Municipal Tow Fees

Recent Guidance from Illinois Courts May Limit the Amount that May be Collected

By Katherine Swise

The Illinois Vehicle Code authorizes municipalities to impose an administrative fee for the processing and release of lawfully impounded vehicles.  However, a recent Illinois appellate court decision has brought into question the amount of such fees that can lawfully be imposed.  As a result, municipalities should review any existing ordinance imposing such a fee to ensure that the fees can be justified under the Vehicle Code and in accordance with recent guidance from the courts.

The Vehicle Code authorizes all municipalities to pass an ordinance providing “procedures for the release of properly impounded vehicles and for the imposition of a reasonable administrative fee related to its administrative and processing costs associated with the investigation, arrest, and detention of an offender or the removal, impoundment, storage, and release of the vehicle.”  625 ILCS 5/11-208.7(a) (emphasis added).  This fee may be imposed for vehicles that have been lawfully impounded for those specific violations listed in the statute, and is imposed against the registered owner of the vehicle or such owner’s agent.  The Vehicle Code does not set a maximum fee that may be imposed by a municipality for the release of impounded vehicles; it merely provides that the fee be “reasonable” and “related to” the municipality’s administrative costs associated with the tow and impound.  However, in the case of Carter v. City of Alton, decided in May of 2015 (Carter v. City of Alton, 2015 IL App (5th) 130544), the Illinois Appellate Court set forth  guidelines for determining whether a fee imposed by a municipality is reasonable.

In Carter, the court addressed whether the dismissal of challenges to the administrative tow fee of four separate municipalities was proper, based on the amount of the fee charged.  The court first noted that fees imposed by a municipality must be rationally related to their stated purpose, which means that the amount charged must bear “some reasonable relationship to the actual costs it is intended to recoup.”  While the fee need not represent the municipality’s precise costs, it must “at least relate” to the actual costs incurred in association with the impound.  The court also noted that many of the costs the cities were using to justify their tow fees were costs that would be associated with any arrest, even though they were only charged in arrests involving vehicles.  The court found this practice to be improper, and stated that, if a fee was to be charged because of the involvement of a vehicle in the crime, then it was inappropriate to consider costs that were not unique to those vehicle offenses for which a fee may be imposed.

It is important to note that the Carter court did not render an opinion as to whether the fees charged by the cities involved in that case were reasonable and related to the cities’ actual administrative costs.  The court only addressed whether it was proper for the trial court to grant the cities’ motion to dismiss the challenges to their respective ordinances without first making a factual determination as to whether the fees charged were reasonably related to the cities’ costs.  The court ultimately held that such dismissal was improper.

Based on the court’s decision in Carter, municipalities should review any ordinance imposing an administrative fee for towing and impounding of vehicles in order to ensure that the fee imposed is representative of the municipality’s actual costs related to administration and processing of such vehicles.  A municipality should be prepared to demonstrate that the fee imposed bears a reasonable relationship to these costs.  Pursuant to the statute, a municipality can consider the costs associated with the investigation, arrest, and detention of an individual, as well as the removal, impoundment, storage, and release of the vehicle.  However, the court’s guidance in Carter suggests that only those costs unique to vehicle offenses should be considered when calculating the actual administrative cost to the municipality in processing these offenses.   Municipalities with questions about the validity of their administrative tow fees or the costs that can be recouped following a tow and impound in light of the Carter decision should consult with their municipal attorneys.

Posted in Katherine Swise, Local Government and Public Finance