Following the Kansas Supreme Court’s ruling in April that Mission’s so-called “driveway tax” was illegal, the city is preparing to formally strike the controversial transportation utility fee from its books.
Mission suspended collection of the TUF at the start of 2016, replacing the approximately $800,000 per year it generated with new property taxes. Conceived in 2010 as a way to create a dedicated revenue source for maintenance and repair of city streets, the TUF charged single-family home owners a flat fee of $72 per year. Businesses and multi-family developments, however, were assessed fees based on how much traffic their properties generated.
In 2012, the Heartland Apartment Association sued the city over the practice, saying that the fee met the definition of an excise tax, which is illegal in Kansas. Though a Johnson County District court judge agreed with the city that the fee was not an excise tax in late 2013, that ruling was overturned in summer 2015 by the Kansas Court of Appeals. The Supreme Court upheld the appellate court’s ruling two months ago.
At its finance and administration committee meeting on Wednesday, the Mission City Council agreed to forward a motion to repeal the TUF ordinance from city code to its next full city council meeting.
However, it’s still unclear what liability the city will have for the “driveway tax” funds it collected between 2010 and 2015. A motion submitted by the Heartland Apartment Association seeks the repayment of funds collected under the TUF as well as damages. Whether repayment would be limited to just the plaintiffs in the case or could be required for every entity that paid under the TUF remains to be seen. Mission collected approximately $4 million in total under the TUF.
Attorneys from Mission and from the Heartland Apartment Association are scheduled to have a hearing before a Johnson County District Court judge on the matter July 10.