Loading...
HomeMy Public PortalAboutExhibit MSD 3B - Direct Testimony, Susan Myers, MSD MSD Exhibit No. MSD 3B 2018 Stormwater Rate Proceeding SUSAN M. MYERS Direct Testimony Metropolitan St. Louis Sewer District February 26, 2018 Table of Contents Page Witness Background and Experience ........................................................................................... 1 Criteria Governing Rate Change - Stormwater ............................................................................. 1 Past Litigation Regarding Stormwater Rates ................................................................................ 5 Direct Testimony of Susan M. Myers, MSD February 26, 2018 2018 Stormwater Rate Proceeding 1 MSD Exhibit No. MSD 3B Witness Background and Experience 1 Q1. Please state your name, business address, and telephone number. 2 A. Susan M. Myers, 2350 Market Street, St. Louis, Missouri 63103-2555, (314) 768-6209, 3 smyers@stlmsd.com 4 Q2. What is your occupation? 5 A. I am the General Counsel for the Metropolitan St. Louis Sewer District (District). 6 Q3. How long have you been associated with the District? 7 A. I have been with the District continuously since August 6, 2001. 8 Q4. What is your professional experience? 9 A. I have been employed by the District as in-house counsel since 2001 and was promoted 10 to General Counsel in April 2011. I have a rare combination of environmental 11 engineering and legal experience. Prior to becoming a lawyer and joining MSD, I served 12 as an environmental engineer for two years with EPA Region VII in Resource 13 Conservation and Recovery Act (RCRA) Permitting and for nine years on a billion dollar 14 DOE Superfund Clean-up project. 15 Q5. What is your educational background? 16 A. I am a graduate of the Missouri University of Science and Technology, formerly known 17 as the University of Missouri – Rolla, with a B.S. in Geological Engineering. I received 18 my Juris Doctorate degree from St. Louis University School of Law. 19 20 Criteria Governing Rate Change - Stormwater 21 Q6. Is the Proposed Stormwater Capital Rate consistent with constitutional, statutory, 22 or common law as amended from time to time? 23 A. Yes. First, the Stormwater Capital Rate is consistent with the District’s Charter. Under 24 Direct Testimony of Susan M. Myers, MSD February 26, 2018 2018 Stormwater Rate Proceeding 2 MSD Exhibit No. MSD 3B Section 3.020(16), the District may “establish by ordinance a schedule or schedules of 1 rates, rentals, and other charges, to be collected from all the real property served by the 2 sewer facilities of the District, whether public or private.” 3 Second, Article X, § 22(a) of the Missouri Constitution (the Hancock Amendment) 4 prohibits a political subdivision of Missouri from “levying any [new] tax, license, or fee, 5 …without the approval of the required majority of the qualified voters of that … political 6 subdivision voting thereon.” The proposed Stormwater Capital Rate will be taken to the 7 voters for approval. 8 Q7. What is the legal basis for charging the proposed Stormwater Capital Rate to 9 governmental, non-profit, and other tax-exempt entities? 10 A. There is a three-part rationale for charging the Stormwater Capital Rate to governmental, 11 non-profit, and other tax-exempt entities. 12 First, the Stormwater Capital Rate can be properly interpreted as not being a property tax 13 or any other form of tax, but instead is a charge or rate authorized by the Charter, thus non-profit 14 and governmental entities would not be exempt from paying the rate. The constitutional and 15 statutory exemptions for governmental and non-profit entities apply to ad valorem property 16 taxes. The Stormwater Capital Rate is not in any way based on the value of property, so it is not 17 an ad valorem tax, and thus the tax exemptions should not apply to the Stormwater Capital Rate. 18 The Charter expressly allows the District to collect revenue through ad valorem property taxes, 19 special assessments, and rates and charges. The Stormwater Capital Rate is plainly a rate or 20 charge that is authorized by the Charter and is not a special assessment or ad valorem tax. 21 Therefore, this Stormwater Capital Rate can be charged to all customers “whether public or 22 private” in the District pursuant to the express terms of the Charter § 3.020(16). 23 Direct Testimony of Susan M. Myers, MSD February 26, 2018 2018 Stormwater Rate Proceeding 3 MSD Exhibit No. MSD 3B Second, even if construed as a property tax, non-profit entities may not be exempt from 1 paying the Stormwater Capital Rate because the statutory exemption for non-profits is 2 inconsistent with the District’s Charter. Article VI, § 30(b) of the Constitution provides that the 3 District’s Charter is the “organic law” of the District and “shall take the place of and supersede” 4 all laws that are “inconsistent therewith.” Missouri courts have thus held that the powers granted 5 by this constitutional provision are “immune from legislative interference,” but the Charter does 6 not supersede any inconsistent constitutional provisions. The exemption from taxation for non-7 profit entities is not constitutional, but rather is statutory in nature, so it can be superseded if it is 8 inconsistent with the Charter. Charter § 3.020(16) expressly gives the District the power to 9 collect rates and charges from “all real property . . . whether public or private,” which would 10 include non-profit entities. The Charter provisions supersede and are immune from the statutory 11 exemption given to non-profit entities and exempting non-profits from paying the Stormwater 12 Capital Rate would result in a clear inconsistency with the Charter. 