MOUNTAIN VIEW LIMITED
PARTNERSHIP, AND CLIFTON WOODS LIMITED PARTNERSHIP v. CITY OF
September 18, 1998
Record No. 972275
MOUNTAIN VIEW LIMITED PARTNERSHIP,
AND CLIFTON WOODS LIMITED PARTNERSHIP
THE CITY OF CLIFTON FORGE
OPINION BY JUSTICE BARBARA MILANO KEENAN
FROM THE CIRCUIT COURT OF THE CITY OF CLIFTON FORGE
Duncan M. Byrd, Jr., Judge
Present: All the Justices
In this appeal, we decide whether a former ordinance setting
rates for refuse collection constituted an impermissible tax and
whether the rate classifications contained in the ordinance were
In June 1991, the City Council for the City of Clifton Forge
(City) enacted an ordinance increasing refuse collection charges
in the City based on a classification system of residential and
commercial users (1991 Ordinance.  The fees imposed by the 1991
Ordinance varied in accordance with the described
classifications. For example, single family residences receiving
weekly service were charged $13.50 per month. Apartment house
owners who collected refuse in "dumpsters" and received
weekly or biweekly service were charged $12.55 per month for each
residential unit. Rooming house owners receiving weekly service
were charged $6.75 per room per month. Stores, businesses,
restaurants, banks, and office buildings requiring one collection
per week also were charged $13.50 per month. However, some
businesses, such as beauty shops, dry cleaners, and service
stations, were charged higher fees, due to the nature of the
waste that they generated.
Mountain View Limited Partnership owns and operates an apartment
complex known as Mountain View Apartments, which consists of 54
residential units. Clifton Woods Limited Partnership owns and
operates an apartment complex known as Clifton Woods Apartments,
which contains 66 residential units. Both complexes are located
within the City of Clifton Forge and each uses one
"dumpster" for the disposal of solid waste. The
"dumpster" at the Mountain View complex is emptied by
the City twice per week, while the "dumpster" at the
Clifton Woods complex is emptied once per week.
Before July 1991, Mountain View Limited Partnership and Clifton
Woods Limited Partnership (collectively, Mountain View) paid the
City a refuse collection fee of $7.00 per month for each
residential unit. Under the 1991 Ordinance, Mountain View was
required to pay $12.55 per month for each residential unit.
In October 1992, Mountain View filed a motion for judgment and
motion for declaratory judgment against the City, challenging the
validity of the 1991 Ordinance. The issues raised at trial were
whether the fee imposed by the 1991 Ordinance constituted an
impermissible tax and whether the fee classifications contained
in the Ordinance were valid.
At trial, Thomas C. Trinkle, the managing general partner of
Mountain View, testified that other local jurisdictions charged
comparable apartment complexes refuse collection fees at a flat
rate of $28 a month and $132 a month. He also testified that the
City of Covington charged $5.23 per dwelling unit per month for
At Mountain View’s request, Jason Hartman, a certified public
accountant, made a comparative analysis of the City’s annual
financial reports pertaining to refuse collection for fiscal
years 1990-91 through 1995-96. Hartman testified that these
documents showed a total accumulated surplus of about $832,000
over the six-year period. As of June 1996, the accumulated
surplus was $615,742.12. This amount included a $125,000 loan
made in June 1996 from the solid waste fund to other governmental
units included in the City’s general fund.
Hartman stated that the City maintains its solid waste fund as a
unit of the "general fund" of the City. He explained
that the general fund is a "governmental fund," which
is analyzed under accounting principles by tracking the flow of
financial resources, rather than by measuring individual costs
and related revenue for those costs.
Hartman testified that in order to determine whether a
proprietary fee approximates the cost of providing a service, the
"enterprise fund" method of accounting should be used.
The governmental fund and the enterprise fund methods differ in
the manner in which future expenses are listed. Under the
governmental fund method, an expense is recorded only in the year
the expenditure is made, while the enterprise fund method
accounts for future expenses prior to the actual expenditure.
