City of Hammond v. Herman & Kittle Properties, Inc. , 95 N.E.3d 116 ( 2018 )

FILED
Feb 20 2018, 5:37 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Bryan H. Babb Steven C. Shockley
Bradley M. Dick Russell C. Menyhart
Bose McKinney & Evans LLP Taft Stettinius & Hollister LLP
Indianapolis, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
City of Hammond, February 20, 2018
Appellant-Plaintiff, Court of Appeals Case No.
49A04-1612-PL-2784
v. Appeal from the Marion Superior
Court
Herman & Kittle Properties, The Honorable Michael D. Keele,
Inc., Judge
Appellee-Defendant. Trial Court Cause No.
49D07-1601-PL-531
Robb, Judge.
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Case Summary and Issues
[1] In 1961, the City of Hammond created an inspection program for rental
housing that permitted inspections of housing and required inspections of
rooming houses. In 2001, Hammond created a program which required annual
registration of all rental housing and assessed a per unit fee. Beginning in 2011,
the Indiana General Assembly passed a series of bills related to rental
registration and inspection programs, including a 2014 bill that restricted fees
that could be imposed by a rental registration program (“Fee Restriction”)
unless the program was created prior to July 1, 1984 (“Fee Exemption”). In
2014, Hammond sought payment of nearly $86,000 from Herman & Kittle
Properties, Inc. (“HKP”) for overdue registration fees for two of its rental
properties. Based on the 2014 legislation, HKP disputed it owed the entirety of
those fees. Hammond then filed a complaint seeking a declaratory judgment
that because its inspection program was created prior to July 1, 1984, its
program was unaffected by the 2014 legislation and, accordingly, HKP owed
the fees in question.
[2] While that declaratory judgment action was pending, the General Assembly in
2015 enacted further legislation that amended the definition of a “rental
registration or inspection program” such that there was no question
Hammond’s registration program did not qualify for the Fee Exemption.
Hammond then amended its complaint to add Counts II and III seeking a
declaratory judgment that the 2015 legislation was special legislation in
violation of Article 4 Sections 22 and 23 of the Indiana Constitution. The State
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of Indiana intervened in the action for the limited purpose of defending the
constitutionality of the law.
[3] Both Hammond and HKP filed motions for summary judgment. The trial
court granted summary judgment to Hammond on the first count, finding
Hammond qualified for the Fee Exemption in 2014. The trial court also found
that although the Fee Exemption is special legislation, it does not violate the
Indiana Constitution. The trial court therefore granted summary judgment to
HKP on Counts II and III of Hammond’s complaint. Hammond now appeals,
raising three issues for our review:
1) Whether Hammond is entitled to summary judgment
declaring the Fee Exemption is in violation of Indiana
Constitution Article 4, Section 22’s prohibition on special
legislation relating to salaries and fees;
2) Whether Hammond is entitled to summary judgment
declaring the Fee Exemption is in violation of Indiana
Constitution Article 4, Section 23’s requirement that where
possible, laws must be general; and
3) Whether, if the Fee Exemption is unconstitutional, it is
severable from the remainder of section 36-1-20-5 or whether the
entire section must be stricken.
HKP’s brief, in which the State has joined, does not challenge the entry of
summary judgment for Hammond on Count I. In addition to meeting
Hammond’s argument with respect to Counts II and III, HKP alleges
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preliminarily that Hammond does not have standing to challenge the
constitutionality of the Fee Exemption.
[4] Concluding that Hammond has standing, that the Fee Exemption runs afoul of
both Sections 22 and 23 of Article 4 of the Indiana Constitution, and that the
Fee Exemption is not severable from the remainder of section 36-1-20-5, we
reverse and remand to the trial court to enter summary judgment for Hammond
on Counts II and III.
Facts and Procedural History
I. Hammond’s Ordinances
[5] In August 1961, Hammond enacted Ordinance 3337, “an ordinance
establishing minimum standards governing supplied facilities, maintenance and
occupancy of dwellings within the City of Hammond; fixing certain
responsibilities and duties of owners and occupants of dwellings; authorizing
the inspection of dwellings, the condemnation of dwellings unfit for human
habitation, and fixing the penalties for violations.” Appendix to Brief of
Appellant, Volume II at 99. In pertinent part, Ordinance 3337 provides:
The Health Officer and/or the Fire Inspector and/or the Building
Commissioner are hereby authorized and directed to make
inspections to determine the condition of dwelling units, rooming
units, and premises located within the City of Hammond, in
order that they may perform their duties of safeguarding the
health and safety of the occupants of dwellings and of the general
public. For the purpose of making such inspections, the Health
Officer, and/or Fire Inspector and/or Building Commissioner
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are hereby authorized to enter, examine and survey at all
reasonable times, all dwellings, dwelling units, rooming units,
and premises.
Id. at 101 (Section 2.1); see also Hammond City Code § 96.135(B) (2002)
(authorizing and directing the Code Enforcement Commissioner to make
inspections to determine the condition of dwelling units, rooming units, and
premises in the city and requiring the owner or occupant of every dwelling,
dwelling unit or rooming unit to give an authorized city inspector access to the
premises). A “dwelling” is “any building which is wholly or partly used or
intended to be used for living or sleeping by human occupants . . . .” App. to
Br. of Appellant, Vol. II at 99 (Section 1.5). A “dwelling unit” is “any room or
group of rooms located within a dwelling and forming a single habitable unit
with facilities which are used or intended to be used for living, sleeping,
cooking and eating.” Id. at 100 (Section 1.6). A “rooming unit” is “any room
or group of rooms forming a single habitable unit used or intended to be used
for living and sleeping, but not for cooking or eating purposes.” Id. at 101
(Section 1.21).
[6] In addition, Ordinance 3337 has a section devoted to hotels and rooming
houses. Id. at 108. A “rooming house” is “any dwelling, or that part of any
dwelling containing three or more rooming units, in which space is let by the
owners or operator to persons who are not husband or wife, son or daughter,
mother or father, or sister or brother of the owner or operator.” Id. at 101
(Section 1.22). Every hotel and rooming house is required to be inspected twice
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each year and every person maintaining or operating a hotel or rooming house
is obligated to pay the City Controller an annual inspection fee of $5 per hotel
or rooming house. Id. at 108 (Sections 9.2(A) and 9.2(B)).1 Thus, Hammond’s
inspection program applies to both owner-occupied dwellings and rentals.
[7] In January 2001, Hammond enacted Ordinance 8327, the purpose of which “is
to protect the health, safety and general welfare of the citizens of the City of
Hammond by requiring the registration of all rental housing units which are or
shall be in existence in the City of Hammond.” Id. at 118. The ordinance
required “[a]ny owner of real property in the City of Hammond, which real
property is used as rental housing, . . . to register all such properties on an
annual basis.” Id. at 119. “Rental housing” is defined as “any room, dwelling
unit, rooming unit or portion thereof let or intended to be let to a family or
person for compensation.” Id. The ordinance also imposed a five dollar annual
registration fee for each dwelling or rooming unit. Id. at 119-20. In 2004,
Ordinance 8327 was amended to increase the annual registration fee for each
dwelling or rooming unit to $10. Id. at 124. In 2010, Ordinance 9060 increased
the annual fee to $80 “in order for the City of Hammond to bear the increased
costs of inspections and enforcement actions on income property . . . .” Id. at
129. A 2011 ordinance made other changes to the rental registration program
that are not relevant to this litigation, but specifically continued the $80 annual
1
Currently, this provision also applies to motels and the inspection fee is $100. Hammond City Code §
96.088(B) (2004).
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fee. Id. at 137; see also Hammond City Code § 96.152(C) (2011). Failure to
register annually subjects the owner to a fine per unit per day.
II. Relevant Statutes and Legislative History 2
A. 2011 – HEA 1543
Regulation of Residential Leases Begins by Requiring Fees be Maintained
in a Special Fund and Allowing Landlords to Pass Fee on to Tenants
[8] House Bill 1543 was introduced in 2011 to add a chapter to Title 36 concerning
the regulation of residential leases. As introduced, the bill proposed, among
other things, that a regulation by a political subdivision regarding
landlord/tenant relations could not require owners of rental units to be
registered with the political subdivision. App. to Br. of Appellant, Vol. II at 145
(HB 1543 Introduced Version Sec. 5).3 HB 1543 would therefore have barred
all political subdivisions from registering rental units and therefore barred all
registration fees. Ultimately, however, the General Assembly enacted Indiana
Code chapter 36-1-20 as follows:
2
Although the substance of Hammond’s inspection program is relevant to the issues given the statutory
definition of “rental registration and inspection program” added in 2015, inspection fees themselves are not
at issue. The following recitation of statutory history is therefore limited to the changes relevant to
registration fees.
3
The proposed text read as follows:
A regulation may not do any of the following:
(1) Require owners of rental units to be:
(A) licensed; or
(B) registered with the political subdivision.
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Sec. 1. The definitions in IC 32-31-3 apply throughout this
chapter.
Sec. 2. (a) Except as provided in subsection (b), the owner of a
rental unit assessed any inspection, registration, or other fee by a
political subdivision pertaining to the rental unit may:
(1) notify the tenants of the rental unit of the assessment of the
fee; and
(2) require the tenants of the rental unit to reimburse the owner
for the payment of the fee.
***
Sec. 3. Any inspection, registration, or other fee assessed under
section 2 of this chapter and collected by a political subdivision
must be maintained in a special fund dedicated solely to
reimbursing the costs reasonably related to services actually
performed by the political subdivision that justified the
imposition and amount of the fee. Each fund shall be
maintained as a separate line item in the political subdivision’s
budget. Money in the fund may not at any time revert to the
general fund or any other fund of the political subdivision.