13 Third, governmental entities are also not exempt because the Stormwater Capital Rate is 14 not an ad valorem property tax, and the Charter specifically authorizes the District to charge 15 governmental entities. The government exemption applies only to real estate taxes for general 16 purposes, and not to other types of taxes and charges, so long as there is a clear legislative intent 17 that the government be subject to the charge at issue. Here, the analysis is that the State through 18 Article VI, § 30(b) subjected itself to the Stormwater Capital Rate by delegating to the District 19 the power to create the organic law of the District. And, again, the Charter provides that the 20 District can collect rates and charges “from all real property . . . whether public or private,” 21 which demonstrates a clear intent to subject governmental entities to the Stormwater Capital 22 Rate and other charges. As for charging federal governmental entities, there is no issue because 23 Direct Testimony of Susan M. Myers, MSD February 26, 2018 2018 Stormwater Rate Proceeding 4 MSD Exhibit No. MSD 3B the federal government specifically made itself subject to “payment of reasonable service 1 charges” for stormwater services by enacting 33 U.S.C. § 1323. 2 Q8. What is the legal basis for charging the proposed Stormwater Capital Rate to 3 persons covered by R.S.Mo. § 204.700? 4 A. R.S.Mo. § 204.700, as enacted by House Bill 661 in 2009, is void and illegal for 5 numerous reasons. 6 First, R.S.Mo. § 204.700 violates Article III, § 40(30) of the Constitution, which bars 7 special or local laws. A law violates this provision if it is close-ended, meaning it is based on 8 non-changing characteristics such as historical or physical facts, geography, or constitutional 9 status, and thus an affected political subdivision cannot come into the group or leave the group. 10 Because R.S.Mo. § 204.700 relates only to a district created under Article VI, § 30 of the 11 Constitution that provides stormwater services and because MSD is the only district by 12 constitutional status, historical fact, and geography that can fit that description, the statute is 13 special on its face and unconstitutional. 14 Second, House Bill 661 violates the Constitution’s single subject provision (Article III, 15 § 23), which requires a bill to be limited to one subject. House Bill 661was described as relating 16 to programs administered by the Missouri Department of Natural Resources. The other nine 17 provisions in House Bill 661 did relate to MDNR programs, including waste and scrap tires and 18 federal stimulus funds. However, R.S.Mo. §204.700 relates to charges, fees, and taxes that 19 MSD can assess for stormwater services, which is a program that is not administered by, let 20 alone remotely related to, MDNR. The inclusion of R.S.Mo. §204.700 thus introduced a 21 completely different subject in House Bill 661, which violates the Constitution. 22 Third, R.S.Mo.§ 204.700 is inconsistent with the District’s Charter and thus is 23 unconstitutional. As discussed in my testimony on Question 7, pursuant to Article VI, § 30(b) of 24 Direct Testimony of Susan M. Myers, MSD February 26, 2018 2018 Stormwater Rate Proceeding 5 MSD Exhibit No. MSD 3B the Constitution, MSD’s Charter supersedes any inconsistent law. The Charter clearly provides 1 that the District can impose taxes, assessments, and charges and rates on all customers within the 2 District. R.S.Mo. § 204.700 is contrary to this authority because it attempts to exempt a handful 3 of customers from any charge, rate, assessment, or tax. Missouri law is settled that, in such a 4 situation, the Charter prevails and the statute is illegal. 5 Q9. Does the proposed Stormwater Capital Rate impair the ability of the District to 6 comply with applicable Federal or State laws or regulations as amended from time 7 to time? 8 A. No, the Stormwater Capital Rate does not address any particular federal or state law or 9 regulation. The Stormwater Capital Rate is being proposed based upon the MSD rate payer’s 10 needs and wants to address flooding and erosion in our region. 11 Past Litigation Regarding Stormwater Rates 12 Q10. What was the outcome of William Zweig et al. v. Metropolitan Sewer District? 13 A. As it pertains to the proposed Stormwater Capital Rate, the Zweig case confirmed that a 14 new impervious area-based rate must be approved by the voters to comply with the 15 Hancock Amendment. See Exhibit MSD 22. 16 Q11. Does this conclude your prepared direct testimony in this matter? 17 A. Yes, it does. 18 19