Hartman agreed, however, that both methods of accounting are
appropriate for use by a municipality, and that there is no
requirement that one method be used over the other.
Hartman further noted that in 1995 and 1996, the City’s
expenditures for solid waste management almost doubled. He
explained that this increase was due to the fact that, in these
years, the City allocated to the solid waste fund 25% of the
costs incurred by other departments in performing duties related
to solid waste management. Although Hartman was
"skeptical" of this allocation, he acknowledged that
there are many ways to estimate a proper allocation of costs, and
that accounting principles dictate only that the method be
reasonable and consistent.
Stephen A. Carter, the City Manager of Clifton Forge from June
1989 through June 1994, testified that the City paid for refuse
disposal based on volume. He stated that since it is impractical
to weigh refuse collected at every separate location in the City,
the 1991 Ordinance classifications were created in an attempt to
account for the difference in the volume of refuse generated by
various commercial and residential users.
Carter explained that the City raised the refuse collection fees
in 1991 based on an expected increase in operating costs and
future expenditures relating to the closing of the landfill used
by the City. Carter stated that, in 1991, the City disposed of
its solid waste in the Peters Mountain Landfill, which was
scheduled to close in the "near future."
Based on a consultant’s report detailing the cost of complying
with state and federal regulations relating to landfill closings,
the City determined that its current fee structure would not
support the expenses related to the Peters Mountain closing and
other anticipated expenses. Carter stated that the City Council
enacted the increased fees in the 1991 Ordinance to ensure that
the City could meet its anticipated expenses, and that an
unexpected delay in the landfill closing resulted in a surplus in
the solid waste fund.
Beginning in fiscal year 1994, Carter decided to allocate to the
solid waste fund the cost of work performed by other City
departments on solid waste management, which previously had been
billed to those other departments within the City’s general fund.
After discussions with managers of the relevant city departments,
Carter determined that about 25% of the costs incurred by other
City departments were related to solid waste management. Other
city employees testified that Carter’s estimate was reasonable.
Thomas Price Smith, the City’s independent auditor, testified
that he reviewed the 25% allocation and concluded that it was
reasonable. Smith also stated that, in his experience performing
audits for about 70 counties, towns, and cities in Virginia, many
local governments maintain a solid waste fund surplus.
Smith explained that maintaining a surplus is desirable because a
municipality must plan for future expenses. He testified that if
a local governing body "spend[s] down" to zero at the
end of its fiscal year, the governing body will have no funds
with which to operate in the first month of the new fiscal year.
Smith also stated that the State Auditor of Public Accounts
requires that solid waste expenditures be reported under the
governmental fund method of accounting.
Richard Magnifico, the current city manager, testified that the
City no longer uses the Peters Mountain Landfill and presently
disposes of its solid waste at the Alleghany transfer station. He
explained that "tipping fees," the cost for disposing
of each ton of solid waste, increased from approximately $20 per
ton at the Peters Mountain Landfill to $65 per ton at the
Alleghany transfer station.
Magnifico projected that the City’s solid waste fund would have a
zero or a negative balance by the next fiscal year. He attributed
this situation to the costs associated with the closing of the
Peters Mountain Landfill, the increased "tipping" fees,
the purchase of a new garbage truck for $78,000, and the purchase
of a recycling truck for $30,000 and recycling containers for
After hearing this evidence, the trial court held that the 1991
Ordinance imposed a valid fee, rather than an impermissible tax,
and that there was sufficient evidence of the reasonableness of
the Ordinance classifications to render the issue fairly
debatable. Thus, the trial court upheld the 1991 Ordinance and
entered judgment in favor of the City in the total amount of
$59,046 plus interest.
On appeal, Mountain View argues that the City enacted the 1991
Ordinance as a means of generating revenue to pay for the cost of
performing other municipal functions. Mountain View asserts that
under McMahon v. City of Virginia Beach, 221 Va. 102, 267
S.E.2d 130, cert. denied, 449 U.S. 954 (1980), and Tidewater
Ass’n of Homebuilders, Inc. v. City of Virginia Beach, 241
Va. 114, 400 S.E.2d 523 (1991), the fee imposed by the Ordinance
was an impermissible tax, because the fee exceeded the actual
cost of providing the service and there was no reasonable
correlation between the benefit conferred and the burden imposed.