Id. at 150. Thus, the bill as enacted allowed political subdivisions to impose a
fee in any amount for registration of rental units, but required those fees to be
maintained in a special fund to be used only for reimbursing program costs.
The bill also allowed landlords to pass the fees on to tenants. An emergency
was declared for the bill and it became effective upon passage on May 10, 2011.
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B. 2013 – HEA 1313
Amendment to Temporarily Freeze Fees
and Appoint an Interim Study Commission
[9] House Bill 1313 proposed to repeal chapter 36-1-20 and add a new chapter that
would allow registration of rental units but bar imposition of a rental
registration fee. See id. at 154 (HB 1313 Introduced Version Sec. 3).4 The bill as
enacted, however, amended chapter 36-1-20 to add a new section placing a
temporary moratorium on imposing new registration fees or increasing existing
registration fees. Ind. Code § 36-1-20-4(b) (2013); App. to Br. of Appellant,
Vol. II at 157 (“A regulation that does any of the following may not be adopted
after February 28, 2013: . . . [i]mposes or increases a fee or other assessment for
. . . [r]egistration of an owner, landlord, or rental unit.”). By its own terms, this
section expired on July 1, 2014. Ind. Code § 3-1-20-4(d) (2013); App. to Br. of
Appellant, Vol. II at 158. An interim study committee was appointed to study
the topic of regulation of residential leases by political subdivisions. App. to Br.
of Appellant, Vol. II at 158.
[10] The minutes from the September 2013 meeting of the Interim Study
Commission on Economic Development regarding this issue show
4
The relevant section reads as follows:
A regulation that does any of the following may not be adopted or enforced:
***
(3) Imposes a fee for any of the following:
(A) Inspection of a rental unit.
(B) Registration of an owner, landlord, or rental unit.
(C) For any other purpose.
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Representative Speedy introduced the topic by indicating there is “a concern
that several political subdivisions have increased the fees to the point that it
impacts the affordability of housing and is detrimental to professionally
managed rental properties and to new rental housing development.” App. to
Br. of Appellant, Vol. III at 190. Representative Speedy “proposed that the
General Assembly adopt a comprehensive policy on fees that a political
subdivision may charge with regard to rental properties.” Id. Representatives
of various organizations and towns, as well as owners and residents of rental
housing, also gave statements about registration and inspection programs.
C. 2014 – HEA 1403
Amendment Creating the Annual Registration Fee Restriction
and Date-Based Fee Exemption
[11] House Bill 1403, introduced on January 16, 2014, proposed to amend chapter
36-1-20 to provide as follows with respect to registration programs:
Sec. 5. (a) This chapter does not prohibit a political subdivision
from establishing and enforcing a registration program for rental
units within the political subdivision.
(b) A political subdivision may assess a one (1) time registration
fee of not more than five dollars ($5) for a rental unit
community. . . .
App. to Br. of Appellant, Vol. II at 165 (HB 1403 Introduced Version Sec. 6)
(emphasis added). This original proposal would have allowed a political
subdivision to register rental units but restricted it to imposing a one-time-only
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fee of not more than five dollars. The Legislative Services Agency (“LSA”)
prepared a Fiscal Impact Statement noting there are fourteen Indiana cities and
towns, including Bloomington, Hammond, and West Lafayette, that have
rental registration and/or inspection programs with fees ranging from $10 per
unit to $200 per rental community. Id. at 169. The Fiscal Impact Statement
states every program, except for Bloomington’s, was created after 2000.
[12] A new version of House Bill 1403 was then introduced which included the Fee
Restriction still in place today: “A political subdivision may impose on an
owner or landlord of a rental unit an annual registration fee of not more than
five dollars ($5).” Id. at 177 (HB 1403 Amended Version Sec. 6) (emphasis
added). This proposed amendment—applicable to all political subdivisions—
allowed a political subdivision to register rental units but restricted it to
imposing a yearly fee of not more than five dollars. This proposed version of
the statute was later amended to add an exemption to the Fee Restriction:
“This [Fee Restriction] section does not apply to a political subdivision with a
rental registration or inspection program created before July 1, 1984.” Id. at
183. With this latest amendment, political subdivisions with programs falling
within the Fee Exemption were not subject to the Fee Restriction and could
therefore charge an annual registration fee of more than five dollars. LSA
issued a new Fiscal Impact Statement noting that of the fourteen previously
noted cities or towns with rental registration programs, “[t]wo of those
programs, Bloomington and West Lafayette, would not be affected by the
proposed changes to the law as they were established prior to July 1, 1984.” Id.
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at 187.5 Hammond was not mentioned in the Fiscal Impact Statement despite
its inspection program starting in 1961.
[13] The bill as enacted and effective June 30, 2014, reads, in pertinent part:
(a) This section does not apply to a political subdivision with a
rental registration or inspection program created before July 1,
1984.
(b) This chapter does not prohibit a political subdivision from
establishing and enforcing a registration program for rental units
within the political subdivision.
(c) A political subdivision may impose on an owner or landlord
of a rental unit an annual registration fee of not more than five
dollars ($5).
(d) A registration fee imposed under subsection (c) covers all the
rental units in a rental unit community. However, if a rental unit
is not part of a rental unit community, a registration fee may be
imposed for each separate parcel of real property on which a
rental unit is located.
(e) If the ownership of a rental unit community or the ownership
of a parcel of real property on which a rental unit is located
changes, a political subdivision may require the new owner of the
rental unit community or new owner of the real estate parcel to:
5
Although the chart included in the Fiscal Impact Statement says West Lafayette’s rental certificate program
began in 2005, statements before the Interim Study Committee indicated West Lafayette created its
inspection program in 1976. App. to Br. of Appellant, Vol. III at 192. Regardless of the date in the Fiscal
Impact Statement, it appears undisputed that West Lafayette’s program qualifies for the Fee Exemption.
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(1) pay an annual registration fee of not more than five
dollars ($5); and
(2) provide updated registration information to the
political subdivision;
not later than thirty (30) days after the change of ownership.
Ind. Code § 36-1-20-5 (2014). It is under this version of the statute the
Hammond-HKP dispute initially arose.
D. 2015 – HEA 1165
Amendment to the Definition of “Rental Registration and
Inspection Program”
[14] House Bill 1165 proposed amending section 36-1-20-5 so that the Fee
Exemption applied only to “a political subdivision with a rental registration or
inspection program created after July 1, 1977, and before July 1, 1984.” App. to
Appellant’s Br., Vol. II at 211 (HB 1165 Introduced Version Sec. 6) (emphasis
on added language). LSA’s Fiscal Impact Statement for this bill noted the
proposed amendment would mean Bloomington’s program, which began in the
early 1970s6 and charges about $75, would be subject to the Fee Restriction. Id.
at 215.
6
Statements before the Interim Study Committee on Economic Development in 2013 suggested that
Bloomington’s program began in 1961. See App. to Br. of Appellant, Vol. III at 192.
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[15] Also, up to this point, Indiana Code chapter 36-1-20 had incorporated the
definitions in Indiana Code chapter 32-31-3. Ind. Code § 36-1-20-1. Indiana
Code section 32-31-3-8(2)(C) defines a “rental unit” to include a “rooming
house.” HB 1165 proposed adding the following definition of “rental
registration or inspection program” to Indiana Code chapter 36-1-20:
As used in this chapter, “rental registration or inspection
program” means a program authorizing the registration or
inspection of rental units and no other type of dwelling. The
term does not include a general housing registration or inspection
program.
App. to Br. of Appellant, Vol. II at 208 (HB 1165 Introduced Version Sec. 2).
And a “rental unit” would be defined as:
(1) a structure, or the part of a structure, that is used as a home,
residence, or sleeping unit by:
(A) one (1) individual who maintains a household; or
(B) two (2) or more individuals who maintain a common
household; or
(2) any grounds, facilities, or area promised for the use of a
residential tenant, including the following:
(A) An apartment unit.
(B) A mobile home space.
(C) A single or two (2) family dwelling.
Id. at 209 (HB 1165 Introduced Version Sec. 3). The result of these
amendments would be that a “rental registration or inspection program” as
defined for purposes of chapter 36-1-20 included programs that only inspected
rental units and not rooming houses or boarding houses. LSA’s Fiscal Impact
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Statement noted the number of units subject to rental registration fees in
political subdivisions may be reduced with the elimination of rooming houses
and boarding houses from the definition. Bloomington’s rental inspection
program includes the inspection of rooming houses. Id. at 222 (Bloomington
Municipal Code § 16.02.020 defining a rental unit as “any dwelling unit,
rooming house, or rooming unit occupied by a person(s) other than the owner
and/or their legal dependent”) and 225 (Bloomington Municipal Code §
16.03.040(a) requiring “[e]ach residential rental unit” to receive an inspection).
West Lafayette’s rental certificate program defines rental housing to include a
“rooming unit.” App. to Br. of Appellant, Vol. IV at 167 (West Lafayette City
Code § 117.02(n) defining rental housing as “any room, dwelling unit, rooming
unit or portion thereof let or intended to be let to a family or person for
compensation”). Hammond’s ordinance defines “rental housing” to include a
“rooming unit.” Hammond City Code § 96.151.
[16] Ultimately, the date range for the Fee Exemption was abandoned, and section
36-1-20-5 remains as it was in 2014, imposing a fee restriction on political
subdivisions unless they had a rental registration or inspection program prior to
July 1, 1984. The only change made by HEA 1165 to Indiana Code chapter 36-
1-20 was to add a definition for a “rental registration or inspection program” – a
definition, notably, that is different than originally proposed. As enacted
retroactively to January 1, 2015, Indiana Code section 36-1-20-1.2 states, in
pertinent part:
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As used in this chapter, “rental registration or inspection
program” means a program authorizing the registration or
inspection of only rental housing. The term does not include a
general housing registration or inspection program or a
registration or inspection program that applies only to rooming
houses and hotels.
