AZ League Connection

The League's Monthly Online Newsletter

Issue 185: September 2018

Legal Corner: S.B 1487 Update

Ten official complaints have been filed against cities and towns since S.B. 1487 was signed on March 17, 2016 and became effective on August 6, 2016. This article provides an overview of the law and a summary of the closed cases and their determination by the Attorney General.

OVERVIEW OF S.B. 1487 (A.R.S. §§ 41-194.01, 42-5029, 43-206)

The Attorney General, at the request of a legislator, is required to investigate and determine whether a law, regulation, or other act by the city or town council violates state law or the Arizona Constitution. Once a legislator files the investigative request, the Attorney General has 30 days to investigate and make a written report of findings and conclusions and submit the report to the Senate President, House Speaker and the legislator(s) who requested the investigation.

At the end of the 30-day investigation, the Attorney General must decide on one of three options:

  1. If the Attorney General finds the council's action does not violate the law, the Attorney General will not take any further action.
  2. If the Attorney General determines only that the local law may violate state law or the Arizona Constitution, the Attorney General is required to file a special action in the Arizona Supreme Court to resolve the issue. The Supreme Court must give the action precedence over all other cases and require the municipality to post a bond equal to the amount of state shared review paid to it over the preceding six months.
  3. If the Attorney General determines that the local law violates state law or the Constitution, the Attorney General is required to notify the municipality, which has 30 days to cure the violation. If the violation is not cured in 30 days, the Attorney General must notify the State Treasurer, who is required to withhold and redistribute state shared revenues from the municipality to others who are not in violation until the violation is cured.

The State Treasurer does not have to withhold any amount of state shared revenues that are required for payment of debt services on bonds or other long-term obligations incurred before committing the violation. The city or town must certify to the Attorney General and State Treasurer that these monies meet the criteria.

MAY VIOLATE

The first S.B. 1487 complaint was filed on August 11, 2016 and resulted in a “may violate” determination. Rep. Paul Boyer (R-Phoenix) alleged that the Town of Snowflake was violating the law by issuing a special use permit for a medical marijuana dispensary. The Attorney General found the Town's approval of the Facilities Agreement with the dispensary may violate Arizona's Constitution, and the Town repealed its ordinance.

The most recognized S.B. 1487 case is State ex rel Brnovich v. City of Tucson, which has been the only litigated case involving the law. On October 12, 2016, Rep. Mark Finchem (R-Tucson) filed a complaint alleging that the City of Tucson's destruction of firearms violated a state law prohibiting firearm destruction. The Attorney General found Tucson's ordinance “may violate” state law and filed a special action in the Arizona Supreme Court. On August 17, 2017, the Supreme Court held that Tucson's ordinance violates state law because firearm destruction is a statewide concern, not a local matter protected by the City's charter. The Court upheld the Attorney General's investigative process and the “may violate” procedures of S.B.1487, although the bond requirement is likely unenforceable.

The final “may violate” determination was part of a split decision for the City of Tempe. On January 2, 2018, Rep. Vince Leach (R-Oro Valley) alleged that Tempe's use of government property lease excise tax (“GPLET”) relating to two ordinances violated A.R.S. § 42-6203's rate structure. The Attorney General found that one ordinance relating to Bank of the West “may violate” the law and on May 24, 2018, filed a special action against Tempe in the Arizona Supreme Court. However, the Attorney General and the City settled the matter the following month and the matter was closed.

VIOLATIONS

There have been two instances where the Attorney General has made a finding that the municipality's actions violate the law. First, on September 28, 2017, Sen. Warren Petersen (R-Gilbert) filed a complaint against Bisbee alleging that the city's plastic bag ban “violates” the A.R.S. § 9-500.38 restriction on a municipality regulating auxiliary containers. The Attorney General agreed, and Bisbee revised the ordinance to make the plastic bag ban voluntary.

On April 4, 2018, Rep. Darrin Mitchell (R-Goodyear) alleged that Sedona's business license ordinance for short-term/vacation rentals violated A.R.S. § 9-500.39 because it was treating short-term rentals differently than long-term rentals. The Attorney General found that Sedona's ordinance “violates” state law because municipalities are prohibited from adopting a long-term residential rental licensing requirement, which the Attorney General applied to the short-term rental statute. Sedona repealed its ordinance.

DOES NOT VIOLATE

Four complaints resulted in a “does not violate” determination within the past two years. As mentioned previously, Rep. Vince Leach filed a complaint against Tempe's two GPLET ordinances and the Attorney General found that the ordinance relating to the Graduate Hotel did not violate state law.

Policies adopted by employees of the City of Phoenix were the subjects of two separate complaints in the Fall of 2017. First, on September 14, 2017, Sen. John Kavanagh (R-Fountain Hills) filed a complaint alleging the police department's operational order relating to immigration violated A.R.S. § 11-1051. A second complaint filed on November 8, 2017 by Rep. Jay Lawrence (R-Scottsdale) alleged that the police department's transparency protocol conflicted with law enforcement privacy laws relating to disciplinary actions under A.R.S. § 38-1109. The Attorney General's investigation concluded that neither of these policies violated the law.

The Town of Patagonia faced a complaint by Rep. Vince Leach who alleged that the Town's ordinance limiting the number of trips commercial trucks in their community violated A.R.S. §§ 28-1103 and 28-1106. The Attorney General found no conflict between the ordinance and state law and concluded that A.R.S. § 9-240(B)(3) provides the Town with broad authority to regulate and control the streets in the Town and falls within the scope of the general authority granted to the Town.

WITHDRAWALS

The remaining two complaints against municipalities were not decided because the legislator withdrew the request. On August 17, 2017, Rep. Don Shooter R-Yuma) alleged that Somerton's ordinance requiring a church to obtain a conditional use permit to operate in a commercial zone (while not requiring the same from others) violated A.R.S. § 41-1493.03. The complaint was soon withdrawn, and the matter was closed once the City provided the Attorney General with documentation that the ordinance was in the process of being repealed as part of a resolution with the Department of Justice.

Additionally, on July 17, 2018, Sen. Judy Burges (R-Sun City West) filed a complaint against Sedona alleging that the City's agreements diverting a portion of its bed tax and providing property to the non-profit Chamber of Commerce violates the gift clause. Sedona responded that there is no violation because state law authorizes the bed tax to be diverted for specific purposes relating to tourism, including partnering with a non-profit organization. A decision was not issued because Sen. Burges withdrew the complaint the day prior to the report deadline. She has instead requested a new investigation under A.R.S. § 35-212, which does not contain the same timelines or penalties involving shared revenue.

CONCLUSION

Ten official complaints have been filed against cities and towns in the past two years. One complaint was filed against Mohave County, but was withdrawn and the matter closed. There are several challenges when handling a S.B. 1487 complaint and the most pressing issue is the compressed time frame to gather sufficient information to defend the city or town when state shared revenue is at risk. The municipality and the Attorney General are sharing the 30-day timeframe allotted in statute and depending on the complexity of the matter, it can require a significant amount of time. Additionally, all the complaints except one have been filed by legislators who do not represent the city or town.

During the City of Tucson litigation, the League provided legal support, including an amicus filing and general legal research from outside counsel. If your city or town is faced with a S.B. 1487 complaint, please encourage your attorney to contact the League's General Counsel for assistance navigating through the complaint process. The complaints and decisions can be found on the Attorney General's website.

 

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