                 IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                   January 5, 2005 Session

    RAYMOND P. WHITE, ET AL. v. HICKMAN COUNTY, TENNESSEE

                    Appeal from the Chancery Court for Hickman County
                         No. 0015226    Timothy L. Easter, Judge



                     No. M2004-00232-COA-R3-CV - Filed May 10, 2005


In these consolidated cases, certain property owners in Hickman County, Tennessee, challenged the
way Hickman County imposed and administered solid waste disposal fees, asserting the improper
use of disposal fees to retire debt incurred in closing a previous landfill and further asserting
collection of fees beyond what was necessary for the operation of the solid waste department. Judge
R.E. Lee Davies granted a partial summary judgment to the County, and following trial on the merits
on the remaining issue, Judge Timothy Easter rendered judgment for Defendant, Hickman County.
We affirm the actions of both of the trial judges.

     Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

WILLIAM B. CAIN , J., delivered the opinion of the court, in which WILLIAM C. KOCH , JR., P.J., M.S.,
and FRANK G. CLEMENT , JR., J., joined.

Phillip L. Davidson, Nashville, Tennessee, for the appellant, Raymond P. White.

Peggy L. Tolson, Catherine Schmidt, Brentwood, Tennessee, for the appellee, Hickman County,
Tennessee.

                                            OPINION

       Plaintiffs are residents of Hickman County, Tennessee, and brought this suit seeking relief
from payment of disposal fees imposed by the County for solid waste disposal.

        By chapter 451 of the Public Acts of 1991, Tennessee adopted the Solid Waste Management
Act. This Act was codified as Tennessee Code Annotated Title 68, parts 8 and 9. Pursuant to
Tennessee Code Annotated section 68-9-211, the county legislative body of Hickman County, on
April 18, 1994, declared Hickman County to be a solid waste region and undertook by committee
to establish a 10-year Municipal Solid Waste Management Plan. Following the development of such
plan, the Hickman County legislative body, on September 19, 1994, adopted Resolution No. 9456
implementing the 10-year Municipal Solid Waste Management Plan. On October 16, 1995, the
Hickman County legislative body adopted Resolution No. 9570, which, pursuant to Tennessee Code
Annotated section 68-211-835, imposed a fee schedule for solid waste disposal services. This
Resolution provided in pertinent part:

              SECTION 1: Pursuant to § 68-211-835, Tennessee Code Annotated, the
       following fee schedule for Municipal Solid Waste Disposal in Hickman County is
       hereby adopted:

              RESIDENTIAL – $ 90.00 per dwelling unit per year
              BUSINESS    – $180.00 per business unit per year
              INDUSTRIAL – $ 10.00 per ton over disposal cost

               SECTION 2: RESIDENTIAL and BUSINESS MSW FEES shall be billed
       semi-annually to the owner of the residential or business unit. Residential and
       Business billing, including home-based businesses, shall be determined by how the
       property is listed in the Hickman County Assessor’s Office. Owners of multi-unit
       residential property shall be billed for each unit. The Hickman County Finance office
       shall be responsible for billing and collecting such fees.

              ....

              SECTION 7: Elderly and disabled property owners qualifying for property
       tax reductions, according to records in the Hickman County Trustee’s Office, shall
       also qualify for a like deduction in MSW Fees.

              ....

               SECTION 9: The fees generated by this resolution shall be deposited into the
       Hickman County Solid Waste Management Fund and shall be used only for the
       purpose for which they were collected. The amount of fees charged may be adjusted
       as required, but shall at all times bear a reasonable relationship to the cost of
       providing solid waste disposal. All residents of the county shall have equat (sic)
       access to the services provided.

      On May 19, 1997, the Hickman County legislative body further amended Resolution No.
9570 by the adoption of Resolution No. 9724 providing in pertinent part:

             SECTION 1: The following terms which are used throughout the Hickman
       County Solid Waste program are hereby defined as follows:

              RESIDENTIAL            --      Any dwelling unit constructed for human
                                             habitation, either in use or intended for use
                                             during the current billing cycle.


                                               -2-
       NON-PERMANENT --                Any dwelling unit used only for recreation
                                       purposes or as a part-time residence (hunting
                                       cabins, etc.)