Ind. Code § 36-1-20-1.2. This means that to qualify as a “rental” program, the
program must apply to all rental properties and to only rental properties. The
effect of the 2015 legislation was that Bloomington and West Lafayette
continued to qualify for the Fee Exemption because their programs applied only
to rental housing. But Hammond no longer qualified for the Fee Exemption on
two fronts. First, relevant to the first sentence of the newly-added definition,
Hammond’s program permits the inspection of non-rental housing. See App. to
Br. of Appellant, Vol. II at 101 (Section 2.1 of Hammond’s 1961 ordinance
authorizing inspections of “dwelling units, rooming units, and premises” in
Hammond). Second, relevant to the second sentence of the definition,
Hammond’s inspection program is both a permissive general inspection
program and a mandatory hotel and rooming house inspection program. See id.
at 108 (Section 9.2(A) of Hammond’s 1961 ordinance requiring inspection of
every hotel and rooming house in Hammond twice a year).
E. Summary of Legislative Changes
[17] Beginning in 2011, the General Assembly began regulating political
subdivisions’ rental registration and inspection programs. The original
proposed legislation would have barred registration programs and therefore
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registration fees altogether, but that proposal was rejected. Instead, the General
Assembly allowed registration programs and restricted the fees that could be
charged to five dollars annually for a rental unit community unless the program
was created prior to July 1, 1984, and fit a specific definition. Several proposed
amendments that would have excluded Bloomington in particular from the Fee
Exemption were abandoned. The result of the legislative amendments is that
every political subdivision but Bloomington and West Lafayette are subject to
the Fee Restriction. Hammond’s City Controller submitted an affidavit in
which she noted the consequences of the legislative changes for Hammond’s
rental registration and inspection program:
8. Hammond employs six full time inspectors, who conduct
inspections of rental properties.
9. Hammond also employs part time inspectors.
10. Hammond also incurs costs and expenses for supplies
necessary to run the rental inspection and registration program.
11. The cost of administering the rental registration and
inspection program exceeds the revenue that Hammond receives
from rental registration fees.
12. Even when Hammond charged a rental registration fee of
$80, the revenue generated from that fee did not fully cover the
costs of administering the program . . . .
13. After Hammond was forced to reduce its rental registration
fee from $80 to $5, the amount of rental registration fees that
Hammond has collected has declined by almost 90%.
14. This reduction will create [sic] budget shortfall for
Hammond’s rental registration and inspection program of over
$700,000.
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App. to Br. of Appellant, Vol. V at 149.7
III. The Dispute
[18] HKP is the management company for two rental communities in Hammond,
Golden Manor Apartments and Saxony Townhomes. On May 20, 2014,
Hammond sent letters to HKP seeking to collect a total of $85,840 in 2014
rental registration fees that had not yet been paid for those two properties.8 See
App. to Br. of Appellant, Vol. II at 198-99 (letter regarding Golden Manor,
seeking $6,400 in registration fees and $40,000 in late fees) and 200-01 (letter
regarding Saxony, seeking $5,440 in registration fees and $34,000 in late fees).
HKP’s regional manager replied by email on June 2, 2014, acknowledging
receipt of the letters:
The delay in payment was to determine if the fees of $80 per unit
would be pro-rated due to the changes that HB 1403 brought
about with regard to rental registration fees. The fees are for
2014 but will significantly reduce after 6-30-14 so I am sure you
can understand why we worked to determine what, if any portion
of the fees would be pro-rated.
7
Because of restrictions on inspections of rental housing in Indiana Code section 36-1-20-4.1, Hammond
could not simply increase the fee it charges for inspections in order to make up for this shortfall.
8
Section 96.152(A) of Hammond’s City Code provides that any owner of real property that is used as rental
housing in the city is required to register the property annually by April 15. Section 96.152(F) provides for a
$500 per unit late fee for each rental unit not registered by April 15.
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Id. at 203. HKP’s corporate counsel also replied to Hammond by letter dated
June 6, 2014:
Please note that HKP disputes the validity of the alleged debts of
$39,440.00 and $46,400.00 as set forth in your May 20th letters,
and in fact, a hearing with the Hammond Board of Public Words
and Safety has been scheduled for July 3, 2014 to address this
specific issue.
HKP is hopeful to have a resolution to this dispute as the result
of or before the July 3, 2014 hearing, and as such, would request
that your offices forego any further collection or other litigation
efforts at this time and pending the determination that is issued
with regard to the upcoming hearing.
Id. at 205.
[19] Before the July 3 hearing, Hammond filed a declaratory judgment action.9 The
complaint alleges, in pertinent part:
7. On or about March 26, 2014, Governor Mike Pence signed
House Enrolled Act 1403 (“HEA 1403”) into law. HEA 1403
amended several sections of the Indiana Code concerning local
government, and added a few sections as well. . . .
8. HEA 1403, Section 5 is the section relevant to this Complaint,
and effective June 30, 2014, will be added to the Indiana Code as
a new section, Indiana Code § 36-1-20-5. HEA 1403, Section
5(c) states: “A political subdivision may impose on an owner or
9
The original complaint was allegedly filed June 23, 2014, but is not included in the record. The following
comes from the first amended complaint, filed September 15, 2014. There is no indication what was
amended from the original to the first amended complaint.
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landlord of a rental unit an annual registration fee of not more
than five dollars ($5).” HEA 1403, Section 5(c), therefore
purports to cap Indiana political subdivisions’ annual rental
registration fees at $5 per rental unit. An exemption is provided,
however, to a “political subdivision with a rental registration or
inspection program created before July 1, 1984.” HEA 1403,
Section 5(a) (emphasis added).
9. Hammond created a rental inspection program in 1961 by
enacting Hammond Ordinance Number 3337 . . . . Specifically,
Ordinance 3337 authorized and directed Hammond’s Health
Officer and/or Fire Inspector and/or the Building Commissioner
(“Inspection Officials”) to “make inspection to determine the
condition of dwelling units, rooming units, and premises located
within the City of Hammond . . . .” Dwelling units and rooming
units are defined, so that they encompass rental property as well
as purchased property. . . .
10. Thereafter, in 2001, Hammond created a rental registration
program by enacting Hammond Ordinance Number 8327 . . . .
This Ordinance required all “rental housing units” to register
annually and pay a $5 annual fee for “each dwelling or rooming
unit.” Four ordinances since 2001 have amended Hammond’s
rental registration program. . . . The most recent amendment,
Ordinance 9060, enacted in 2010, changed the annual
registration fee from $10 to $80. . . .
11. Based on the foregoing, Hammond created a rental
inspection program before July 1, 1984, and its rental registration
program after that date. Because Hammond is “a political
subdivision with a rental registration or inspection program
created before July 1, 1984,” HEA 1403, Section 5(a) (emphasis
added), Hammond’s current rental registration program, which
requires an $80 per unit annual registration fee, qualifies for the
exemption from the $5 per unit cap on rental registration fees in
HEA 1403, Section 5(c).
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12. . . . In 2014, [HKP] has refused to pay the $80 per unit annual
registration fee for Saxony Townhomes and Golden Manor
Apartments because it contends that the $80 fee conflicts with the
$5 cap on rental registration fees in HEA 1403, Section 5(c). . . .
In other words, [HKP] disputes Hammond’s position that
Hammond is entitled to the exemption in HEA 1403, Section
5(a) from the $5 cap.
Id. at 23-25. Accordingly, Hammond sought a declaration that:
(1) the exemption under HEA 1403, Section 5(a) applies to any
Indiana political subdivision that created either a rental
inspection program or a rental inspection [sic] program before
July 1, 1984; and (2) Hammond’s current rental registration
program, therefore, qualifies for the exemption under HEA 1403,
Section 5(a), is lawful under HEA 1403, and can continue to be
implemented and enforced against all rental property owners and
managers in Hammond, including but not limited to [HKP] . . . .
Id. at 26.
[20] After HEA 1165 was enacted in 2015 amending the definition of “rental
registration or inspection program,” Hammond amended its complaint. Count
I still sought a declaration that in 2014, Hammond qualified for the Fee
Exemption and HKP could not dispute the 2014 registration fees owed.
Hammond alleged the enactment of HEA 1165 “confirms that Hammond
qualified for the Fee Exemption in 2014. If Hammond did not, the Legislature
would have seen no need to enact HEA 1165 to disqualify Hammond from the
Fee Exemption beginning in 2015.” Id. at 91. Newly added Counts II and III
alleged the 2015 version of Indiana Code section 36-1-20-5 violated the Indiana
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 21 of 56
Constitution. Count II alleged a violation of Article 4, Section 22 prohibiting
special laws “[r]elating to fees or salaries.” Count III alleged a violation of
Article 4, Section 23 requiring that “in all . . . cases where a general law can be
made applicable, all laws shall be general . . . .” In both cases, Hammond
alleged that the Fee Exemption in section 36-1-20-5(a) could not be severed
from the remainder of the section.
[21] Both Hammond and HKP filed motions for summary judgment. Hammond’s
position was that its rental inspection program was created prior to July 1,
1984, and it therefore qualified for the Fee Exemption in 2014 but the legislative
history of the statutory amendments shows the Fee Exemption was intended to
benefit only Bloomington and West Lafayette to the exclusion of all other
political subdivisions and that the 2015 amendment finally accomplished that.
Hammond contended the legislation is unconstitutional special legislation
because the legislation creates non-uniform rental registration fees throughout
the state when laws of general applicability could be made. HKP took the
position that 1) Hammond did not have a rental registration or inspection
program that was created before July 1, 1984, as that term is now defined, and
was therefore not entitled to the fees it requested for 2014; 2) Hammond lacks
standing to raise its constitutional claims based on precedent from our supreme
court; 3) the “fees” referred to in Article 4, Section 22 are fees collected by
public officials to compensate them for their services, not the “fees” implicated
by this case; 4) the Fee Exemption is constitutional general legislation; 5) the
Fee Exemption constitutes a commonly used grandfather clause that has never
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been considered special legislation; 6) even if it is special legislation, it is
nonetheless constitutional, justified by the special characteristics of
Bloomington and West Lafayette; and 7) if the Fee Exemption is
unconstitutional, it is severable from the rest of the statute.