Although Mountain View concedes that the City may collect fees
and maintain a surplus to pay for anticipated expenses, it
contends that the present evidence in support of the need for a
surplus is incredible as a matter of law. Mountain View argues
that the surplus in the solid waste fund of at least $615,000 far
exceeded the estimated costs associated with the closing of the
Peters Mountain Landfill, particularly since those costs were
payable over a period of 30 years.
Mountain View also asserts that the City’s allocation of 25% of
costs from other municipal departments to the solid waste fund,
and the loan in the amount of $125,000 to other governmental
units included in the general fund, indicate that the City
improperly used the revenue generated by the 1991 Ordinance to
support other city functions. Mountain View contends that,
through use of the governmental fund accounting method, the City
has attempted to hide its use of funds generated from solid waste
collection fees to support other municipal functions. We disagree
with Mountain View.
We first consider the principles set forth in McMahon and Tidewater.
In McMahon, the City of Virginia Beach had enacted an
ordinance requiring landowners to connect their properties to the
municipal water supply system, even if the owners did not intend
to use any water from the system. 221 Va. at 104, 267 S.E.2d at
132. Several landowners filed a declaratory judgment suit against
the City alleging, among other things, that the water connection
fee was an impermissible tax. The trial court disagreed, ruling
that the fee was valid. Id. at 106, 267 S.E.2d at 133. We
affirmed the trial court, holding that "because the charges
imposed by the ordinance would not exceed the actual cost to the
City of installing the waterlines in the streets in front of the
landowners’ residences, a reasonable correlation arose between
the benefit conferred and the cost exacted." Id. at
107, 267 S.E.2d at 134. Thus, we concluded that the evidence
refuted the landowners’ contention that the ordinance was adopted
solely as a revenue-generating measure. Id. at 108, 267
S.E.2d at 134.
Later, in Tidewater, we addressed the validity of a
Virginia Beach ordinance that assessed a "water resource
recovery fee" on all new connections to the City’s water
system. 241 Va. at 117, 400 S.E.2d at 525. The fee was designed
to finance, in part, the acquisition of water from Lake Gaston
for use by the City’s residents. A homebuilders’ organization
challenged the ordinance alleging, among other things, that the
ordinance imposed a tax rather than a valid fee. Id. at
120, 400 S.E.2d at 527. The trial court upheld the ordinance.
Under the principles set forth in McMahon, we approved the
trial court’s ruling and held that under the facts presented,
there was a reasonable correlation between the benefit of the
service provided and the burden imposed by the fee. Id. at
121, 400 S.E.2d at 527.
We did not hold in either case that a fee charged by a
municipality could not exceed the projected cost of providing the
service, or that a municipality may not maintain a surplus in
anticipation of future expenses. In fact, Code ? 15.2-2505 expressly provides that a
locality may include in its budget a reasonable reserve for
contingency expenditures. Under the facts presented in McMahon
we merely concluded that since the costs of the planned services
exceeded the fees imposed for those services, there was no merit
to the contention that either of the ordinances constituted an
impermissible tax. See
241 Va. at 121, 400 S.E.2d at 527; McMahon, 221 Va. at
107, 267 S.E.2d at 134.
we implicitly acknowledged that a municipality may collect fees
in anticipation of future expenses when we stated that the City
was not only making significant expenditures presently, but would
be required to make future expenditures to implement the project.
241 Va. at 122, 400 S.E.2d at 528. We also stated in McMahon
that a municipality may enact ordinances in anticipation of
future problems, and that there "is no requirement that
protective measures be limited to actions taken after a
crisis." 221 Va. at 107, 267 S.E.2d at 134.
