            IN THE COURT OF APPEALS OF TENNESSEE
                        AT NASHVILLE


THRONEBERRY PROPERTIES,
a Partnership composed of
BUFORD C. THRONEBERRY, MARY
                                      )
                                      )
                                      )
                                                     FILED
B. THRONEBERRY, JAMES D.              )
THRONEBERRY, VICKI W.                 )              October 14, 1998
THRONEBERRY, JOHN B.                  )
THRONEBERRY, and ALLISON L.           )             Cecil W. Crowson
THRONEBERRY,                          )            Appellate Court Clerk
                                      )
        Plaintiffs/Appellees,         )
                                      )
VS.                                   )
                                      )
NANCY ALLEN, County                   )
Executive, Rutherford County          )
Tennessee; DAVID H. JONES,            )
Director, Rutherford County Building  )
Codes; BETTS BARBIER, Director,       )
Building and Codes, City of           )
Murfreesboro; DON SUNDQUIST,          )
Governor, State of Tennessee and      )
RILEY DARNELL, Secretary of State, )      Appeal No.
State of Tennessee,                   )   01-A-01-9710-CH-00612
                                      )
        Defendants/Appellees.         )   Rutherford Chancery
                                      )   No. 96CV-1181
and                                   )
                                      )
WALDRON & SONS, a Partnership         )
composed of Kevin Waldron, Roy        )
Waldron and Steven Waldron;           )
BEAVER CONSTRUCTION CO., INC., )
and INDIAN PARK, LTD.,                )
                                      )
        Plaintiffs/Appellants,        )
                                      )
VS.                                   )
                                      )
RUTHERFORD COUNTY,                    )
a Political Subdivision of the        )
State of Tennessee, TOW N OF          )
SMYRNA, TENNESSEE, a Municipal )
Corporation chartered by the State of )
Tennessee; CITY OF                    )
MURFREESBORO, a Municipal             )
Corporation chartered by the State of )
Tennessee; and CHARLES W.             )
BURSON, Attorney General for the      )
State of Tennessee,                   )
                                      )
        Defendants/Appellees.         )


   APPEALED FROM THE CHANCERY COURT OF RUTHERFORD COUNTY
                              AT MURFREESBORO


          THE HONORABLE ROBERT E. CORLEW, III, CHANCELLOR




GAIL P. PIGG
219 Second Avenue, North
Nashville, Tennessee 37201
      Attorney for Plaintiff/Appellee Throneberry Properties

DARRELL L. SCARLETT
MICHAEL A. MYERS
16 Public Square North
Murfreesboro, Tennessee 37130
      Attorneys for Defendant/Appellee Rutherford County

GRANVILLE S. R. BOULDIN
GRANVILLE S.R. BOULDIN, JR.
122 North Church Street
Murfreesboro, Tennessee 37130
      Attorneys for Plaintiffs/Appellants Waldron & Sons,
      Beaver Construction, Inc. and Indian Park, Ltd.

PHILLIP M. GEORGE
511 Enon Springs Road, East
Smyrna Tennessee 37167
      Attorney for Defendant/Appellee Town of Smyrna




                         REVERSED AND REMANDED




                                               BEN H. CANTRELL, JUDGE


CONCUR:
KOCH, J.
CAIN, J.




                               OPINION


                                       -2-
              Chapter 215 of the Public Acts of 1996, called the Rutherford County

Development Tax Act, imposed a tax on the privilege of residential land development

in Rutherford County. The Chancery Court of Rutherford County held that the Act did

not apply to multi-unit developments because they are classified as commercial or

industrial for ad valorem tax purposes by Art. II, § 28 of the Tennessee Constitution.

We reverse.



                                           I.



              The legislature passed Chapter 215 to help Rutherford County cope with

a residential building boom creating an extraordinary demand for public facilities and

services. Relevant portions of the Act provide:



                      SECTION 3. It is the intent and purpose of this act
              to impose a tax on new residential land development in
              Rutherford County, with a portion of the tax being payable
              prior to the recordation of any plat in the register of deeds
              office, and the balance being payable at the time of the
              issuance of a building permit, thus ensuring and requiring
              the persons responsible for new development share in the
              burdens of growth by paying their fair share for the costs
              of new and expanded public facilities made necessary by
              such development.

                      SECTION 4.        Engaging in the act of land
              development for residential purposes within Rutherford
              County, except as provided in Section 6, is declared to be
              a privilege upon which Rutherford County may levy a tax
              at the rate set forth in Section 7.