[22] In addition, the Indiana Attorney General was permitted to intervene in this
action for the “limited purpose of defending the constitutionality of Indiana’s
laws, to the extent they are called into question.” App. to Br. of Appellant, Vol.
III at 67. The State of Indiana filed a Memorandum of Law in Support of the
Constitutionality of Indiana Code Section 36-1-20-5 mostly aligned with HKP’s
position. The State, like HKP, first asserted Hammond lacks standing. Unlike
HKP, however, the State acknowledged the statute was special legislation, but
argued it was nonetheless constitutional as it was based on inherent
characteristics of Bloomington and West Lafayette, primarily the high rate of
renter-occupied housing as compared with other political subdivisions with
rental registration or inspection programs.
[23] Following extensive briefing by the parties and the State, the designation of
numerous exhibits as evidence on both sides, and a hearing, the trial court
issued an order on August 29, 2016, granting summary judgment to Hammond
on Count I of its complaint upon concluding Hammond was entitled to the
registration fees it sought from HKP for 2014.10 The trial court also granted
10
HKP does not appeal this ruling. The only issue before the court on appeal concerns the constitutionality
of Indiana Code section 36-1-20-5. Findings and conclusions related to Count I have been omitted below.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 23 of 56
summary judgment to HKP on Counts II and III of Hammond’s complaint
upon concluding Indiana Code section 36-1-20-5 is constitutional special
legislation. Specifically, with respect to Counts II and III the trial court
concluded:
A. Hammond has standing.
1. HKP and the State contend that Hammond does not have
standing to bring Counts II and III. . . . Hammond brought its
suit under the Declaratory Judgment Act (“Act”).
***
4. HKP and the State argue that Howard County v. Kokomo City
Plan Comm’n, 330 N.E.2d 92 (Ind. 1975), forecloses Hammond’s
standing to bring Counts II and III. But in Howard County, the
county did not allege that it had suffered any injury. Here,
Hammond alleges an injury. And in Howard County, the county
was not attempting to uphold the challenged validity of its
ordinance. Here, Hammond is attempting to uphold the
challenged validity of its ordinance, and in Indiana Dep’t of Nat.
Resources v. Newton Cnty., 802 N.E.2d 430, 433 (Ind. 2004), the
Supreme Court held – based on Howard County – that a county
had standing to “uphold[] the challenged validity of its
ordinances.” Moreover, the Court of Appeals has rejected HKP
and the State’s broad reading of Howard County – “Howard County
does not hold a county may not seek to invalidate a statute;
rather, a county cannot do so in the absence of any injury to the
county itself.” Marion Cnty. v. State, 888 N.E.2d 292, 297 (Ind.
Ct. App. 2008).
5. Hammond’s rights, status, and legal relations have been
affected. So, Hammond has standing to bring all of its claims
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under the Act, and it seeks to uphold the validity of its challenged
ordinance. So, it has standing under Newton County.
***
C. The Fee Exemption is special legislation.
9. In Counts II and III, Hammond alleged the Fee Exemption is
special legislation in violation of Ind. Const. Art. IV Sections 22
and 23. During briefing, the State conceded that the Fee
Exemption is special legislation. HKP argues the Fee Exemption
is a standard grandfather clause.
10. “The determination of whether a law is special or general is a
threshold question in determining its constitutionality under both
Article IV, Section 22 and Section 23.” A law is “special if it is
designed to operate upon or benefit only particular
municipalities.”
***
12. The Fee Exemption singles out a smaller group for special
treatment and is special legislation. Until 2013 . . ., all political
subdivisions could charge rental registration fees of any amount.
At least ten municipalities had fees of more than $5. In 2014, the
Fee Exemption limited the political subdivisions that could
charge more than $5 to those with “a rental registration or
inspection program created before July 1, 1984. . . .” It appears
the Legislature used the 1984 date to single out a group
(Bloomington and West Lafayette) smaller than the previously
specified class (all political subdivisions) to receive a special
benefit (the Fee Exemption), making the Fee Exemption special
legislation.
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***
15. Despite this evidence, HKP contends the Fee Exemption is a
standard grandfather clause. The actions the Legislature took
after Hammond filed this suit undermine this contention. “A
statute is ‘special’ if it ‘pertains to and affects a particular case,
person, place, or thing, as opposed to the general public.” After
Hammond filed this suit, the Legislature attempted to affect this
case and remove Hammond from the Fee Exemption in four
ways. The first two efforts accidentally removed Bloomington
from the Fee Exemption, so they were dropped. The last two
efforts succeeding in removing only Hammond, and they were a
clear effort to affect this case, demonstrating that the Fee
Exemption is special legislation.
***
D. The Fee Exemption does not violate Ind. Const. Art. IV, Sec
22.
18. In Count II . . ., Hammond alleges that the Fee Exemption
violates Article IV, Section 22, prohibiting “local or special laws
. . . [r]elating to fees or salaries, except that the laws may be so
made as to grade the compensation of officers in proportion to
the population and the necessary services required.”
19. The term “fees” used in Section 22 refers to the nineteenth
century “fee system” of using fees collected by county officers . . .
to compensate them directly. In the 1890’s, the State abrogated
this “fee system,” and all county officials were instead
compensated by salaries.
20. Accordingly, the “fees” referenced in Article IV, Section 22
are fees paid directly to county officials as compensation.
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However, the annual rental registration fee regulated by Indiana
Code § 36-1-20-5 is not paid directly to county officials as
“salary” or compensation; rather, it is directed to a special fund.
Therefore, the fee limitation at issues does not regulate a “fee” as
contemplated by Article IV, Section 22. HKP is therefore
entitled to judgment as a matter of law on Count II.
E. Ind. Code 36-1-20-5 does not violate Section 23.
21. In Count III . . ., Hammond alleges the Legislature used the
July 1, 1984 cut-off date in the Fee Exemption to exempt only
Bloomington and West Lafayette from the Fee Restriction of
Subsection 5(c). Hammond contends this violates Article IV,
Section 23 of the Indiana Constitution, which requires that “in all
. . . cases where a general law can be made applicable, all laws
shall be general, and of uniform operation throughout the State.”
To be unconstitutional under Section 23, “a law must not only be
special but subject to a law of general applicability.” The test is
“whether there is something about the class [created by the
special law] that makes it unique and whether that uniqueness
justifies the differential treatment.”
22. Bloomington and West Lafayette are unique in ways that
justified their exemption from the Fee Restriction. The housing
markets in Bloomington and West Lafayette are dominated by
rental housing like nowhere else in the state, giving the owners of
rental properties in those cities unique leverage in their housing
markets. At the same time, as relatively small cities with large
numbers of college students living in them, Bloomington and
West Lafayette have a unique pool of tenants – young,
unsophisticated, first-time renters. With inspection programs,
they ensured the landlords provided safe, habitable rental
housing to their inexperienced tenant populations; with
registration programs, they ensured the landlords could be
identified and held accountable for housing-code violations.
Unlike other cities in the state, Bloomington and West Lafayette
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have for decades imposed the costs of their special oversight on
the landlords themselves.
23. It is at least conceivable that the Legislature, by enacting the
Fee Exemption of Ind. Code § 36-1-20-5(a), decided that the
unique circumstances of the housing markets in Bloomington
and West Lafayette justified exempting them from the Fee
Restriction imposed by Subsection 5(c). Therefore, Hammond
has not satisfied its burden of negating “every conceivable basis
which might have supported the classification.” Accordingly,
Ind. Code § 36-1-20-5 is constitutional special legislation under
Article IV, Section 23, and HKP is entitled to judgment as a
matter of law on Count III . . . .
App. to Br. of Appellant, Vol. IX at 239-46 (some citations omitted). After the
trial court denied Hammond’s motion to correct error, Hammond initiated this
appeal.
Discussion and Decision 11
I. Summary Judgment Standard of Review
[24] When reviewing the grant or denial of summary judgment, we apply the same
test as the trial court: summary judgment is appropriate only if the designated
evidence shows there is no genuine issue of material fact and the moving party
is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Sedam v. 2JR
11
We heard oral argument on this case on December 12, 2017, in Indianapolis, Indiana. We commend
counsel for their excellent written and oral advocacy.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 28 of 56
Pizza Enterps., LLC, 84 N.E.3d 1174, 1176 (Ind. 2017). Our review is limited to
those facts designated to the trial court, T.R. 56(H), and we construe all facts
and reasonable inferences drawn from those facts in favor of the non-moving
party, Meredith v. Pence, 984 N.E.2d 1213, 1218 (Ind. 2013). On appeal, the
non-moving party carries the burden of persuading us the grant of summary
judgment was erroneous. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). A
grant of summary judgment will be affirmed if it is sustainable upon any theory
supported by the designated evidence. Miller v. Danz, 36 N.E.3d 455, 456 (Ind.
2015).
[25] “Specific findings and conclusions by the trial court are not required, and
although they offer valuable insight into the rationale for the judgment and
facilitate our review, we are not limited to reviewing the trial court’s reasons for
granting or denying summary judgment.” Doe v. Donahue, 829 N.E.2d 99, 106
(Ind. Ct. App. 2005), trans. denied, cert. denied, 547 U.S. 1162 (2006). In
addition, the “[f]act that the parties [made] cross-motions for summary
judgment does not alter our standard of review. Instead, we must consider each
motion separately to determine whether the moving party is entitled to
judgment as a matter of law.” Id. (citation omitted).
