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Rogue Valley Sewer Services must pay Phoenix franchise fee

PHOENIX — An Oregon Supreme Court ruling has ended Rogue Valley Sewer Services' challenges of the city’s franchise fee for using of city rights of way.

Attorneys for Phoenix and the mayor said the decision supported home rule in Oregon.

“It’s a great decision for home-rule cities and for everyone," said Ryan Kirchoff, city attorney. "It clarifies if, what and how to do, with respect to dealing with state government and preemptive issues.

"It will be useful in other contexts in which state and local law expressly or impliedly intersect.”

There won't be any challenges to the Supreme Court decision, said RVSS General Manager Carl Tappert, who was disappointed by the ruling.

The court held the city did not need statutory authority to charge a fee and that legislative preemption must be unambiguous. The Legislature has established rules on franchise fees, but did not specify that they applied to sewer services.

RVSS had appealed a Court of Appeals ruling in spring 2014 that upheld a city franchise fee of 5 percent levied against revenues collected by RVSS in the city. Phoenix passed the fee in 2010 and RVSS challenged it in Jackson County Circuit Court. Judge Phil Arnold ruled in favor of the city a year later.

Phoenix leaders maintain the fee covers the cost of street repairs related to work by RVSS in the rights of way. Funds collected are dedicated to that work.

“We didn’t believe that it was an appropriate fee, and this is what we challenged. It seems that the city has the authority to impose it,” said Tappert. “Obviously, we didn’t agree when it was first proposed. The Supreme Court has ruled, and that’s what we have to abide by."

The League of Oregon Cities had filed a brief and supported the city in oral arguments. All 242 cities in Oregon have home rule.

“In Oregon it means the city has the authority to take any action, make any decision, spend money as they deem warranted unless the Legislature has preempted an area,” said Sean O’Day, general counsel for the league. “(The ruling) reaffirms the constitutional standard the voters had in mind in 1906.”

“This is a verification of the home rule, of the abilities cities have in Oregon,” said Mayor Jeff Bellah. “Oftentimes the state Legislature is making decisions that affect the cities without really asking us. This is another precedent-setting case that strengthens home rule in Oregon.”

RVSS will release the money that has been held in an escrow account since the legal challenges began. Tappert said there is about $50,000 in the account. The fee added less than a dollar to the sewer rate RVSS charges Phoenix customers.

Central Point passed an ordinance in February to impose a 5 percent franchise fee on RVSS, said Tappert. The service is negotiating an agreement with Central Point on fee details.

No other cities in the service area have raised the issue so far, said Tappert. Those include Jacksonville, Talent and Eagle Point. White City is in the district but unincorporated. RVSS also serves small parts of southwest Medford.

Tony Boom is a freelance writer living in Ashland. Reach him at tboomwriter@gmail.com.