The Supreme Court of Alabama recently issued a multipart decision regarding fire service fees in Marshall County fire districts, ultimately reversing, affirming and remanding rulings made by a lower court.
The issue began when the Four-C Volunteer Fire Department and Georgia Mountain Volunteer Fire Department in Marshall County accused Revenue Commissioner Michael Johnson of incorrectly assessing and collecting the $5 fire fees as established by Act No. 2013-403.
Richard Lawson, chairman of the board of the Georgia Mountain Volunteer Fire Department, said a 2018 audit showed the department's revenue fell well below projections. Lawson and a representative with Four-C met with Johson to express their concerns. After they were unable to settle their differing interpretations of the 2013 Act and how to asses fire fees, the fire departments took the issue to court.
The dispute came down to how the Act defined the fees — as not a tax but treated like one — and the terms "business" and "dwelling."
The fire departments argued that the revenue commissioner had the authority to levy properties for failing to pay the fee as if it were a tax since the Act stated that the fee should be "enforced as closely as possible at the same time, in the same manner, and under the same requirements and laws as are the ad valorem taxes of the state."
The fire departments also said the fee should apply to all business entities in the county and to RVs, campers, fifth wheels and travel trailers as dwellings.
In November 2023, the Marshall County Circuit Court ruled in favor of the fire departments, granting declaratory relief and issuing a writ of mandamus to force Johnson to follow their interpretation of the Act and collect fees accordingly.
Johnson disagreed with the fire departments' and the trial court's reading of the Act and appealed the decision to the State Supreme Court.
Johnson argued the fire fee was unenforceable as written in the Act and that he had no authority to place a lien on delinquent properties since the fee, "by definition, is not a tax." He also challenged the election referendum that created the fire districts since no description or maps in the records clearly defined their borders.
His primary defense hinged on the definitions of "business" and "dwelling." He argued that "business" meant a business structure rather than each business entity inside a structure — like a strip mall versus the individual stores — and therefore, the business structure owner should be assessed the fee.
Johnson said the fire departments' and lower courts definition "produces absurd results because it does not include a threshold for the level of commerce being conducted."
"This interpretation does not delineate between a retail store and a child's lemonade stand," he said, according to the Supreme Court's 75-page order.
Johnson also argued that RVs, campers, fifth wheels, and travel trailers would not fall under the Act's definition of a dwelling as a "building, structure, or other improvement to real property" since they are classified as motor vehicles and trailers by the Code of Alabama.
"Once a building or structure qualifies as an improvement, then one may look to see what the intent of that improvement is. If a person intends to live in the improvement, then it would qualify as a 'dwelling' and be subject to the fire service fee. However, the trial court's order classifies objects as structures that cannot be classified as an improvement to realty," Johnson argued.
After considering both sides, the Supreme Court ruled in Johnson's favor regarding the definitions of business and dwellings and reversed the lower court's decision.
"We believe the Revenue Commissioner's understanding of the term 'dwelling' reflects a more careful reading of the Act," the Supreme Court stated. "...The trial court erred in concluding otherwise, and we therefore reverse that portion of the trial court's judgment."
"The Revenue Commissioner has not erred in assessing and collecting the fire-protection service fee on structures or buildings that contain businesses rather than assessing and collecting the fee on every business entity that operates in Marshall County at any time," the high court added. "In other words, the trial court's interpretation of the term' business' in its November 29, 2023, judgment is incorrect."
However, the Supreme Court disagreed with Johnson's challenge to the election referendum.
"Considering the Act as a whole, we must conclude that the Legislature did not provide for the right to contest elections held under the Act and that a party's remedy would be to follow whatever procedures have been developed for dissolution of the fire districts in question…In short, the Revenue Commissioner's attempt to invalidate the fire-protection service fee by challenging the adequacy of the submitted petitions fails even though his observation about what a submitted petition requires is accurate," the Supreme Court said.
On whether failure to pay a fire service fee could result in a lien and tax sale, the justices declined to rule, saying the issue was "not ripe for decision."
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