[26] Finally, as this proceeding concerns the constitutionality of a statute, we note
that a statute is “clothed with the presumption of constitutionality until clearly
overcome by a contrary showing.” Zoeller v. Sweeney, 19 N.E.3d 749, 751 (Ind.
2014) (citation omitted). We resolve all doubts in favor of the legislature, and
where there are multiple possible interpretations of the statute, we will choose
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the interpretation that upholds the statute. State v. Buncich, 51 N.E.3d 136, 141
(Ind. 2016). “To doubt the constitutionality of a law is to resolve in favor of its
validity.” Henderson v. State, 137 Ind. 552, 36 N.E. 257, 258 (1894).
II. Standing
[27] We begin with the threshold question raised by both HKP and the State
regarding whether Hammond has standing to pursue this constitutional
challenge to Indiana Code section 36-1-20-5.12 Although HKP agrees with the
trial court’s resolution that the Fee Exemption does not violate the Indiana
Constitution, it urges affirming on the alternate ground of standing in
furtherance of our policy of exercising judicial restraint in constitutional
matters. See Jones v. Jones, 832 N.E.2d 1057, 1059 (Ind. Ct. App. 2005) (noting
we must refrain from deciding constitutional questions when non-constitutional
grounds are available for resolving the case).
[28] Standing “focuses on whether the complaining party is the proper person to
invoke the court’s power.” State ex rel. Cittadine v. Ind. Dep’t of Transp., 790
N.E.2d 978, 979 (Ind. 2003). Only those who have a personal stake in the
outcome of the litigation and who show they have suffered or are in immediate
danger of suffering a direct injury have standing. Id.12
The State filed a Notice of Joining Appellee’s Brief in this matter, noting HKP’s brief “asserts the
arguments that the Attorney General raised in the trial court” and declining to file a separate brief “in the
interests of judicial economy and to avoid a duplication in briefing.” References to HKP therefore include
the State except where noted otherwise.
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[29] HKP cites Bd. of Comm’rs of Howard Cty. v. Kokomo City Plan Comm’n, 263 Ind.
282, 330 N.E.2d 92 (1975), as support for its position that Hammond does not
have standing to bring this case. In Howard County, the Board of
Commissioners of Howard County challenged a statute authorizing cities in
counties with a population under 84,000 to exercise planning and zoning
authority for two miles outside city boundaries without the consent of county
commissioners. The county made several constitutional arguments that the
population classification discriminated against residents of the county, invoking
Article 4, Sections 22 and 23, among others. With respect to Article 4, the
county claimed, “the residents of the contiguous area in counties such as
Howard are thereby discriminated ageinst [sic] in their political and civil
rights.” Id. at 295, 330 N.E.2d at 100. Our supreme court noted the county
“makes no claim that it, as a governmental entity, is injured by the statute, nor
would such a claim stand up against the power of the State over its
subdivisions.” Id.When a governmental subdivision of the State receives a
command from the Legislature to exercise or to refrain from
exercising the police power in a particular manner or in a
particular area of governmental concern, that governmental body
is powerless to invoke . . . Art. 4, ss 22 and 23, against such a
command on its own behalf, or on behalf of its citizens.
Id. The court determined that, although a state may act as parens patriae on
behalf of its citizens, a county cannot. Id. at 101. “[S]ince a county has not
been recognized as a sovereign which may protect its citizens,” the county’s
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attempt to “represent the interests of individual residents to vindicate
constitutional rights personal to them” fails for lack of standing to assert the
claims of its residents. Id. at 295, 330 N.E.2d at 100-01; see also Bd. of Comm’rs of
Union Cty. v. McGuinness, 80 N.E.3d 164, 170 (Ind. 2017) (affirming dismissal of
county’s complaint against the Indiana Department of Transportation for
damage to septic systems of county residents because county did not aver a
personal interest, only an interest on behalf of its citizens). HKP essentially
asserts this case holds that under no circumstances may a political subdivision
assert rights under Article 4, Sections 22 or 23, and states that in the forty-two
years since this decision, “this holding has never been questioned, much less
overturned.” Brief of Appellee at 29.
[30] Although it may never have been explicitly overturned, the extent of the Howard
County decision is indeed questionable. Where HKP would have Howard
County apply under all circumstances in which an Article 4 claim is raised by a
political subdivision, subsequent cases have clearly delineated a political
subdivision’s ability to challenge a state statute based on the nature of the injury
alleged. In State ex rel. State Bd. of Tax Comm’rs v. Marion Superior Court, 271 Ind.
374, 377, 392 N.E.2d 1161, 1164 (1979), our supreme court, citing Howard
County, stated, “A county or an official thereof possesses standing to challenge
an interpretation or application of a statute if it can be demonstrated that the
party is seeking the resolution of a legitimate controversy surrounding the
operation of the statute.” The court determined a county, through its county
council and commissioners, had standing to maintain an action challenging a
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 32 of 56
State Board of Tax Commissioners determination regarding county property
tax rates because the county “has a vital interest at stake [and i]t would be
anomalous indeed for us to hold that a county or its officials cannot resolve in a
court of law a bona fide dispute . . . over the application of a state statute.” Id.
at 378, 392 N.E.2d at 1165. In so holding, the court distinguished cases in
which the complaining political subdivisions were denied standing because in
those cases, the city or county complainant had no “personal” interest in the
dispute. Id. at 377-78, 392 N.E.2d at 1165 (citing, e.g., Lentz v. Trustees of Ind.
Univ., 248 Ind. 45, 221 N.E.2d 883 (1966), where the county assessor tried to
challenge a decision of the State Tax Board as to a particular piece of property
owned by a private entity).
[31] Similarly, in Ind. Dep’t of Natural Res. v. Newton Cty., 802 N.E.2d 430, 433 (Ind.
2004), the supreme court, again citing Howard County, decided the merits of a
county’s constitutional challenge to a statute that conflicted with a county
ordinance, noting “the County has a legitimate interest in upholding the
challenged validity of its ordinances just as it does in seeking interpretation of
statutes that affect its governance.”13 And in Marion Cty. v. State, 888 N.E.2d
292 (Ind. Ct. App. 2008), Marion and St. Joseph Counties challenged the
constitutionality of a state statute authorizing the State to recoup from counties
13
The specific challenge in Newton County was to the constitutionality of a statute as a violation of separation
of powers. Id. at 432.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 33 of 56
a portion of its expenses in operating juvenile detention facilities.14 The State
sought an arrearage of approximately $75 million dollars from the counties.
The State, citing Howard County, asserted that “with rare exceptions, a county
and its government have no standing and are powerless to challenge the
constitutionality of a state statute.” Id. at 297. This court disagreed: “Howard
County does not hold a county may not seek to invalidate a statute; rather, a
county cannot do so in the absence of any injury to the county itself.” Id.Because the counties “have a stake in the $75 million at issue in this case”—
money that would be paid out of their own treasuries—the court held the
counties had standing to pursue their claim. Id. at 298.
[32] More particularly, several cases since Howard County have addressed the merits
of a political subdivision’s Article 4, Sections 22 or 23 challenge to a statute if
the political subdivision—rather than its constituents—had a direct stake in the
outcome and was in danger of suffering a direct injury. See, e.g., Alpha Psi
Chapter of Pi Kappa Phi Fraternity v. Auditor of Monroe Cty., 849 N.E.2d 1131,
1134 (Ind. 2006) (addressing the merits of a county’s Article 4, Section 23
argument regarding the constitutionality of a statute requiring the auditor to
waive the requirement to timely file an application for exemption of a university
fraternity property from taxation); Mun. City of S. Bend v. Kimsey, 781 N.E.2d
683, 684 (Ind. 2003) (addressing the merits of a challenge under Article 4,
14
The counties challenged the statute as a violation of Article 9, Section 2, requiring the General Assembly
to provide “institutions for the correction and reformation of juvenile offenders.”
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Section 23 by the city of South Bend to a law applicable only to St. Joseph
County allowing a majority of landowners in an affected area of the county to
block annexation by a municipality). HKP posits that because standing was not
addressed in Alpha Psi Chapter or Kimsey, it was likely waived by the opposing
party failing to raise it. Nonetheless, Hammond itself stands to lose hundreds
of thousands of dollars annually if it is restricted to collecting a five dollar
annual rental registration fee due to the most recent iteration of Indiana Code
section 36-1-20-5. See App. to Br. of Appellant, Vol. II at 170 (showing
Hammond’s fee revenue in 2011 was $851,899 and in 2012 was $862,384).
Hammond is not seeking to represent the interest of any individual, group of
individuals, or business in this litigation; rather, it is seeking to represent its own
interests and uphold its own ordinance regarding rental registration. Because
Hammond has a direct stake in the outcome of this litigation and will sustain a
direct injury if the statute is upheld, Hammond has standing to raise these
claims.
III. The Indiana Constitution
[33] Section 22 of Article 4 prohibits enactment of various local or special laws
regarding sixteen enumerated subjects. Alpha Psi Chapter, 849 N.E.2d at 1134.
Section 23 establishes a requirement of general laws where such can be made in
all other cases. Id. Specifically, Article 4, Section 22 of the Indiana
Constitution states:
The General Assembly shall not pass local or special laws:
***
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Relating to fees or salaries, except that the laws may be so made
as to grade the compensation of officers in proportion to the
population and the necessary services required . . . .
And Article 4, Section 23 of the Indiana Constitution states:
In all the cases enumerated in [Section 22], and in all other cases
where a general law can be made applicable, all laws shall be
general, and of uniform operation throughout the State.
[34] The determination of whether a law is special or general is a threshold question
when analyzing its constitutionality under both Article 4, Sections 22 and 23.