       COMMERCIAL              –       Any for-profit, non-profit or not-for-profit
                                       business and/or organization that buys and/or
                                       sells as retail or wholesale, or is service
                                       related, including assembly and or
                                       construction. Commercial customers shall be
                                       classified into one of five waste generators.

       INDUSTRIAL              --      Any business whose main purpose is
                                       manufacturing or the production of a specific
                                       product or products, and any entity whose
                                       waste volume fluctuates and is deemed to be
                                       out of compliance with current Commercial
                                       Classifications. Waste shall be delivered
                                       directly to the Hickman County Solid Waste
                                       Transfer Station where it will be weighed and
                                       billed through a pre-approved charge account.

        SECTION 2: Sections 1, 2, and 3 of Resolution No. 9570, with respect to
Business or Commercial accounts and the fee charged to them is hereby changed to
the following five classifications and fees:

        Class A – In-Home Business (residential fee exempt)        $125.00 annually
        Class B – Extra Small (up to 2 cu.yds per week             $ 90.00 annually
        Class C – Small (above 2 and up to 5 cu.yds. per           $150.00 annually
        week)
        Class D – Medium (above 5 and up to 10 cu.yds.per          $300.00 annually
        week
        Class E – Large (above 10 cu.yds. per week)                $600.00 annually

The above fees will be billed annually on the first day of July of each year and shall
be due and payable by September 30 of each year. This change shall become
effective upon July 1, 1997, and customers shall be credited for any payment made
prior to this change with respect to the current billing cycle.

        SECTION 3: Section 7 of Resolution No. 9570 is hereby further amended
to include a fifty percent (50%) exemption for low income households based upon


                                         -3-
       the most current poverty guideline index as prepared by the Federal government.
       Persons desiring to take advantage of this exemption shall furnish a copy of the
       household most recent IRS 1040 statement. Additionally, there is hereby authorized
       a fifty percent (50%) exemption for hunting cabins and second homes (cabins and
       homes which are used only for part-time recreational purposes). The aforementioned
       exemptions shall be in effect retroactively to residential billing for the first half of the
       calendar year 1997. Also, retroactively effective to July 1, 1996, all churches are
       hereby exempt from solid waste fees unless they have a daily operation or program
       (day school, etc.). In such cases, they shall be billed according to the current
       Commercial billing system.

         Contemporaneously with Resolution No. 9570, the county legislative body, in October of
1995, approved Resolution Nos. 9571 and 9572 authorizing capital outlay notes in the respective
amounts of $900,000 and $700,000. The $900,000 note was issued for the purpose of financing the
cost of final closure of the existing landfill and to establish a reserve for post-closure care of that
facility. The $700,000 note was issued for the purpose of constructing a transfer station and two (2)
convenience centers, together with building roads, grading and purchasing equipment for the solid
waste disposal department. Both of these notes contained language mandated by Tennessee Code
Annotated section 9-21-603, same being:

       That, the Notes shall be direct general obligations of Hickman County and Hickman
       County hereby pledges its taxing power as to all taxable property in Hickman County
       for the purpose of providing funds for the payment of principal and interest on the
       Notes. The Legislative Body of Hickman County hereby authorizes the levy and
       collection of a special tax on all taxable property of Hickman County to create a
       sinking fund to retire the Notes with interest as they mature in an amount necessary
       for that purpose.

       There were seven original plaintiffs, five of whom were owners of business property in
Hickman County and two of whom were owners of residential property in Hickman County. The
lawsuit, in a nutshell, is stated in the Complaint:

              3.1. That the fee set forth in the Resolution collects more funds than are
       required to meet services.

               3.2.    That the fee is not being levied in a uniform, non-discriminatory
       manner. Some owners of property described in the Resolution are not charged.
       Some residents are being charged, but receive no services. Others are not charged
       equally such as elderly and disabled persons, business on property where the
       taxpayers homes are also located are charged unequally in relation to taxpayers who
       run a small business out of their homes. Some industrial users pay less of a fee than
       business and residential property owners.



