Oregon Advisory Opinions February 02, 1970: OAG 70-10 (February 2, 1970)

OAG 70-10.

Chapter 700 [1969] Oregon Laws 1900 (hereafter referred to as "the Act" or "the Metropolitan Service District Law") requires that the notice of hearing for formation of a district shall "state the purpose of the petition or resolution." § 5. It is apparent therefore that such purpose is adequately and completely stated if the notice sets forth the fact that the

Section 5 of the Act specifically provides as follows:

"No land shall be included in the District that could not in the judgment of the governing body, be benefited by the District."

While there is no specific procedure in the Act, it would appear that a Writ of Review would lie based upon an allegation that an official agency has exceeded its jurisdiction. ORS 34.020 to 34.040. See also, Vollmer v. Schrunk , 242 Or.

Section 32 of the Act provides that when a Metropolitan Service District functions in a mass transit district organized under Chapter 643 [1969] Oregon Laws 1586, the governing body of the Metropolitan Service District "may at any time order transfer of the transit system of the transit district to the metropolitan district." It is further provided that when transfer is ordered "the boundaries of the metropolitan district shall, for the purposes of mass transit, be extended to encompass all the territory of the transit district." Although administrative problems may be foreseen in keeping separate the "purposes of mass transit" from other purposes served by the

Metropolitan Service District, there is no constitutional principle limiting the legislature from validly providing that in such case the district will have two sets of boundaries.

This question undoubtedly arises because Chapter 494 [1969] Oregon Laws 889 (hereinafter called "the Boundary Commission Law") gives boundary commissions jurisdiction over city annexations in three defined areas of the state, which happen to be the same areas within which metropolitan service districts may be formed. Section 29 of the Metropolitan Service District Law provides that territory in a "metropolitan area" may be annexed to a Metropolitan Service District "by proceedings that conform to general state law on annexation of territory to cities." In Evert v. Oregon and Western Colonization Co. , 123 Or. 225 (1927), the Court contrasted a "general law" with a "local law", the latter being one that operates exclusively upon only a portion of the territory of the state and the people living therein. In this sense the Boundary Commission Law would be regarded as a "local" law rather than a "general" law.

However, a clear indication of legislative intent can be found in the fact that House Bill 1027, which became the Boundary Commission Law, was thoroughly reviewed by the Senate Committee on Local Government which had earlier considered Senate Bill 494, which became the Metropolitan Service District Law. Having already recommended and considered enactment of legislation providing for metropolitan service districts, it would have been a simple matter to include such districts within the list in Section 3 of the Boundary Commission Law which specifies the municipal entities over which a boundary commission shall have jurisdiction. But this was not done, and it should be concluded that it was not the intention of the legislature to subject metropolitan service districts to the jurisdiction of boundary commissions.

The Act does not set forth any requirement that a Metropolitan Service District, in undertaking to perform sewerage functions, must provide such functions only on a

Article XI, § 11, of the Oregon Constitution, limits the ad valorem taxing power of every taxing unit to the amount of its tax base, whether such unit be the state, county, municipality, district or other body which has the power to levy an ad valorem tax in any year. The tax base is defined as the amount obtained by adding six per cent to the total amount of tax lawfully levied by the taxing unit within its tax base in any one of the last three years in which such a tax was levied or the amount approved as a new tax base by a majority of the legal voters of the taxing unit voting upon the question submitted to them. Subsection (3) of Article XI, § 11, of the Oregon Con

Subsection (3) of section 17 of the Act provides as follows with respect to an ad valorem tax:

"In taxation a district may classify property on the basis of services received from the district and prescribe different tax rates for the different classes of property."

This issue was discussed at great length by the Oregon Supreme Court in Smith v. Columbia County , 216 Or. 662 (1959) which held that a classification is valid when based on something substantial and not arbitrary and unreasonable. The court pointed out that the state is free to select the subject of

It can be observed therefore that the differential in tax rates permitted by subsection (3) of section 17 of the Act may not be applied arbitrarily. The District before it prescribes different tax rates must classify the property on the basis of services received. Furthermore, the subsection requires that a rate be prescribed for each class of property. A rational procedure for determining such tax rates would not, in our opinion, violate Article I, Section 32, or Article IX, Section 1, of the Oregon Constitution as these provisions have been interpreted by the Supreme Court.

We find no requirement either in the Act or in the Constitution that an election be held to authorize either classifications or rates. The only limitation on the taxing authority of a Metropolitan Service District is the 6% limitation on ad valorem taxes contained in Article XI, § 11 of the Oregon Constitution.

Subsection (3) of Section 17 of the Act does not restrict the use of taxes raised through the differential rate to a particular purpose. Such tax monies may be used for capital improvement, for principal and interest on bonded debt, and for general operations and maintenance.

The Act itself does not provide for any specific method of contesting the validity of the differential tax rates. However, the property owner could seek to avoid the levy of the District under ORS 294.485 on the grounds that the legislature did not have the authority to delegate the classification of property to a political subdivision of the State of Oregon and that the particular classification was unreasonable within the guidelines set out in Smith v. Columbia County , 216 Or. 662 (1959). Another alternative would be to test these propositions in a declaratory judgment proceeding under ORS Chapter 28.