Alpha Psi Chapter, 849 N.E.2d at 1136. A statute is “general” if it applies to “all
persons or places of a specified class throughout the state,” and a statute is
“special” if it “pertains to and affects a particular case, person, place, or thing,
as opposed to the general public.” Kimsey, 781 N.E.2d at 689 (citation
omitted). “If the law is general, we must then determine whether it is applied
generally throughout the State. If it is special, we must determine whether it is
constitutionally permissible.” Id. at 690 (quoting Williams v. State, 724 N.E.2d
1070, 1085 (Ind. 2000)).
[35] The State conceded below that the statute in question was a special law. See
App. to Br. of Appellant, Vol. V at 56 (from the State’s Memorandum of Law
in Support of the Constitutionality of Indiana Code Section 36-1-20-5: “In this
case, the statute at issue is permissible special legislation . . .”). HKP
maintained below that the Fee Exemption was not special legislation just
because fewer than all municipalities qualify; rather, HKP asserted the Fee
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 36 of 56
Exemption was “a common tool of statutory drafting” “to protect those who
have relied on the law as it existed before a new statute takes effect”: the
grandfather clause. App. to Br. of Appellant, Vol. IV at 206, 208.15 However,
HKP has apparently abandoned this tack on appeal, and we will proceed, as the
trial court did, under the assumption that Indiana Code section 36-1-20-5 is,
indeed, special legislation, as it pertains to and affects a particular case and/or
place. Our task, then, is to determine whether the law is constitutionally
permissible. Kimsey, 781 N.E.2d at 690.
[36] Before discussing the constitutional questions, it is important to note that
Hammond does not dispute the constitutionality of the Fee Restriction, as, in
the absence of the Fee Exemption, it applies across the board to all political
subdivisions. We also note the trial court found Hammond was entitled to the
Fee Exemption in 2014 and granted Hammond summary judgment on its claim
against HKP for approximately $86,000 in rental registration and late fees owed
that year for its rental properties. HKP does not appeal this decision, and we
proceed with the assumption that Hammond was entitled to the Fee Exemption
as it existed in 2014. Additionally, Hammond does not argue that the 2014
iteration of the statute is unconstitutional special legislation – nor would it be
expected to, as the Fee Exemption at that point also benefitted Hammond. It is
not the Fee Exemption per se that troubles Hammond, then, but the Fee
15
HKP argued in the alternative below as it argues now on appeal that even if the statute was special
legislation, it was constitutional special legislation. See id. at 208.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 37 of 56
Exemption in conjunction with the definition of “rental registration and
inspection program” the legislature added in 2015. It is only when the
legislature added the definition of “rental inspection or registration program”
that excluded Hammond from the Fee Exemption that Hammond’s alleged
injury arose.
A. Article 4, Section 22
[37] If a statute is special legislation relating to one of the sixteen enumerated
subjects in Section 22, it is per se unconstitutional. See State v. Lake Superior
Court, 820 N.E.2d 1240, 1249 (Ind. 2005) (holding two statutes applicable only
to Lake County were unconstitutional upon finding they related to the
assessment and collection of taxes, which is prohibited by Section 22), cert.
denied, 546 U.S. 927 (2005). Hammond bases its Section 22 argument on the
provision prohibiting the General Assembly from passing local or special laws
relating to fees or salaries.
[38] HKP argues (and the trial court agreed) the “fees” referred to in Section 22 are
only those fees which are used to directly compensate public officials for their
services as they were in 1851 when Section 22 was written. See State v. Hoovler,
668 N.E.2d 1229, 1233 (Ind. 1996) (noting that in interpreting a provision of the
Indiana Constitution, “we seek the common understanding of both those who
framed it and those who ratified it”) (quotation omitted). As explained in
Harter v. Bd. of Comm’rs of Boone Cty., 186 Ind. 301, 116 N.E. 304, 304 (1917),
the “fee system” of compensating public officials meant officials collected
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 38 of 56
certain fixed fees for services required to discharge the duties of their office. See
also Cowdin v. Huff, 10 Ind. 83 (1857) (explaining there were at that time three
modes of compensating persons engaged in public service: fees, which are
“compensation for particular acts or services”; wages, which are the
“compensation paid . . . for services by the day, week, etc.”; and salaries, which
are “per annum compensation to men in official . . . situations”). “This system
for compensating officials became so intolerable” that the legislature in 1891
replaced that system with a law fixing salaries applicable to county officers and
fees to be collected for certain services, requiring the fees to be paid into the
county treasury and salaries to be paid therefrom. Harter, 116 N.E. at 304-05.16
A series of amendments to the fee and salary acts and cases challenging those
laws followed until the supreme court in Harmon v. Bd. of Comm’rs of Madison
Cty., 153 Ind. 68, 54 N.E. 105 (1899), upheld the fee and salary acts against a
Section 22 challenge. HKP argues the Fees and Salaries clause of Section 22
has since been dormant and cannot support Hammond’s claim that the Fee
Restriction is unconstitutional pursuant to this provision because “fees” no
longer compensate county officers as they did when this section was enacted.
16
When enacted in 1851, Section 22 originally prohibited special laws “in relation to fees and salaries.”
Because officials in larger and more populous counties provided more services, they collected more fees than
officials in smaller counties, and Section 22 was amended in 1881 to add the provision that “laws may be so
made as to grade the compensation of officers in proportion to the population and necessary services
required.” The section was further amended in 1984 as part of an overall revision “designed to make the
Indiana Constitution more understandable through the use of modern language.” Gallagher v. Indiana State
Election Bd., 598 N.E.2d 510, 513-14 (Ind. 1992), cert. denied, 506 U.S. 1081 (1993). The original introduction
“in relation to” was changed to “relating to” during this comprehensive revision.
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[39] Hammond contends the Fees and Salaries clause survived the abolishment of
the fee system of compensation and the legislature cannot now pass a special
law governing the payment of fees of any type. Indeed, with the passing of the
fee and salary acts, fees continued to be paid although they no longer directly
compensated public officials and the validity of those fees was considered
separately from salaries under Sections 22 and 23. For instance, in State ex rel.
McCoy v. Krost, 140 Ind. 41, 39 N.E. 46 (1894), the court discussed whether the
Lake County recorder could charge $1.25 for recording a mortgage when the
law set a fee of $1.00. The recorder argued the fee and salary acts were
unconstitutional under Sections 22 and 23 because, for some reason, the law
had failed to provide a salary for the Shelby County recorder (and other public
officials in Shelby County). The court, however, noted the question before it
pertained only to the validity of the law prescribing a fee for recording
mortgages, “unless it shall be found that the fee provisions and the salary
provisions of the law are so interdependent as to cause the fall of either by the
invalidity of the other. A full reading of the act will disclose that the system of
fees provided therein is complete . . . .” Id. at 47; see also State ex rel. Bd. of
Comm’rs of Benton Cty. v. Boice, 140 Ind. 506, 39 N.E. 64, 64 (1894) (citing Krost
and noting Krost “held that the act should be considered as presenting a system
of fees apart from the system of salaries also provided” and adding that “either
system must stand, and its constitutional validity be determined, independently
of the other”). The court in Krost held, notwithstanding any deficiencies in the
salary law, the fee law was valid and prescribed a fee of one dollar for recording
mortgages.
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[40] HKP is correct that there has been no litigation on this point in over a hundred
years. But that does not mean the constitutional provision is no longer in effect;
in fact, it remains very much a part of Indiana’s Constitution to this day. As
noted above, in the early 1980s, the General Assembly, by joint resolution,
undertook to amend the state constitution to update “certain antiquated style,
language, or provisions.” 1982 Ind. Acts P.L. 231. Had the legislature
considered the Fees and Salaries clause of Section 22 “antiquated,” it could
have addressed it at that time. Amendments to thirty-four provisions of the
constitution were proposed, including amendments to Section 22. And yet the
only thing that was amended in the Fees and Salaries clause was the
introductory language. We therefore cannot agree with HKP that the Fees and
Salaries clause has no continued viability.
[41] HKP also points out that the fees prescribed in the 1890s’ fee and salary acts
were those paid to constitutional officeholders for services provided by the
office, unlike the fees at issue herein. Again, this is correct, but a broader view
of Section 22 and the cases that have construed it supports the notion that when
the State sets a fee—any fee—it should apply uniformly. Cf. Harmon, 54 N.E. at
107 (“The state has the right to appoint such reasonable fees to be paid for
official services as it sees fit [and t]he fees for such official services must be
uniform throughout the state.”). And here, the State has taken on the task of
regulating the fee a municipality may charge for a service to landlords and
tenants, but has not required the fee to be uniform across the state. In addition,
the legislature has declared that rental registration fees must be maintained in a
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special fund to be used only for reimbursing the costs of the registration and
inspection programs. Ind. Code § 36-1-20-3. In this regard, the fees at issue
herein are similar to the fees considered in the 1890s. The fees collected in the
1890s were used to pay the salaries of the officials collecting them; here, the
rental registration fees are used to pay for the implementation and operation of
the program assessing them, which would include the salaries paid to those
running the program. See App. to Br. of Appellant, Vol. V at 148-49 (affidavit
of Hammond City Controller noting the Hammond rental registration and
inspection program employs six full time inspectors, part time inspectors, and
incurs costs and expenses for supplies in running the program). No other
program or expense is paid for or supported by the monies generated by this
program.
[42] Section 36-1-20-5 relates to fees for rental registration programs and allows
Bloomington and West Lafayette and only Bloomington and West Lafayette to
charge a fee different than all other political subdivisions in the State. Section
36-1-20-5 therefore runs afoul of Article 4 Section 22, which prohibits special
laws relating to fees or salaries. Because section 36-1-20-5 is unconstitutional
under Section 22, we need not necessarily consider Hammond’s alternative
argument that the statute is unconstitutional under Section 23. However, in the
interest of completeness, we do so below.