                                                   -4-
             3.3. The fee is not equally levied in that some property owners are granted
       exemptions by an arbitrary method known only to County officials.

              3.4. The disposal fee heretofore set forth and described in paragraph 2.6
       (Exhibit A) violates the Tennessee Solid Waste Management Act, Tenn. Code Ann.
       68-211-101, et seq., in that it collects funds not solely used for solid waste
       management purposes and is not uniformly assessed against all Hickman County
       residents.

              WHEREFORE, the plaintiffs, demand the following relief.

              1. That this Court grant them a hearing at which time the issues raised in
       this complaint may be fully adjudicated.

              2. That this court Declare the Resolution (Exhibit A) to be in violation of
       Tennessee Code Ann. §§ 68-24-101, et seq., or in the alternate, that the County has
       exceeded its legal authority by its continued implementation of the Resolution.

              3. That the Court order that the County reimburse all county citizens who
       have paid fees set forth by the Resolution they have paid to the County.

              4.    That the Court grant such other and further relief as it deems proper.

       After a considerable amount of discovery, the case was heard on November 20, 2002, before
the Honorable R.E. Lee Davies, circuit judge, on Defendant’s Motion for Summary Judgment. This
hearing resulted in an Order of December 17, 2002, providing in pertinent part:

              This case presents three issues for determination by the Court.

              1. Whether the fees charged by Defendants for the providing of solid waste
       disposal services bears a reasonable relationship to the costs of providing said
       services;
              2. Whether the fees collected by Defendant’s solid waste disposal fund are
       properly segregated and only used for solid waste purposes; and
              3. Whether the exemption process utilized by the County for the payment of
       solid waste disposal services is uniformly applied under the equal protection clause.

               With regard to the first issue, the Court finds that summary judgment is
       proper. T.C.A. § 68-211-835(g)(1) requires that the fees charged bear a reasonable
       relationship to the cost of providing solid waste services. This does not require that
       the amount charged be identified with mathematical certainty. The undisputed
       testimony of the State Auditor who is responsible for auditing the Fund reveals that
       the Fund is losing money. Thus, no unreasonable relationship between fees and


                                                -5-
       services exists as the Fund is not making a profit. The Auditor further testified that
       this Fund is required to be maintained as a Enterprise Fund and the accrual method
       of accounting is the proper method for evaluating the profitability of the this (sic)
       fund. Plaintiffs have offered no expert proof to contradict these facts, therefore,
       summary judgment on this issue is GRANTED.

               The statute requires fees to be segregated from the general fund and used only
       for the purpose collected. The funds generated are to be used to establish and
       maintain solid waste collection and disposal services. With regard to this second
       issue, as a matter of law, this Court finds that the capital outlay notes in the amount
       of $700,000.00 and $900,000.00 are start up costs for the Fund and are properly
       payable from this Fund. However, disputed issues of fact remain regarding whether
       funds transferred from this Solid Waste Fund to the County’s General Fund are
       properly being used to retire these notes. Moreover, there remains questions with
       regard to the authority of the County to make repayment of the notes from the Solid
       Waste Disposal Fund based upon the language of Resolution Nos. 9571 and 9572
       authorizing the County to incur the notes. Summary judgment is therefore DENIED
       with regard to these issues at this time.

               Finally, the Court finds that Plaintiffs have no standing to complain about
       how property owners other than themselves may have been mistreated in relationship
       to the exemption process established by the County for payment of solid waste
       disposal fees. However, the Plaintiffs may be able to show that others are being
       treated more favorably than Plaintiffs and, if so, they will have met their prima facie
       burden of proof. The Court finds that, with the passage of Resolution No. 9724
       amending the original Resolution No. 9570, the current Resolution, as written,
       containing exemptions is not arbitrary and has a rational basis in fact and has
       corrected any prior inequities. Defendant’s Motion for Summary Judgment with
       regard to this third issued is, therefore, DENIED at this time, but Plaintiffs’ proof is
       limited to post-amendment examples of unequal treatment, if any.

