial statutory exemption from taxation is a vested right which cannot be subsequently taken away by the Legislature.
As a general rule, exemptions from taxation do not confer vested rights.
We reasoned that the 1911 statute was "general in its effect, and was subject to repeal or amendment at legislative will."
The Supreme Court of Iowa addressed an analogous case in Shiner v. Jacobs et al., Township Trustees.
The U.S. Supreme Court has addressed a similar situation. In Salt Company v. East Saginaw,
We find nothing in the language of the pre-1991 version of § 13-1115 which would constitute a pledge by the Legislature that the circumstances under which property in an industrial area could be annexed would never be altered by an
Cold Storage makes a related argument that the annexation would impair its contractual right arising from the pre-1991 version of § 13-1115. Although a statute can be the source of a contractual right, a contract will be found to exist only if the statutory language "evince[s] a clear and unmistakable indication that the legislature intends to bind itself contractually."
For the same reason that we concluded the prior version of the statute created no vested right, we conclude it created no contractual right. We find nothing in the statutory language indicating intent on the part of the Legislature to be contractually bound with the landowners in a designated industrial area, or any corresponding duty on the part of landowners in the industrial area that could be construed as the landowners' part of the contract with the state.
We find no merit in Cold Storage's argument that § 13-1115 cannot be applied retroactively to authorize the annexation of its property. As noted, the Legislature had the authority to change the law in 1991 and that change applies to Cold Storage because it had no vested or contractual right prior to that change. Applying a change in the law that was made in 1991 to an annexation ordinance adopted in 2009 does not constitute a retroactive application. What Cold Storage characterizes as a retroactivity argument is subsumed within the question of whether application of § 13-1115 as amended would deprive Cold Storage of a vested or contractual right. For the reasons discussed above, we conclude that it would not.
On appeal, Cold Storage argues that to the extent the 1991 amendment to § 13-1115 can be read to authorize the annexation of its property without its consent, the statute is void as unconstitutional special legislation, in violation of article III, § 18, of the Nebraska Constitution. But this argument is not properly preserved for our review. In its complaint, Cold Storage did not challenge the 1991 amendment to § 13-1115 as unconstitutional special legislation. At trial, Cold Storage did not advise the court that it was challenging § 13-1115 as unconstitutional special legislation. And not surprisingly, the district court did not address any issue of special legislation in its order dismissing the complaint. A constitutional issue not presented to or passed upon by the trial court is not appropriate for consideration on appeal.
For completeness, we note that in its answer to the complaint, La Vista asserted that §§ 13-1111 to 13-1120, including § 13-1115, are special legislation. However, this claim appears to have been abandoned by the time of trial and, in any event, does not raise the specific constitutional issue which Cold Storage now asks us to decide. Accordingly, we conclude that Cold Storage, as the party which would have had the burden of proving the statute unconstitutional, did not present
An appellate court may, at its option, notice plain error.
For the reasons discussed above, we find no merit in any of the assignments of error asserted by Cold Storage in its cross-appeal.
The appeal of SID 59 is focused solely on ordinance 1142, by which La Vista sought to annex that portion of SID 59 that did not include the industrial area. SID 59 contends that ordinance 1142 is void because La Vista purported to adopt it while Cold Storage's challenge to ordinance 1107 was pending in the court.
The argument is premised on § 31-765, which must be read in context with other statutes relating to the annexation of sanitary and improvement districts. Neb.Rev. Stat. § 31-763 (Reissue 2008) details what is to occur "[w]henever any city or village annexes all the territory within the boundaries of any sanitary and improvement district...." In that circumstance, § 31-763 provides that the sanitary and improvement district "shall merge" with the city or village. Section 31-765 then explains:
(Emphasis supplied.) Neb.Rev.Stat. § 31-766 (Reissue 2008) sets forth the procedures for dividing assets, liabilities, maintenance, and other obligations of the district and for changing the district's boundaries if "only a part of the territory within any sanitary and improvement district" "is annexed by a city or village."
SID 59 contends that in the circumstances of this case, where ordinance 1107 was pending in court, the italicized language of § 31-765 imposed an affirmative statutory limitation on La Vista's power to annex. La Vista contends that the language simply stays any proposed merger until a court can determine the validity of the challenged ordinance and does not in any way impose an additional statutory limitation on its power to annex.
The district court concluded La Vista was correct. And based on the plain language of § 31-765, read in light of that entire section and its placement in the
For the reasons discussed, we conclude that the district court did not err in upholding the validity of both ordinance 1107 and ordinance 1142 adopted by La Vista for the annexation of SID 59. We therefore affirm the judgments of the district court.
AFFIRMED.
MILLER-LERMAN, J., participating on briefs.