                                    *      *      *

                     SECTION 7. (a) For the exercise of the privilege
              described herein, Rutherford County imposes a tax on
              each lot of covered single-family development or, in the
              case of multi-family development on each unit proposed
              for human habitation, in an amount equal to seven
              hundred fifty dollars ($750) payable as follows:

                     (1) Three hundred seventy five dollars ($375) per
              lot or unit prior to the time the final plat of the
              development containing said lot or unit is recorded in the
              register of deeds office; and



                                          -3-
                      (2) Three hundred seventy five dollars ($375) per
              lot or unit at the time the building permit is issued and
              obtained;

                     (b) In the event a single or multi-family structure is
              placed upon property and a plat is not required by
              applicable provisions of the general law, then in that
              event, the seven hundred fifty dollar ($750) tax shall be
              paid, in its entirety, at the time the building permit is
              issued and obtained.

Section 6(6) specifically exempted non-residential development from the tax.



              Four developers filed suit in the Chancery Court of Rutherford County

challenging the Act’s application to apartment buildings. The challenge rested on

various state and federal constitutional grounds but primarily on Art. II § 28 of the

Tennessee Constitution. That section created three broad classifications of property

for ad valorem tax purposes: real property, tangible personal property, and intangible

personal property. Real property was further divided into four subclassifications:

                     (a) Public Utility Property, to be assessed at fifty-
              five (%) percent of its value;
                     (b) Industrial and Commercial Property, to be
              assessed at forty (40%) percent of its value;
                     (c) Residential Property, to be assessed at twenty-
              five (25%) percent of its value, provided that residential
              property containing two (2) or more rental units is hereby
              defined as industrial and commercial property; and
                     (d) Farm Property, to be assessed at twenty-five
              (25%) percent of its value. (Emphasis added.)

According to the plaintiffs, any parcel of property containing two or more rental units

is not residential property and the Rutherford County Development Tax Act does not

apply to such property.



              The chancery court sustained the plaintiffs’ challenge and ordered a

refund of the taxes that had been paid under protest. The court did not rule on the

other grounds of the plaintiffs’ suit.



                                           II.




                                          -4-
                 We are of the opinion that the chancellor erred in holding the Act

inapplicable to multi-unit parcels because Art. II, § 28 makes such parcels industrial

or commercial property for ad valorem tax purposes.1 The tax in question is not an

ad valorem tax but a tax on the privilege of engaging in the act of land development

for residential purposes. Sec. 4. “Residential land development” is defined as “the

development of any property for a dwelling unit or units, including, but not limited to,

single or multi-family housing.” Sec. 2(5). The tax is measured by the number of units

developed for human habitation, regardless of value.



                 A privilege tax is not directly related to any property but is imposed upon

persons or businesses engaged in doing some specific act. Tennessee Trailways,

Inc. v. Butler, 373 S.W.2d 201 (Tenn. 1963). In this case the act is residential land

development. The Act’s definition is not restricted by Art. II, § 28, which pertains to

the other general kind of taxation, taxation of property according to its value. See

Tennessee Trailways v. Butler. The plaintiffs in this case argue that Section 6(6),

which specifically exempts non-residential development, should be read as the

legislative intent to adopt the definition in Art. II, § 28. We think the Act read in its

entirety overwhelmingly shows otherwise.




                                                     III.



                  The plaintiffs also assert that the Rutherford County Development Tax

Act violates the equal protection provisions of the state constitution, Art. I, § 8, Art. XI,

§ 8, and the Fourteenth Amendment to the United States Constitution. We will treat

all the cited constitutional provisions as one, because “Article I Section 8 and Article

XI Section 8 of the Tennessee Constitution are the state’s expression of equal


        1
         Tenn. Code Ann. § 67 -5-501 a lso furthe rs the co nstitutional purpose by providing: All real
property which is used, or held for use, for dwelling pu rposes which co ntains two (2) or m ore renta l units
is hereby d efined an d shall be c lassified as “industrial an d com mer cial prope rty.”

                                                    -5-
protection corresponding to Section 1 of the Fourteenth Amendment of the United

States Constitution.” Tullahoma v. Bedford County, 938 S.W.2d 408, f. 2 at 411

(Tenn. 1997).