         The first question to be resolved is whether or not the grant of summary judgment by Judge
Davies is correct in holding that the fees charged by Defendant for the providing of solid waste
disposal services bears a reasonable relationship to the cost of providing said services. The answer
to this question depends on whether or not we are concerned with a cash basis accounting method
as opposed to an accrual accounting method. The Supreme Court has held:

       The Solid Waste Management Act expressly regulates the imposition, collection, and
       use of fees and surcharges by the state and local governments; it limits the use of
       proceeds collected by local governments; and it requires that the comprehensive plan
       for the management of solid waste include a uniform accounting system developed
       by the State comptroller.



                                                 -6-
City of Tullahoma v. Bedford County, 938 S.W.2d 408, 413-14 (Tenn.1997).

       Tennessee Code Annotated section 68-211-874 (2000) provides:

          68-211-874. Accounting for financial activities — Funds — Uniform solid
       waste financial accounting system — Development — Approval — Requirement
       for state funds. — (a) Each county, solid waste authority and municipality shall
       account for financial activities related to the management of solid waste in either a
       special revenue fund or an enterprise fund established expressly for that purpose.
       Any county, solid waste authority or municipality that operates a landfill and/or
       incinerator shall account for financial activities related specifically to that landfill
       and/or incinerator in an enterprise fund. Each county, solid waste authority and
       municipality shall use a uniform solid waste financial accounting system and chart
       of accounts developed by the comptroller of the treasury.
           (b) The comptroller of the treasury is directed to develop a uniform financial
       accounting system conforming to generally accepted accounting principles for use as
       required by this section.
            (c) Such uniform accounting system shall be subject to the approval of the
       commissioner of finance and administration. Upon such approval, each county shall
       establish and maintain the uniform solid waste financial accounting system.
         (d) No state funds for solid waste management shall be released to a county, solid
       waste authority or municipality unless financial activities related to the management
       of solid waste are accounted for in either a special revenue fund or an enterprise fund
       established solely for that purpose. No state funds for solid waste management shall
       be released to a county, solid waste authority or municipality that operates a landfill
       and/or incinerator unless financial activities related to that landfill and/or incinerator
       are accounted for in an enterprise fund.

         The documentary evidence before the Court, using a cash flow analysis, creates at least a
material question of fact as to whether or not the fees generated are excessive. The undisputed
expert proof, however, establishes that the solid waste management fund in Hickman County is an
“enterprise fund” as defined in section 68-211-874 of the Code and as developed by the comptroller
of the treasury pursuant to that same statute.

        The expert testimony offered by Jerry Durham, state auditor employed by the comptroller of
the treasury, established that the County was required by state law to begin operating the solid waste
disposal system under “an enterprise fund,” which requires an accrual basis of accounting rather than
a cash basis. At the start of the operation, the County contributed to the enterprise fund all
equipment, land and buildings, together with related property, which contributions form
intergovernmental contributed capital. Long-term obligations must be provided for under the accrual
method and taken into consideration in determining the financial performance of the enterprise fund.
Mr. Durham testified:



                                                  -7-
       Q             Overall, did you find that the fund was, from inception, was making
       money or losing money?

       A               It was typically losing money.

       Q                 And that’s what accounts for even as of the last completed audit
       period, a nearly three-quarter of a million dollar retained earnings?

       A              That and, of course, the fact that everything is recorded on the accrual
       basis of accounting, which requires your post closure care cost to be recorded now
       even though you’re going to be paying for them over 30 years. And that requires the
       booking of that $900,000 note, even though you’re going to be paying for that over
       whatever the life of the loan would be. So, when you look at your assets compared
       to your liabilities, and because you’ve booked these two large liabilities, it makes
       your deficit look worse than you might consider it to be. But it is a true deficit based
       upon generally accepted accounting principles.

        The familiar standard of appellate review relative to a grant of summary judgment requires
that the record before this Court affirmatively disclose that there is no genuine issue of material fact
warranting trial. The moving party has the burden of showing the court that there are no disputed
material facts and that the moving party is entitled to judgment as a matter of law. Byrd v. Hall, 847
S.W.2d 208 (Tenn.1993). This expert testimony being undisputed, the results of a cash basis
accounting would be immaterial, and summary judgment was properly granted.