In accordance with these principles, we hold that a municipal
ordinance setting a fee for refuse collection and disposal is not
an invalid revenue-generating device solely because the fee set
by the ordinance generates a surplus. The relevant inquiry, as
set forth in McMahon and reaffirmed in Tidewater,
is whether there is a reasonable correlation between the benefit
conferred and the cost exacted by the ordinance. Tidewater,
241 Va. at 121, 400 S.E.2d at 527; McMahon,
221 Va. at 107, 267 S.E.2d at 134.
In applying this test to the 1991 Ordinance, we consider the
evidence in the light most favorable to the City, the prevailing
party at trial. Hudson v. Lanier, 255
Va. 330, 331, 497 S.E.2d 471, 472 (1998); Cardinal
Dev. Co. v. Stanley Constr. Co., 255 Va. 300, 302,
497 S.E.2d 847, 849 (1998). We will not disturb the trial court's
decision unless it is plainly wrong or without evidence to
support it. Code ? 8.01-680; Hudson,
255 Va. at 333-34, 497 S.E.2d at 473; Cardinal,
255 Va. at 302, 497 S.E.2d at 849.
We conclude that the record contains sufficient evidence to
support the finding of a reasonable correlation between the
benefit conferred and the cost exacted by the 1991 Ordinance. The
evidence showed that the benefit conferred by the Ordinance
included the refuse collection service itself, as well as payment
of projected costs relating to landfill closing regulations,
greatly increased "tipping" fees, and new equipment.
The maintenance of a budget surplus to pay for future costs was
supported by the testimony of Thomas Price Smith, the City's
auditor, and Jason Hartman, Mountain View's accounting expert.
Both witnesses testified that municipalities commonly maintain
surpluses in solid waste funds, and Smith added that such a
practice is desirable to ensure that a municipality can meet the
public's needs. The evidence also showed that the City's solid
waste fund surplus essentially has been depleted due to recent
expenditures necessary for the provision of solid waste
We disagree with Mountain View that a different outcome is
required based on the City's allocation of 25% of its costs from
other departments to the solid waste department. This allocation
was supported by Stephen Carter's testimony, as well as the
testimony of Richard Magnifico, and Lee Anna Tyler, the City's
accounting supervisor, who confirmed that the 25% figure was a
reasonable estimate of the amount of work performed by other
departments relating to solid waste management. Even Mountain
View's expert, Hartman, agreed that the practice of allocating
costs from other departments is reasonable, and that formal
studies are not required to determine an appropriate allocation.
We also find no merit in Mountain View's contention that the
$125,000 loan made from the solid waste fund to other
governmental units included in the City's general fund is
evidence that the 1991 Ordinance is a revenue-generating device.
Under Code ? 15.2-1105, cities have authority to borrow
money. Moreover, since the evidence was not refuted that this
loan always has been accounted for as part of the solid waste
fund surplus, the record does not show that this money was
improperly diverted to other governmental units within the
The City's use of the governmental fund accounting method also
does not alter our decision. Both accountants who testified
agreed that the City's use of this accounting method was proper,
and that accounting principles do not require the City to use the
enterprise fund accounting method. The City's use of the
governmental fund method also assists the City in complying with
the requirement of the State Auditor of Public Accounts that the
City use this method of accounting in its reports to that office.
Therefore, under the principles set forth in McMahon
and Tidewater, we conclude that the
evidence supports the trial court's determination that the 1991
Ordinance imposed a valid fee.
Mountain View also argues that the trial court erred in
ruling that the classifications contained in the 1991 Ordinance
were reasonable. Mountain View notes that Carter, the former city
manager, conceded that the cost associated with refuse collection
from businesses is no different from the cost involved in refuse
collection from apartment buildings. Thus, Mountain View contends
that the 1991 Ordinance was invalid because it charged apartment
building owners more for the same service provided to business
customers. We disagree with Mountain View's argument.
We review Mountain
View's challenge under well-established principles that afford
the 1991 Ordinance a presumption of validity. See
Twietmeyer v. City of Hampton, 255 Va.
