Mission agrees to repay plaintiffs in settlement of ‘driveway tax’ cases

The city of Mission has agreed to begin negotiations to settle two civil cases over the city’s controversial transportation utility fee (TUF), commonly known as the “driveway tax.”

Details on the settlements, and how much will be repaid, will be worked out over the next 30 days, said city administrator Laura Smith. But the city has unanimously agreed to authorize settlement agreements in two pending lawsuits, ultimately to repay TUF dollars to the Heartland Apartment Association and 10 individual plaintiffs in that case, as well as a class action case brought by Rex Danley. In general, the plaintiffs and the city have agreed to terms in both of the cases.

The “driveway tax” became an issue in Mission city politics shortly after its passage in 2010.

“The city has taken strong positions all along,” said Mission City Administrator Laura Smith. “We feel like we have strong defenses against repayment and that we aren’t obligated to repay that, but in looking at how it was impacting the council’s ability to look at future capital programming and expenditure of street dollars with the potential of that repayment and the cost of ongoing litigation.”

Smith said the council began in fall 2018 to consider settlement agreements in the lawsuits.

The city created the transportation utility fee in 2010 as a way to generate revenue for maintenance and repair of city streets. During its time in effect through 2015 and ending in 2016, 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.

The TUF ultimately generated about $800,000 per year in new property taxes, or about $4 million in total. The Danley lawsuit seeks repayment to all property owners who paid TUF funds during that time.

The Heartland Apartment Association sued the city in 2012 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 in April 2017.

Smith said that after the council decided to end TUF in 2015, they instead raised the mill levy to raise a comparable amount of funds for transportation infrastructure.

Mayor Ron Appletoft said the city had used the funds raised from TUF as intended, adding that the city had modeled it after the stormwater utility fee.

“Hopefully we are going to get close to a settlement on this issue and be able to start looking forward without the unknown of what’s going to happen to this suit,” Appletoft said, adding that the council has indicated that the city and the plaintiffs are “substantially in agreement.”