        Appellants next complain of the method used by the County for the payback of the two
capital outlay notes by which money was procured to close the existing Hickman County Landfill
and to construct new landfill facilities.

        At the outset, these two capital outlay notes were approved by the Hickman County
legislative body and forwarded to the comptroller of the treasury on October 18, 1995. The letter
from Hickman County Executive Steve Gregory to the director of local finance of the office of the
comptroller provided:

       Enclosed you will find two Capital Outlay Notes recently approved by the Hickman
       County Legislative Body. Both have to do with solid waste, but were separated
       because they will be utilized at different times and will be paid back by different
       means.

       The first, Resolution No. 9571, is for an amount not to exceed $900,000. This is for
       closure of current cells at the Hickman County Landfill, and we do not plan to
       execute this note until next spring. The note will be retired through the General Debt
       Service.



                                                  -8-
       The second, Resolution No. 9572, is for and (sic) amount not to exceed $700,000 and
       will be executed as soon as possible. The note is for construction of landfill facilities
       and will be retired through user fees generated by the Hickman County Solid Waste
       Department.

       Regardless of the source of funds contemplated by the County legislative body to be used for
the payback of these two capital outlay notes, state law found in section 9-21-603 of the Code
requires that both notes be general obligations of Hickman County and that Hickman County
“pledges its taxing power as to all taxable property in Hickman County for the purpose of providing
funds for the payment of principal and interest on the notes.”

        The problem lies with the insistence of Plaintiffs that the method contemplated for repayment
of the notes by the County legislative body had to, in fact, be put into place and followed in the
future. The trial court held:

       21. Initially, the $900,000 note was to be retired through the County’s General Debt
           Service Fund, and the $700,000 note was to be retired from income generated
           by the Solid Waste Disposal Fund.

       22. After the recommendation of the state auditor, the County began paying the
           $900,000 note from the Solid Waste Disposal Fund and the $700,000 note from
           the General Debt Service Fund.

        How the County chose to pay back the money has no bearing on the fact that both of the
notes, by their terms and by statutory mandate, constituted general obligations of the County. Since
the proceeds of both notes were contributed by the County to the enterprise fund, as clearly reflected
in the Enterprise Fund Audit Report of June 30, 1996, the future payback of these notes plus interest
had to be attributed to the enterprise fund under the accrual method of accounting. This is the
undisputed testimony of State Auditor Jerry Durham. He testified, while reviewing the June 30,
1997, audit of the enterprise fund:

       Q               Total expenses 910,515?

       A               Right.

       Q               Did this 910,515 include post closure care costs?

       A               Yes, it did.

       Q                Can you explain, and we’re going to see this several times in some
       of these audits, so we might as well go ahead and explain this now. What is, to your
       understanding, is post closure care cost here?



                                                 -9-
A               Post closure care costs are a percentage of a figure that is calculated
by an engineer of how much it’s going to cost to close and then to maintain closure
of a land fill for a period of 30 years. So this number on Page 110 represents a
percent of the capacity of the land fill used, multiplied times an estimated number of
those costs.

Q                 To a layman though, this money, this $239,000, is not actual, real
dollars that the county paid out in that year, right?

A                 That’s right. It’s an estimated number based on an engineer, what he’s
told us.

Q               Was there also a charge in here for building a transfer plant? It may
not be in this year. I’m just asking.

A               No. Because of the nature of the enterprise fund, it’s operated on an
accrual basis, so that would have been booked as an asset. And any number that we
would have used to record the cost of a building would be recorded as an asset and
not in the expenditures.

           ....

Q             Let’s see if I can go over to the – – to any findings, and I think they
would be on 128. Is that the – – basically the only finding that you made here in this
year?

A                   Yes.

Q              Now, let’s talk about this finding if I could. Did you find that the
problems that you had noted in the year before, in terms of – – had been corrected?

A               Yes, they were able to provide us with a detailed listing of accounts
receivable in this audit year.

Q                  Now, explain to me your finding on Section B there on 128?

A                  Let me read it just briefly.

Q                  Sure. Take your time.