              Equal protection has several aspects under Article XI § 8 of the

Tennessee Constitution. The legislature has no power to “suspend any general law

for the benefit of any particular individual” or to “pass any law granting to any

individual or individuals, rights, privileges, immunity, or exemptions other than such

as may be, by the same law extended to any member of the community, who may be

able to bring himself within the provisions of such law. . . .”



              Under the prohibitions of Art. XI, § 8 the Supreme Court has invalidated

a privilege tax imposed on retail liquor dealers in Williamson County because no

reasonable basis was shown for the additional tax burden. Brentwood Liquors Corp.

of Williamson County v. Fox, 496 S.W.2d 454 (Tenn. 1973). See also Sandford v.

Pearson, 231 S.W.2d 336 (Tenn. 1950); Jones v. Haynes, 424 S.W.2d 197 (Tenn.

1968). Similarly, a solid waste dumping fee in Bedford County was invalidated

because it violated a uniform general law relating to solid waste disposal. City of

Tullahoma v. Bedford County, 938 S.W.2d 408 (Tenn. 1997). These cases show how

equal protection may be offended by (1) treating persons in the same category

differently without justification and (2) passing laws of local application that violate or

suspend the general law.



                In this case the plaintiffs rely primarily on the fact that residential

developers in Rutherford County are treated differently from developers in other parts

of the state, and that the Act singles out apartment buildings from other types of large

buildings. But the justification for the disparate treatment is found in the Act itself. It

recites that Rutherford County is the fastest growing county in the state and that the

County’s revenues are not able to keep up with the increased demand on services


                                           -6-
resulting from such growth. In the immediate future there will be a need for 34,000

new residential units requiring new and additional facilities at a cost exceeding

$110,000,000.



              The legislature has considerable latitude in determining what groups are

different and what groups are the same. State v. Smoky Mtn. Secrets, 937 S.W.2d

905 (Tenn. 1996). Legislative classifications are not arbitrary and capricious if the

classification has a reasonable basis and the legislature has the power to make the

classification of it is fairly debatable. Chattanooga v. Harris, 442 S.W.2d 602 (Tenn.

1969). We are satisfied that the Act in question does not violate the equal protection

provisions of the state or federal constitutions.



                                           IV.



              The plaintiffs also argue that the Act is invalid because it imposes double

taxation on the same taxable privilege. Reference is made in the pleadings to the

Rutherford County Adequate Facilities Tax Act, Ch. 212, Private Acts of 1996. That

Act imposed a tax of $.40 per gross square foot on new residential development, to

be paid at the time the builder applied for a building permit. The justification for the

tax was essentially the same as for the tax under consideration here and the Act

provided that it was to be imposed “in addition to all other taxes, fees, assessments,

or other revenue raising or land development regulatory measures.”



              Assuming that both private acts are privilege taxes on the same

privilege, our constitution does not prohibit the legislature from imposing double

taxation on the same taxable privilege if it is clear that such was the legislative intent.

Oliver v. King, 612 S.W.2d 152 (Tenn. 1981). In this case both acts were passed at

the same legislative session and both provided that the tax was in addition to all other

taxes. (The language in the two acts on this subject is identical.) This expression is


                                           -7-
sufficient to show the legislative intent to impose both taxes, regardless of the overlap.

See Stalcup v. City of Gatlinburg, 577 S.W.2d 439 (Tenn. 1978).



                                            V.



              Finally, the plaintiffs alleged that the Act constitutes a taking without just

compensation as prohibited in Art. I, § 21 of the Tennessee Constitution. We

disagree. “No man’s property is taken, but a tax imposed.” L & N Railroad v. County

Court, 33 Tenn. 636 (1854). That distinction was applied by our Supreme Court in a

case attacking an act authorizing Cumberland County to impose a privilege tax on the

occupancy of hotels and motels. Pete v. Cumberland County, 621 S.W.2d 731 (Tenn.

1981). We think the same distinction applies here.



              The judgment of the court below is reversed and the challenges to the

Rutherford County Development Tax Act, Chapter 215, Private Acts of 1996, are

dismissed. All other issues are rendered moot by our decision herein. Remand the

cause to the Chancery Court of Rutherford County. Tax the costs on appeal equally

to Waldron & Sons, Throneberry Properties, Beaver Construction, Inc. and Indian

Park, Ltd.




                                                   ____________________________
                                                   BEN H. CANTRELL, JUDGE



CONCUR:




_____________________________
WILLIAM C. KOCH, JR., JUDGE




                                           -8-
_____________________________
WILLIAM B. CAIN, JUDGE




                                -9-