Section 16 of the Act authorizes a Metropolitan Ser

There is nothing in the Act which requires the District to submit a schedule of service or user charges to the voters for approval.

There is nothing in the Act which requires that service or user charges in payment of services must be the same throughout the District. However, variations in rates must be reasonable. For a complete discussion of the legal requirements of variations in user charges, see Kliks v. Dalles City , 216 Or. 160 (1959).

Section 18 of the Act authorizes the District to levy special assessments against property within the District in proportion to the benefit such property might receive on account of the construction or acquisition of a service facility. Voter approval is not required but the governing body must notify affected owners by mail of its intent to make such improvement and assessment. Section 18 also requires that the notice shall advise such property owners that each may appear before the governing body to remonstrate against the assessment.

Subsection 2 of section 18 provides that the governing body may state in the notice that the cost of such improvements, construction or acquisition shall be paid in part by general funds, ad valorem tax levies and proceeds from the sale of bonds, service charges, or any combination of these sources of revenue. The language indicates that the entire cost of a project can be financed by special assessment at the option of the District's

Section 9 of the Act as far as it applies to a Metropolitan Service District comprised of more than one county provides that the governing body shall be made up of (1) a representative from the governing bodies of each county with territory in the District chosen by such governing bodies; (2) a representative of the governing body of the most populous city in the District, chosen by that governing body; and (3) a representative of other cities in the District within each county, exclusive of the most populous city in the District, with each county to have a representative of such other cities to be chosen by joint conventions of mayors of the cities in the respective counties. It is said that under such circumstances one member of the governing body of a District comprised of two or more counties might represent 12,000 persons

In the case of Sailors v. Board of Education of the County of Kent , 387 U.S. 105, 18 L. ed. 2d 650, 87 S. Ct. 1549 (1967), the United States Supreme Court held valid the composition of a county school board, whose powers were in all significant aspects similar to those of an intermediate education district board in the State of Oregon. The county school board members in that case were chosen by delegates from local school boards with one vote to every school board without regard to the size of the population residing within the respective school districts. The Court noted that the process of selecting board members was essentially appointive rather than elective, and held that the "one man, one vote" rule did not apply. In doing so, the "non-legislative" character of the office of the board member was emphasized:

"We find no constitutional reason why state or local officers of the nonlegislative character involved here may not be chosen by the governor, by the legislature, or by some other appointive means rather than by an election. . . .. 387 U.S. at 108.

". . . We need not decide at the present time whether a state may constitute a local legislative body through

It was noted that a board of education such as involved in the case performed:

". . . essentially administrative functions; and while they are important, they are not legislative in the classical sense.

"Variable local governments may need many innovations, numerous combinations of new and old devices, great flexibility in municipal arrangements to meet changing urban conditions. We see nothing in the Constitution to prevent experimentation. At least as respects nonlegislative officers, a State can appoint local officials or elect them or combine the elective and appointive system as was done here." 387 U.S. at 110-111.

It is important to note that the court considered the question before it, not one of whether the rule of "one man, one vote" was violated, but one of whether or not the members of the board could be chosen by appointment rather than election. In doing so, the Court pointed out that the delegates who chose the members of the school board were not bound by the preference of any school electors and, indeed, had no authentic way of even knowing what the preference of the voters would be. Thus, the process of choosing the board members was purely appointive and not deduced from the electoral process. In that respect, the method of choosing members of the governing bodies of Metropolitan Service Districts under Oregon law would be similar.

It is also important to note that the Court, while refusing to pass directly upon the question of whether "legislative" officers "in the classical sense" must be elective rather than appointive, heavily emphasized the fact that in the case before it such officers were not of such legislative character. In this respect, a distinction must be noted between a county school board (similar to an Oregon intermediate education district board) involved in the Sailors case and the board of a Metropolitan Service District which under section 24 of the Metropolitan Service District Law may "exercise police power and in so doing adopt such ordinances, rules, and regulations as a majority of the members of a governing body considers necessary for the proper functioning of the district." It is further provided in section 25 of the Act that violation of any ordinance, rule or regulation adopted by a district is punishable by a fine of not more than $500.00 or by a jail sentence of not more than 30 days, or both. The United States Supreme Court may consider that a governing body with power to enact such police regulations may not be "nonlegislative" and therefore may be chosen only by election rather than appointment.

In the recent case of Kramer v. Union Free School District No. 15 , 395 U.S. 621, 23 L. ed. 583, 89 S. Ct. 1886 (1969), the United States Supreme Court, in referring to the

It must be concluded from a review of recent decisions by the United States Supreme Court that the Court has not held that "legislative" bodies must necessarily be elected; and, further, that the Court may draw a distinction between the bodies which are legislative "in the classical sense" and those which are not. What the Court may mean by the latter distinction, if it chooses to apply it, cannot be known with certainty at this time. In any event, it is interesting to note that section 11 of the Act expressly provides for use of the initiative and referendum to change the manner of selecting members of the governing body.

It is concluded, therefore, that in reliance upon the presumptive validity of legislative acts the procedure for selecting the governing body of a Metropolitan Service District is not invalid under the present state of constitutional law.