A              Basically what I’m saying is there was a note. And that note, which
was payable to a bank, had not been recorded on the balance sheet of this fund. And
since it’s an enterprise fund operating under a full accrual basis of accounting, it


                                             -10-
should have been. They also charged interest to this fund, but they did not charge the
correct amount of interest to this fund. And the difference was $18,939. And so we
showed that amount as being due to, I believe, the debt service fund.

Q              Now, this was a note to build the land fill is that – – not the land fill,
but the transfer?

A               No. This $900,000 note, if I recall correctly, was a note to actually
close the land fill, put the cover on it basically, and then to set up a reserve for any
post closure care costs that might have been incurred after the land fill was closed.
I believe we set up something like $262,000 worth of reserve at this point.

Q                 Was this money supposed to be taken out of solid waste disposal
fund?

A             That’s – – it really didn’t have to be at first. The money was paid out
of the debt service fund. But then by resolution of the county commission, they
decided to put this $900,000 debt into the fund and allow the fund to pay the
principle and interest on that debt.

Q               Originally it was not supposed to be done that way?

A               Actually, you can’t say it wasn’t supposed to be done that way. It
would be correct to do it either way. It would have been correct, in terms of
accounting, to have placed it in the debt service fund or to have placed it in the
enterprise fund. In my judgment is that the most appropriate accounting for this
900,000 is in the land fill fund, because it should operate as an enterprise. It should
pay its own debt.

Q              Now, what about the transfer station, was that also to be paid out of
solid waste disposal?

A               That money was the $700,000 note, and they chose not to pay that out
of the – – out of the land fill fund. That’s being paid through the general debt service
fund of the county.

Q              So if money had been taken out the (sic) of the solid waste disposal
account to pay for that, that would have been improper?

A               No, sir, it wouldn’t.




                                          -11-
        Q                   Well, it would have gone against what the county commission
        originally determined was going to be the method of payment for that land – – for
        that transfer station, would it not?

                        MR. SCHWALB: Object to the form of the question.

                         THE WITNESS: As I say, they could have done it either way they
        wanted to. At first, I think it was – – now, this is only my opinion, if you understand.
        I think they didn’t do a lot of thinking about it. They borrowed the money. They
        built the transfer station. They closed the land fill. And sort of as an afterthought
        they said, well, why shouldn’t the land fill pay for at least one of these notes; I mean
        if one of these notes has gone to either build the transfer station or operate the land
        fill. But they chose to put in the enterprise fund the one that did – – that dealt with
        the closure of the land fill specifically. And I think if you’re going to choose one of
        the two, that would be the most appropriate one, because it strictly dealt with the land
        fill.

        It is clear that under the accrual method of accounting, the payback of the entire $1,600,000
debt, evidenced by the two notes, was correctly chargeable to the enterprise fund, regardless of
whether the payback actually occurred from the enterprise fund or from other general funds of the
County. Nothing in Tennessee Code Annotated section 68-211-835(g)(1) or in any other statute
provides that the enterprise fund be the sole source to be used by the County in repaying these capital
outlay notes. The statute only provides that funds generated in the form of solid waste fees may only
be used to defray the costs of solid waste disposal services.

        Every dime of the $1,600,000 evidenced by the two capital outlay notes was transferred by
the County to the enterprise fund in 1996. If one could relieve the enterprise fund of the obligation
of repaying these notes with interest, the fees collected would be excessive. However, the payback
of the notes and interest is clearly contemplated by the accrual method of accounting to be charged
against the enterprise fund, and the result is a continuing deficit in that fund. The fact that portions
of the payback are made from the general funds of the County is not a material consideration since
both of the notes are general obligations of the County anyway. As held by the trial court, there is
no proof that solid waste disposal fees have been used for any purpose other than solid waste
disposal and management. Here, the inquiry comes to an end.

        The remaining issue posed by Plaintiffs involves their assertion of unequal treatment of
themselves in relation to the exemption process relative to solid waste disposal fees and the further
assertion that the exemption process is arbitrary and capricious. In this respect, it is well to note that
only three of the plaintiffs testified in the case or presented any evidence to support any allegation
of unequal treatment.

        In its findings of fact, the trial court stated in pertinent part:



                                                   -12-
2. . . . Elderly and disabled residents who qualified for a reduction in property taxes
   qualified for a like reduction for payment of the disposal fee.

3. On May 19, 1997 the County passed Resolution No. 9724 to amend Resolution
   No. 9570 and clarify the classification system and provide for additional
   exemptions. Resolution No. 9724 established more specific definitions for the
   previous three classifications and added a fourth classification, Non-Permanent.
   It also provided a 50% exemption for low-income households, owners of hunting
   cabins or second homes used for recreational purposes, and churches which have
   no daily operations or programs. The basic fee and exemption structure set forth
   in Resolution Nos. 9570 & 9724 remain in effect today. (Trial Exhibit 3)

4. Both Resolutions required payment for residential dwelling units. If the property
   did not contain a habitable dwelling, no payment was required. If the property
   contained a habitable dwelling, but the dwelling would not be used during the
   year, no payment was required. It was the property owner’s responsibility to
   pursue the exemptions with the Solid Waste Department.

5. Resolution No. 9570 authorizes the Solid Waste Committee to handle disputes
   with regard to matters not specifically addressed in the Resolution, including
   billing.

6. The testimony is undisputed that the Solid Waste Committee has the power to
   grant exemptions from payment of the disposal fee.

7. The committee delegated this duty in part to the Director of Solid Waste and the
   billing clerks in the solid waste office. When the exemption requested clearly fit
   with an exemption from the Resolutions, this office could grant the exemption.
   If the solid waste office refused to grant an exemption, the individual was entitled
   to come before the Solid Waste Committee and request the exemption. The
   committee would then vote on whether an exemption should be granted.

8. Resolution No. 9570 provided little guidance to the committee as to when to
   grant exemptions. The committee recommended changes to Resolution No. 9570
   which were ultimately incorporated into Resolution No. 9724.

9. Only Plaintiffs Maxie White (White), Charles Holt (Holt) and James Moss
   (Moss) appeared at trial and testified in this matter regarding their experience
   with the exemption process and/or the disposal fee assessed to them for their
   residence and/or business. No other named Plaintiff testified or otherwise
   produced any proof of the treatment they received with regard to their particular
   circumstances.



                                         -13-
10. Holt, operator of a small business, filed for an exemption based upon the fact that
    he was not producing enough garbage to justify the fee. His request for an
    exemption was denied. White, an operator of an in-home woodwork business,
    applied for an exemption for the same reason and it was granted. Moss, an owner
    and landlord for some fifteen (15) rental dwellings, filed for an exemption
    because he believed the fee was unfair. He complains that he should not have to
    pay fees for every residential property he owns because he rents them out. His
    request for an exemption was denied. Moss alleged that the Keg County Cowboy
    Club was granted an exemption and he should be treated similarly. The Keg
    County Cowboy Club is a recreational campground and not a residential property.

11. For the initial billing in 1996 (the first time the fee was billed), White was
    assessed the $90 fee for her residence and $180 for her business. White testified
    that she paid the fee for her residence and went to the Committee and requested
    an exemption from payment for her in-home business because she did not
    generate any waste from her business. This exemption was granted. Thereafter
    this lawsuit was filed and she has not requested any further exemptions for her
    home or business and she has not paid any fee assessed to her for her home or
    business. In particular, White has not paid the assessed fees or requested any
    type of exemption since the enactment of Resolution 9724. Her basic contention
    is that the fees charged to her are excessive in proportion to the waste she
    generates.

12. White could not specifically identify any person or individual similarly situated
    to her who received treatment more favorable than she since the enactment of
    Resolution 9724.

13. For the initial billing in 1996, Holt was assessed a fee for his residence in the
    amount of $90 and $180 for his business. Holt requested that he be exempted
    because “I did not produce enough garbage for the fee.” The requested
    exemption was denied. Holt admitted that his business generated waste, he
    simply thinks that the fee of $180 was excessive in proportion to the waste he
    personally generated. Holt testified that he believes that the residential fee is also
    excessive based upon the amount of trash generated by him and he believes that
    the County should, instead, implement a tipping fee so that citizens would only
    pay for what they generate/use. Like White, Holt has not paid any fee assessed
    to his residence or business since the filing of this lawsuit. Nor has he applied
    for any exemption since 1996.

