[co-author: Tatum Weight, Summer Associate1]
On June 13, 2023, the Arizona Court of Appeals held in Pope v. City of Phoenix that Sky Harbor Airport’s $6.00/day “customer facility charge” does not violate the anti-diversion provision of the Arizona Constitution.
After breaking ground on the $270 million Rental Car Center,2 the City of Phoenix enacted an ordinance allowing Sky Harbor to collect daily “customer facility charges,” which would fund the project. These charges also paid for the $745 million Phoenix Sky Train project.3
In 2017 and 2019, the Plaintiff taxpayers paid $36 and $30, respectively, in fees for renting a vehicle at Sky Harbor’s facility. Plaintiffs subsequently brought putative class action claims against the City of Phoenix, arguing that the customer facility charge violates the anti-diversion provision of the Arizona Constitution. Under the anti-diversion provision, funds generated from a tax or fee relating to the registration, operation, or use of vehicles on a public road, can only be used for highway and street purposes. In a unanimous opinion, the three-judge panel upheld the tax court’s ruling and dismissed the Plaintiffs’ claims.
First, the court rejected the City’s argument that Plaintiffs’ appeal was “untimely.” Arizona court rules require parties to file an appeal within 30 days of the final judgment; however, this deadline may be extended if a party were to file a time-extending motion — such as a motion for new trial. The court held that the Plaintiffs’ appeal was timely because Plaintiffs filed a motion for new trial and the procedures for appealing civil judgments apply equally to tax court appeals.
Second, and more significantly, the court held that Sky Harbor’s customer facility fee does not violate the anti-diversion provision. Plaintiffs argued that the fee is unconstitutional because it “relates to” the use of a vehicle and it funds the Sky Harbor facility, rather than street or highway purposes, as required by the Arizona Constitution. The court dismissed this argument, holding that the fee does not “relate to” the use of a vehicle within the meaning of the anti-diversion clause.
The court relied on an Arizona Supreme Court decision which stated that a fee “relates” to the use of a vehicle under the anti-diversion provision if the fee is “(1) imposed as a prerequisite to, or (2) triggered by, the legal operation or use of a vehicle on a public road.”4 Because Sky Harbor’s fee is neither, the court held that it does not violate the anti-diversion provision.
Drawing a distinction between practical and legal barriers, the court explained that the fee is not a prerequisite (or legal barrier) to lawful road use. Rather, it is a practical barrier for renting a car at Sky Harbor, and the anti-diversion provision does not extend to practical barriers. Additionally, the fee is not triggered by a customer’s lawful operation of a vehicle. Instead, it is triggered by the rental companies’ use of the Sky Harbor facility.
Therefore, because Sky Harbor’s fee does not fall within the Supreme Court’s definition of “relating to” the use of a vehicle, it does not violate the anti-diversion provision of the Arizona Constitution. This may not be the final say on this issue. The plaintiffs may appeal the Court of Appeal’s ruling to the Arizona Supreme Court, but the Arizona Supreme Court’s decision whether to review the case is discretionary.
Footnotes:
