Beaumont Investors v. Beaumont-Cherry Valley Water Dist.

• Decision Date: 05 March 1985
• Docket Number: BEAUMONT-CHERRY
• Citation: 165 Cal.App.3d 227,211 Cal.Rptr. 567
• Parties: BEAUMONT INVESTORS, etc., et al., Plaintiffs and Appellants, v.VALLEY WATER DISTRICT, et al., Defendants and Respondents. E000534. Civ. 29992.
• Court: California Court of Appeals Court of Appeals

Page 567

211 Cal.Rptr. 567

165 Cal.App.3d 227

BEAUMONT INVESTORS, etc., et al., Plaintiffs and Appellants, v. BEAUMONT-CHERRY VALLEY WATER DISTRICT, et al., Defendants and Respondents.

E000534.

Civ. 29992.

Court of Appeal, Fourth District, Division 2, California.

March 5, 1985.

Review Denied June 6, 1985. ^**

[165 Cal.App.3d 230] Steven E. Smith, Sherman Oaks, for plaintiffs and appellants.

Redwine & Sherrill and Frederick A. Bryson, Riverside, for defendants and respondents.

OPINION

McDANIEL, Associate Justice.

On this appeal, we are asked to consider whether a facilities fee enacted by a water district constitutes a "special tax" within the meaning of article XIII A, section 4, of the California Constitution (Proposition 13), and thus must be approved by a two-thirds vote of the electors in the district.

FACTUAL AND PROCEDURAL BACKGROUND

On September 4, 1980, the Beaumont-Cherry Valley Water District Board of Directors (District) adopted Resolution No. 80-5 imposing a "facilities fee" payable upon application for connection to its water system. About three months later, plaintiff, Beaumont Investors, Inc., ¹ applied for a hook-up to the water system for its recently completed 80-unit apartment complex. It was then informed that a condition to the hook-up would be payment to the District of a new facilities charge of $60,000 (80 units x $750). It declined to pay. As a result, the District refused to connect plaintiff to the water system. Plaintiff thereupon brought this action against the District and its Board (hereinafter referred to collectively as defendant) for declaratory relief and damages. ²

The action was submitted to the trial court upon stipulated facts and documents which may be summarized as follows: In July of 1978, plaintiff first appeared before the defendant Board with plans for a development. Six months later, in February of 1979, the Board first considered the matter of a "facilities fee" for new users to finance the construction of certain water system facilities which new development would require. Board minutes reveal that the possibility of a facilities fee was generally discussed, but that no action was taken by the Board during the following year.

In September of 1979, the Board authorized and issued a "will serve" letter indicating the District's willingness to provide plaintiff's proposed development with domestic water. Shortly thereafter, plaintiff obtained the necessary building permits and commenced construction of its project.

In February of 1980, the Board approved the water plan prepared by the District Engineer for plaintiff's development. The plan required plaintiff to install a 12-foot water main and indicated that this would be the limit of service in that particular pressure zone and that there would be no refunds to plaintiff on the main installation. The Board then authorized and sent to plaintiff a "Main Extension Agreement." The agreement was not signed by the Board secretary as required by the District rules. Nevertheless, plaintiff's president signed the agreement and returned it to defendant. Shortly thereafter, the Board proposed and plaintiff consented to certain changes in the original agreement. ³

In early March 1980, after plaintiff had begun construction, the Board adopted a policy which would impose a $350 per unit facilities charge on new hook-ups, effective March 4, 1980, payable upon application for meter installation. Four months later, in July 1980, the Board amended the policy by increasing the facilities fee to $750 per unit. On September 4, 1980, the Board adopted Resolution No. 80-5 memorializing the purpose of the aforesaid facilities fee and setting forth in detail the exact charges and procedures governing its imposition. At the same meeting, plaintiff's representative requested an exemption from the fee on the grounds that plaintiff had signed the Main Extension Agreement and had begun construction before the enactment of the facilities charge, and hence that the $60,000 charge had not been incorporated into its construction financing. A motion by a Board member to exempt all those persons who had obtained a building permit before March 3, 1980, (the date of enactment of the $350 facilities fee, later modified to $750) died for lack of a second. The Board later denied plaintiff's request to be exempted from the facilities fee.

In its action, plaintiff attacked the validity of the fee on two broad fronts. First, plaintiff argued that it had acquired a "vested right" before the Board's imposition of the facilities charge, with the result that defendant was estopped from collecting the fee. Second, plaintiff argued that under various provisions of the Water Code as well as Proposition 13 and statutes promulgated pursuant thereto, defendant lacked authority to impose the fee. ⁴ With respect to the second prong of plaintiff's attack, plaintiff argued that the facilities charge violated Water Code section 22281.1, which provides that water districts may impose a charge for the right to connect to the system in an amount roughly equal to that proportion which the new pipeline or extension bears to the total area to be served. Plaintiff further argued that the facilities fee constituted a "special tax" within the meaning of Proposition 13, and thus, to be legally valid, required the affirmative vote of two-thirds of the electors in the District. Additionally, according to plaintiff, the fee was not exempt from the two-thirds vote requirement under Government Code section 50076, which specifically excludes from the definition of "special tax" "any fee which does not exceed the reasonable cost of providing the service or regulatory activity for which the fee is charged and which is not levied for general revenue purposes." Plaintiff argued that Government Code section 50076 was inapplicable because defendant had failed to show the fee did "not exceed the reasonable cost of providing the service" for which it was charged.

The trial court found for defendant, apparently concluding on balance, that the equities did not support plaintiff's estoppel argument. The trial court entered no findings or conclusions with respect to plaintiff's statutory and constitutional claims. Plaintiff now appeals from the judgment, and its contentions on appeal are the same as those which it urged below.

DISCUSSION

In view of our conclusion that the facilities fee patently violates Proposition 13, we need not dwell on plaintiff's "vested right" theory.

Nor are we persuaded by plaintiff's contention that the facilities fee fails under Water Code section 22281.1. This section, entitled "Connection Charge," concerns reimbursement by new users to the District for the actual expenses advanced by the District to enable hook-up to the system. The charge at issue here, denominated a "facilities fee," on the other hand, was designed to reimburse the District for the future costs of constructing new water system facilities necessitated by new development. Clearly, therefore, the fee at issue here is not a "connection charge." The mere fact that the facilities fee was made payable at time of connection does not by that fact alone transmute it into a "connection charge" within the meaning of Water Code section 22281.1.

Absent authorization under Water Code section 22281.1, plaintiff further contends that the Water Code provides no authority for the imposition of a "facilities fee" of the type at issue here. We disagree. Water Code section 22280 provides, in pertinent part, that defendant "may in lieu in whole or in part of levying assessments fix and collect charges for any service furnished by the district, including any and all of the following:" The statute then goes on to list six kinds of services for which charges may be imposed, none of which is relevant to the case here. However, this list of six services is obviously not exclusive. Water Code section 20512 defines the word "include" as follows: " 'Include' except when used in relation to the inclusion of land into a district does not necessarily exclude matters not enumerated." The construction of new facilities for the provision of water services is clearly an activity for which the District may exact a charge payable at the time of application for connection to the system.

We turn then to the final and, in our view, dispositive issue raised by plaintiff. Does the facilities fee enacted by defendant constitute a "special tax" under Proposition 13 and thus require an affirmative vote of two-thirds of the qualified electors in the District? The record before us compels the conclusion that it does, and thus that the facilities fee, as defendant attempted to enforce it, is invalid.

Proposition 13, section 4, provides, subject to certain exceptions not applicable here, that, "Cities, counties and special districts by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district...."

To implement the authorization granted by section 4 to cities, counties and special districts to impose "special taxes," the Legislature enacted sections 50075 and 50076 of the Government Code. (Mills v. County of Trinity (1980) 108 Cal.App.3d 656, 662, 166 Cal.Rptr. 674.) Section 50075 provides: "It is the intent of the Legislature to provide all cities, counties and districts with the authority to impose special taxes, pursuant to the provisions of Article XIII A of the California Constitution." Section 50076 then excludes from the definition of "special tax" any "user fee," i.e., "any fee which does not exceed the reasonable cost of providing the service or regulatory activity for which the fee is charged and which is not levied for general revenue purposes." Hence, any fee which falls within the definition of a service or regulatory fee under section 50076 is not a "special tax" under Proposition 13 and thus is exempt from the requirement of a two-thirds affirmative vote by the...