14. Moss has never paid any fee assessed to him since its implementation and has
    never applied to the Committee for an exemption.




                                          -14-
       Assertions that the solid waste disposal fees are improper because they are not keyed to a
proportional use of the solid waste facilities provide no basis for relief. It has been held that a county
can legally impose a monthly fee on all of its residents for solid waste disposal services regardless
of whether or not the services are actually utilized. Horton v. Carroll County, 968 S.W.2d 841
(Tenn.Ct.App. 1997).

        As to the issue of the alleged arbitrary and capricious nature of the exemption process, the
trial court held:

             The last issue for this Court to determine is whether the exemption process
        utilized by the County is arbitrary and capricious. The County is authorized by
        statute it (sic) impose the solid waste disposal fee on all residence (sic). The manner
        by which this fee was being imposed bears a reasonable relation to a proper
        legislative purpose. Newton v. Cox, 878 S.W.2d 105 (Tenn. 1994). Further, the
        statutory procedure, as it was imposed, was neither arbitrary nor discriminatory and
        comports with substantive due process. This Court finds that there is no evidence of
        any discriminatory purpose for the classification system and that the exemptions have
        not been granted in an arbitrary manner.

            Plaintiffs presented two lists summarizing exemptions granted by the County.
        (Trial Exhibits 15 & 16). Both lists appear to contain inconsistencies regarding the
        granting of exemptions. Dwight Sullivan, former chairman of the Solid Waste
        Committee, testified regarding the supposed inconsistencies. Mr. Sullivan explained
        that even though two people on the list claimed the same exemption (disability, fixed
        income, etc.), the exemption was only granted to those who actually established that
        they met the criteria. One way to establish this was to demonstrate to the committee
        that they qualified for the property tax reduction. These lists do not adequately
        provide the Court with evidence to conclude that the conduct of the County was
        arbitrary and capricious.

            White and Holt provided the only conclusive evidence of inconsistent treatment.
        White requested and was granted an exemption in 1996 for her in-home business.
        She was assessed a fee for her home ($90) and her in-home business ($180). The
        Solid Waste Committee found that her in-home business was not generating enough
        waste to justify the $180 fee in addition to the $90 she was already paying for the
        same building. She has not applied for another exemption since 1996. Holt
        requested and was denied exemptions in 1996. He was also assessed a fee for his
        home ($90) and his in-home business ($180). He has not applied for another
        exemption since 1996. In response to similar situations, the County Commission
        passed Resolution 9724 that amended the amount residents would have to pay for
        their residences and in-home businesses to $135 total. Both have been assessed the
        same fee since Resolution 9724 came into effect in 1997. This isolated incident is



                                                  -15-
        not enough to convince the Court that the entire system of exemptions has been
        implemented in an arbitrary and capricious manner.

Plaintiffs simply offered no proof to support their assertions that the actions of County officials, in
either granting or withholding exemptions, has been arbitrary or capricious.

        Plaintiffs predicate almost their entire case on an assertion that, on a revenue versus
expenditure cash analysis, solid waste fee collections have been excessive. They offer no proof that
such a method of accounting is either mandated by law or proper when dealing with a statutorily
mandated enterprise fund. The undisputed expert testimony is that an accrual method of accounting
is mandated when dealing with an enterprise fund. It is further clear that the two capital outlay notes
totaling $1,600,000 are mandated by statute to be general obligations of the County and that
repayment of the same may be made from any funds available to the County. The only statutory
mandate as to the use of the fees generated by the solid waste disposal program is that they must be
used for solid waste disposal purposes. When the accrual method of accounting is used and both the
proceeds of the capital outlay notes and the scheduled payback with interest of the notes is properly
attributed to the enterprise fund, that fund is operating at a deficit. No proof is offered by Plaintiffs
that would support a finding that the exemptions authorized by the statute are either unauthorized
or applied in an arbitrary and capricious manner.

       The judgment of the trial court is in all respects affirmed, and costs of the appeal are assessed
to Appellants.


                                                         ___________________________________
                                                         WILLIAM B. CAIN, JUDGE




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