B. Article 4, Section 23
[43] Even where a law does not address one of the Section 22 subjects, the residual
clause of Section 23 requires it must nevertheless be general where a general law
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can be made. See Ind. Const. Art. 4, sec. 23 (“. . . in all other cases where a
general law can be made applicable, all laws shall be general, and of uniform
operation throughout the State”) (emphasis added); Lake Superior Court, 820
N.E.2d at 1245. Therefore, even if we had not found the rental registration and
inspection fee to be subject to Section 22, it might still be unconstitutional under
Section 23. In including the qualifying language—“where a general law can be
made applicable”—the drafters expressed a preference for general laws while
recognizing that special laws were sometimes necessary. Indiana Gaming
Comm’n v. Moseley, 643 N.E.2d 296, 300 (Ind. 1994). “If the subject matter of
an act is not amenable to a general law of uniform operation throughout the
State, it is constitutionally permissible.” Buncich, 51 N.E.3d at 141.
[44] Because all sides apparently now agree that section 36-1-20-5 is special
legislation, see ¶ 35, supra; see also Alpha Psi Chapter, 849 N.E.2d at 1137 (the
conclusion that a law is special is a threshold determination in analyzing a law’s
constitutionality), a review of Hammond’s Section 23 claim calls upon us to
determine only whether the statute is nevertheless permissible because the
“relevant traits of the affected area are distinctive such that the law’s application
elsewhere has no effect” and it therefore cannot be made applicable generally,
Kimsey, 781 N.E.2d at 692. In other words, we consider whether there is
something about the class that makes it unique and whether that uniqueness
justifies its differential treatment. Alpha Psi Chapter, 849 N.E.2d at 1138. Our
courts have, on several occasions, found unique circumstances justifying
differential legislative treatment. See, e.g., Buncich, 51 N.E.3d at 142-43
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(upholding statute applicable only to Lake County aimed at reducing the cost of
election administration by consolidating small precincts based on that county’s
exceptionally high number of small precincts – both the highest number of
small precincts in the state and more than twice as many as any other county);
Lake Superior Court, 820 N.E.2d at 1250-51 (upholding tax reassessment statute
based on Lake County’s history of systemic underassessment); Williams, 724
N.E.2d at 1086 (upholding a statute providing for additional magistrates in
Lake County superior courts because the need was objectively supported by a
study comparing caseloads and finding Lake County, as a larger county with a
larger docket, was in need of those judicial resources); Hoovler, 668 N.E.2d at
1233-35 (upholding statute allowing Tippecanoe County to increase certain
taxes because it was the only county subject to Superfund liability); Moseley, 643
N.E.2d at 301-05 (upholding riverboat gambling statute that provided for voting
by city rather than by county for Lake County alone because of the unique
circumstances of its waterfront).
[45] In other cases, we have found the proffered “unique circumstances” to be
insufficient to warrant special legislation. See, e.g., Alpha Psi Chapter, 849
N.E.2d at 1137-39 (striking statute that allowed three particular fraternities at a
single university to retroactively extend time to file for a property tax exemption
because the only thing separating them from other fraternities at the university
was their failure to timely file: “[u]ltimately, the taxpayers’ argument boils
down to a claim that they are unique because they, and they alone, require
relief from the consequences of their own oversight”); Kimsey, 781 N.E.2d at
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694 (striking annexation statute applicable only to St. Joseph County because
neither “the need to preserve rural land around urban areas” nor the need to
prevent competing cities from annexing each other’s land was unique to that
county).
[46] As Hammond points out, whether a general law can be made applicable is
typically a hypothetical situation, because the law at issue in the typical case
begins as a law granting special treatment to a small class. But in this case, it
appears a statute was enacted as a general law and through the series of
amendments detailed in the Facts and Procedural History section, supra, became a
special law benefitting only Bloomington and West Lafayette. House Bill 1543
in 2011 allowed municipalities who already had rental registration and
inspection programs to continue to charge fees of their choosing (and allowed
other municipalities to implement fees of any amount), provided those fees
were maintained in a special fund to be used only for running the program.
Thus, until House Bill 1313 in 2013, any political subdivision could charge
rental registration fees of any amount.17 After the 2014 amendment added the
Fee Restriction and Fee Exemption, every political subdivision but
Bloomington, West Lafayette, and Hammond was restricted to charging a fee
of five dollars based on a seemingly arbitrary date. And after the 2015
amendment changed the definition of “rental registration and inspection
17
Recall that in 2013, HEA 1313 prohibited a political subdivision from adopting a regulation that imposed
an inspection, registration, or other fee after February 28, 2013, allowing political subdivisions which already
imposed a fee to continue, but not allowing political subdivisions to begin imposing a fee.
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program,” only Bloomington and West Lafayette were eligible for the Fee
Exemption, and therefore only those two cities may charge fees of their
choosing. This result was clearly intentional and not merely serendipitous
because the series of amendments focused on drafting a statute that achieved
this very result: that every political subdivision was subject to the Fee
Restriction but Bloomington and West Lafayette.
[47] HKP argues Bloomington and West Lafayette are unique in ways that
rationally justify the determination that they alone should be exempt from the
Fee Restriction, citing their unique housing markets and “an unmatched history
of employing rental registration and inspection programs to regulate all
landlords . . . .” Br. of Appellee at 58; see also App. to Br. of Appellant, Vol. IX
at 245-46 (trial court stating Bloomington and West Lafayette are unique
because their housing markets are dominated by rental housing and their tenant
pool is “young, unsophisticated, first-time renters” and they have for decades
imposed the costs of oversight on landlords). But Hammond argues that these
“unique characteristics” (while denying they are unique at all) existed in 2011,
as well, and cannot suddenly justify allowing them to continue charging any fee
they want while restricting all others to a five dollar fee. In fact, the reasons for
singling out Bloomington and West Lafayette are primarily couched in terms of
the characteristics of those cities and not necessarily by those possessed by the
classification: a political subdivision with a rental registration or inspection
program created before July 1, 1984 that does not have a general housing
registration or inspection program or a registration or inspection program that
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applies only to rooming houses and hotels. Ind. Code §§ 36-1-20-5(a); 36-1-20-
1.2. Further, Hammond argues it is not just the Fee Exemption itself but the
process by which the Fee Exemption came into being that demonstrates this is
unconstitutional special legislation. The legislative history of Indiana Code
chapter 36-1-20 shows that language was offered and rejected until the statute
was crafted into the legislation it is today, benefitting only Bloomington and
West Lafayette. Even LSA’s Fiscal Impact Statements specifically point out the
impact of various proposed bills on Bloomington and West Lafayette.
[48] The subject of the law—rental registration fees—is amenable to a general law of
uniform application throughout the state. The conditions the law addresses—
identification of landlords and protection of tenants—are found throughout the
state. But the law burdens political subdivisions on the basis of a seemingly
random date and highly specific definitional terms. The law began life as a law
of general applicability, but, through a series of amendments, transformed into
a law benefitting only two Indiana cities. The purpose of limits on special
legislation is to “prevent state legislatures from granting preferences to some
local units or areas within the state . . . .” Kimsey, 781 N.E.2d at 685 (citation
omitted). It appears that is exactly what happened here; the question is whether
the alleged “unique circumstances” of Bloomington and West Lafayette are
actually unique circumstances at all, and if so, whether those unique
circumstances rationally justify the law allowing them, and them alone, to be
exempt from the Fee Restriction.
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[49] In Buncich, our supreme court considered whether a law creating a committee in
Lake County directed to identify small voting precincts amenable to
consolidation was unconstitutional special legislation. The data available to the
court showed that at the time the statute was enacted, Lake County had 525
precincts, 130 of which qualified as “small” (fewer than 500 active voters). 51
N.E.3d at 139. The number of small precincts in Lake County was more than
double that of any other county (Allen County was next with fifty-eight out of
338), and was also more than the total number of small precincts in the other
seven most populous counties (Marion, Allen, Hamilton, St. Joseph,
Vanderburgh, Porter, and Elkhart Counties had 129 small precincts combined).
Id. at 139, 143 n.11.
The State argues Lake County is sufficiently distinct in that it has
an exceptionally high number of small precincts, which impose
significant and unnecessary costs on the election system.
Buncich responds that nearly all of our counties have small
precincts, and that taxpayers across the state could benefit from
cost savings. We are thus confronted with a question of degree:
Lake County is not unique merely because it has small precincts,
but at what point does the sheer number of small precincts in
Lake County become a defining characteristic such that it
justifies special legislation?
Id. at 142-43 (footnotes omitted). The court concluded Buncich, who had the
burden of proof as the party seeking to strike down the statute, had not met his
burden of rebutting the presumption that the legislature had determined Lake
County to be past the point at which the characteristic becomes defining. Id. at
143. The court also noted that the statute in question did not mandate a
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 48 of 56
solution to the unique circumstances but left the decision-making authority for
how to handle the disproportionate number of small precincts at the local level.
Id. Therefore, the court concluded “the abnormal number of small precincts in
Lake County is a defining characteristic that is sufficiently distinctive to justify
the Statute.” Id.
[50] HKP seems to try to analogize this situation to the argument the State made in
Buncich, contending the legislature was justified in crafting this special
legislation because the “sheer number” of renters in general and renters of a
certain age in particular in Bloomington and West Lafayette is a defining
characteristic. Here, the alleged “unique characteristics” offered to justify the
Fee Exemption being applicable to only Bloomington and West Lafayette are
their positions as home to the largest college campuses in the state with the
highest percentages of both rental housing generally and rental housing
occupied by “unsophisticated, first-time renters” in particular, see Brief of
Appellee at 20-21,18 and “by far the longest history of regulating all landlords in
their housing markets via rental registration and inspection programs,” id. at 54.