387, 390, 497 S.E.2d 858, 860 (1998); Town of Narrows
v. Clear-View Cable TV, Inc., 227 Va. 272, 280, 315
S.E.2d 835, 839-40 (1984), cert. denied,
469 U.S. 925 (1985). "Municipal corporations are prima facie
the sole judges of the necessity and reasonableness of their
ordinances, and the presumption of their validity governs unless
it is overcome by unreasonableness apparent on the face of the
ordinance or by extrinsic evidence which clearly establishes the
unreasonableness." Tweitmeyer, 255
Va. at 390-91; 497 S.E.2d at 860 (quoting Town of
Narrows, 227 Va. at 280, 315 S.E.2d at 839-40); accord
National Linen Service Corp. v. City of Norfolk,
196 Va. 277, 279, 83 S.E.2d 401, 403 (1954).
A party challenging the validity of an ordinance has the burden
of proving that the ordinance is unreasonable. Twietmeyer,
255 Va. at 391, 497 S.E.2d at 860; Town of Narrows,
227 Va. at 280, 315 S.E.2d at 840; Board of
Supervisors v. Lerner, 221 Va. 30, 34, 267 S.E.2d
100, 102 (1980). When the presumptive reasonableness of an
ordinance is challenged by probative evidence of its
unreasonableness, the municipality must present evidence that the
ordinance is reasonable. If the evidence of reasonableness is
sufficient to render the issue fairly debatable, the ordinance
must be sustained. However, if such evidence is insufficient to
make the issue fairly debatable, the evidence of unreasonableness
defeats the presumption and the ordinance cannot be sustained. Tidewater,
241 Va. at 122, 400 S.E.2d at 528; Town of Narrows,
227 Va. at 280-81, 315 S.E.2d at 840; Board of
Supervisors v. Snell Constr. Corp., 214 Va. 655,
659, 202 S.E.2d 889, 893 (1974).
We accord the trial court's ruling on this issue a presumption of
correctness. We also give full credit to the presumption of
validity of the 1991 Ordinance and examine the record to
determine whether the evidence supports the court's ruling. Twietmeyer,
255 Va. at 391, 497 S.E.2d at 860; Town of Narrows,
227 Va. at 281, 315 S.E.2d at 840; see Tidewater,
241 Va. at 122, 400 S.E.2d at 528.
Applying these principles, we conclude that the evidence supports
the trial court's ruling that the City's evidence of the
reasonableness of the 1991 Ordinance classifications was
sufficient to make the issue fairly debatable. The City presented
evidence that it was impractical to weigh refuse at the point of
collection. The evidence also showed that the fee for an
apartment complex was based on a charge per residential unit to
account for the greater volume of waste generated by this type of
facility. The fee charged for other types of residential
dwellings, such as rooming houses and single family residences,
also was based on a per unit basis.
Although the size of Mountain View's "dumpsters" was
the same as those used by some businesses, there was no evidence
that the amount of waste generated by these facilities was the
same. Thus, we conclude that the record supports the trial
court's ruling that the 1991 Ordinance was valid because the
evidence of reasonableness of the classifications was fairly
For these reasons, we will affirm the trial court's judgment.
 In 1993, the 1991 Ordinance
was repealed and a new ordinance was enacted (1993 Ordinance).
The 1993 Ordinance set rates for refuse collection based on
anticipated volume assigned to "equivalent dwelling
 After the 1991 Ordinance became effective,
Mountain View refused to pay the applicable garbage collection
fee. The City filed two separate motions for judgment against
Mountain View seeking payment of fees and penalties plus interest
for the failure to pay garbage collection fees. The parties agree
that if the ordinance is valid, Mountain View owes the City
$59,046 plus interest of 10% per year from November 1, 1993,
until paid, for services rendered between November 1, 1992, and
September 30, 1995.
 This section, effective December 1, 1997,
does not differ substantively from Code ? 15.1-161.1, which
was in effect on the date of trial.
This section, effective December
1, 1997, does not differ substantively from Code
? 15.1-843, which was in effect on the date of trial.