While it may be true those are circumstances unique to Bloomington and West
18
A table compiled by HKP from 2014 United States Census Bureau data shows 65.7% of Bloomington’s
total occupied housing units are renter occupied and 52.4% of the total occupied housing units are renter
occupied by non-family members fifteen to thirty-four years old. Id. at 21. Similarly, in West Lafayette,
68.8% of total occupied housing is renter occupied and 71.1% is occupied by non-family members fifteen to
thirty-four years old. Id. The city with the next highest percentage of renter occupied housing is East
Chicago, with 56.6%. Id. The city with the next highest percentage of renter occupied housing by non-family
members aged fifteen to thirty-four is Muncie, with 37.2%. Id. Hammond’s renter occupied housing units
are 38.2% of its total occupied housing, with 12.6% occupied by non-family members aged fifteen to thirty-
four. Id.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 49 of 56
Lafayette, there is no obvious connection between those characteristics and the
statute allowing those cities and those cities alone to charge any rental
registration fee they want, while restricting all others to a very minimal fee. If
the defining characteristic of Bloomington and West Lafayette is the large pool
of “young, unsophisticated renters” in rental housing markets with dominant
landlords, it is unclear how a statute allowing those cities to charge whatever
they wish and allowing the landlords to pass that greater fee on to their
allegedly vulnerable tenants is reasonably related to that characteristic.19 Stated
differently, the alleged “uniqueness” of Bloomington and West Lafayette does
not justify exempting them from the Fee Restriction. Although HKP posited at
the summary judgment hearing that the unique situation in Bloomington and
West Lafayette “cries out for oversight,” it also posited that while the legislature
was imposing that oversight on other political subdivisions, it “could have
reasonably decided that in [those] market[s] . . . we’re going to cut them loose.”
Transcript at 61. That is not a meaningful explanation for why the rental
housing markets in Bloomington and West Lafayette justify collecting a
19
College students may be the majority people occupying rental housing in Bloomington and West
Lafayette, but it is unlikely that landlords rent to young, presumably unemployed or minimally employed
people without some sort of guarantee from a parent or other responsible party. Thus, the characteristics of
the people occupying rental housing in Bloomington and West Lafayette are not necessarily indicative of the
characteristics of the actual renters. Counsel for HKP acknowledged at oral argument that parents may have
to sign for their children when renting an apartment. See
https://mycourts.in.gov/arguments/default.aspx?&id=2161&view=detail&yr=&when=&page=1&court=ap
p&search=&direction=%20ASC&future=False&sort=&judge=&county=&admin=False&pageSize=20 at
23:05-23:25.
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 50 of 56
registration fee of more than five dollars when all other political subdivisions
are restricted to that amount.
[51] The purpose of Section 23 “is to prevent the legislature from providing a benefit
to or imposing a burden on one locality and not others . . . .” Buncich, 51
N.E.3d at 141. The Fee Exemption in its current form is available only to
political subdivisions with programs created before July 1, 1984, that authorize
registration or inspection of all rental housing and only rental housing. Of the
fourteen cities LSA identified as having rental registration or inspection
programs in 2014—before the addition of the Fee Restriction and Fee
Exemption—all of them charged a fee of more than five dollars. The statute
now allows only two of those cities to continue to do so; whereas twelve of
those cities will have to run their programs on even fewer dollars than before.
The legislative history of section 36-1-20-5 shows the Fee Exemption was
carefully crafted to provide a benefit to Bloomington and West Lafayette while
burdening all other cities. See Hoovler, 668 N.E.2d at 1234 (the court noting it
would not limit its consideration to the statute’s language but also consider the
circumstances surrounding the act in question in determining its
constitutionality under Section 23). However, in so doing, the statute was not
tailored to address the allegedly “unique circumstances” in Bloomington and
West Lafayette; rather, those “unique circumstances” seem to have been hand-
picked post hoc to justify the differential treatment imposed by the statute. See
Kimsey, 781 N.E.2d at 694 (noting the several different explanations offered to
justify a statute’s application only in counties with population between 200,000
Court of Appeals of Indiana | Opinion 49A04-1612-PL-2784 | February 20, 2018 Page 51 of 56
and 300,000 “were all couched in terms of characteristics of St. Joseph County,
not necessarily those possessed by a county of this population size”); see also
Buncich, 51 N.E.3d at 139 (the statute addressing the abnormally high number
of small precincts in Lake County appointed a committee to identify the small
precincts and determine if any adjoining precincts could be combined; thus, the
statute directly addressed the defining characteristic). A general law regarding
rental registration fees can be—and in fact was—made applicable across the
state. By crafting this special law to exempt Bloomington and West Lafayette
from that general law, the legislature has run afoul of Section 23.
C. Severability
[52] As the Fee Exemption is unconstitutional special legislation, it must be stricken.
Hammond argues the Fee Exemption is not severable from the remainder of the
section and that the entire section, including the Fee Restriction, must be
stricken.
A statute bad in part is not necessarily void in its entirety.
Provisions within the legislative power may stand if separable
from the bad. But a provision, inherently unobjectionable,
cannot be deemed separable unless it appears both that, standing
alone, legal effect can be given to it and that the legislature
intended the provision to stand, in case others included in the act
and held bad should fall.
State v. Monfort, 723 N.E.2d 407, 415 (Ind. 2000) (quoting Dorchy v. Kansas, 264
U.S. 286, 289-90 (1924)). The test for severability is whether the legislature
would have passed the statute had it been presented without the invalid
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provisions. Paul Stieler Enterps., Inc. v. City of Evansville, 2 N.E.3d 1269, 1279
(Ind. 2014); see Ind. Code § 1-1-1-8(b)(1) (stating that “[e]xcept in the case of a
statute containing a nonseverability provision, each part . . . of every statute is
severable” and the invalidity of any provision does not affect the remainder
unless “the remainder is so essentially and inseparably connected with, and so
dependent upon, the invalid provision or application that it cannot be presumed
that the remainder would have been enacted without the invalid provision”).
“The inclusion of a severability clause creates a presumption that the remainder
of the Act may continue in effect. The absence of a severability clause creates
the opposite presumption: the Legislature intends the Act to be effective as an
entirety or not at all.” Ind. Educ. Emp’t Relations Bd. v. Benton Cmty. Sch. Corp.,
266 Ind. 491, 365 N.E.2d 752, 762 (1977).
[53] Standing alone and without the Fee Exemption, section 36-1-20-5 could be
given legal effect as a law of general applicability. However, Indiana Code
chapter 36-1-20 does not contain a severability clause. In the absence of a
severability clause, the burden is on the supporter of the legislation to show the
provisions involved are separable. Id. HKP looks to the legislative vote on
House Bill 1403 to support its assertion that the Fee Exemption is not so
essentially and inseparably connected with the Fee Restriction that the
legislature would not have passed one without the other. HKP notes that the
Fee Exemption had effect in only two House districts and two Senate districts
but the Senate nonetheless passed HB 1403 by a vote of 34-12 and the House
passed the bill 67-28. Accordingly, HKP contends “there is no basis to
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conclude these large majorities would have vanished if Bloomington and West
Lafayette were subjected to the Fee Restriction.” Br. of Appellee at 77. The
various proposed and actual amendments to the statute, however, indicate that
from the beginning, the legislature did not intend for the Fee Restriction to
apply to Bloomington and West Lafayette. House Bill 1403 was originally
proposed with a one-time Fee Restriction applicable to all political subdivisions,
then amended to an annual Fee Restriction applicable to all political
subdivisions, and passed out of committee that way. See App. to Br. of
Appellant, Vol. IV at 106. Representative Truitt, representing a district which
includes portions of Tippecanoe County, then moved to amend the bill to
include the Fee Exemption language. See id. at 108-09. The bill with the Fee
Exemption then passed both houses and was signed by the governor. When
House Bill 1165 was proposed with a definition of “rental registration and
inspection program” that would have impacted Bloomington and West
Lafayette’s ability to qualify for the Fee Exemption, the definition was carefully
amended so that Bloomington’s and West Lafayette’s programs would meet the
definition but Hammond’s would not, and only then was the statute passed, to
be effective retroactively.
[54] Without the Fee Exemption, Bloomington and West Lafayette would be
subject to the Fee Restriction, a result the legislature specifically avoided. We
therefore agree with Hammond that the legislative history of the statute
demonstrates the legislature would not have passed section 36-1-20-5 with the
Fee Restriction had it been presented without the Fee Exemption.
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[55] Whether or not an invalid portion of a statute is severable ultimately rests on a
judicial determination of legislative intent. Kinslow v. Cook, 165 Ind. App. 623,
628, 333 N.E.2d 819, 822 (1975). In determining legislative intent, we may
properly consider the object which the legislature sought to accomplish via the
legislation. In re City of Mishawaka, 259 Ind. 530, 533, 289 N.E.2d 510, 512
(1972). Here, to address the concern that escalating fees may impact the
affordability of rental housing and be detrimental to professionally managed
and developed rental communities, the legislature sought to restrict the rental
registration fee all political subdivisions except Bloomington and West
Lafayette could charge. Only the statute with the Fee Exemption could
accomplish that. The Fee Exemption is not severable from the remainder of
section 36-1-20-5, and therefore the entire section must be stricken.
Conclusion
[56] The special legislation at issue both relates to fees and salaries and could be
made a law of general applicability. Therefore, it runs afoul of both Sections 22
and 23 of Article 4 of the Indiana Constitution. Because making the statute one
of general applicability was not the legislature’s intent, we conclude section 36-
1-20-5 must be stricken in its entirety. The judgment of the trial court in favor
of HKP on Counts II and III of Hammond’s complaint for declaratory
judgment is reversed, and the case is remanded to the trial court for further
proceedings consistent with this opinion.
[57] Reversed and remanded.
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Riley, J., and Pyle, J., concur.
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