Borikas v. Alameda Unified Sch. Dist.

• Decision Date: 12 June 2013
• Docket Number: A129295
• Court: California Court of Appeals Court of Appeals
• Parties: George J. BORIKAS, as Trustee, etc., et al., Plaintiffs and Appellants, v. ALAMEDA UNIFIED SCHOOL DISTRICT, Defendant and Respondent.

214 Cal.App.4th 135

154 Cal.Rptr.3d 186

George J. BORIKAS, as Trustee, etc., et al., Plaintiffs and Appellants,

v.ALAMEDA UNIFIED SCHOOL DISTRICT, Defendant and Respondent.

A129295

Court of Appeal, First District, Division 1, California.

Filed March 6, 2013

Review Denied June 12, 2013

Affirmed in part and reversed in part with directions.

See 9 Witkin, Summary of Cal. Law (10th ed. 2005) Taxation, § 324.

Trial Court: Alameda County Superior Court Trial Judge: Honorable Kenneth Mark Burr, (Alameda County Super. Ct. No. VG08405316)

Randick O'Dea & Tooliatos, Leslie A. Baxter, Pleasanton; Brillant Law Firm, David J. Brillant and Brian Carideo, Walnut Creek; and Umung D. Varma, for Plaintiffs and Appellants.

Chapman, Popik & White, Susan M. Popik and David Nied, San Francisco; Dannis Woliver Kelley, Sue Ann Salmon Evans, Long Beach, Janet L. Mueller, San Diego, and William B. Tunick, Sacramento, for Defendant and Respondent.

Lozano Smith, Jeffrey L. Kuhn, Fresno, and Sloan R. Simmons, Sacramento, for California School Boards Association on behalf of Defendant and Respondent.

Banke, J.

I. Introduction

This case involves the validity of a parcel tax approved by Alameda Unified School District (District) voters in June 2008 as Measure H. The issue before us is whether the tax violates Government Code section 50079, which authorizes school districts to levy “qualified special taxes.” (Gov.Code, § 50079, subd. (a).) ¹ Such taxes are statutorily defined as “taxes that apply uniformly to all taxpayers or all real property within the school district, except that ‘qualified special taxes' may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age.” ( § 50079, subd. (b)(1).) Measure H provides exemptions for some senior and disabled taxpayers. It also imposes different tax rates on residential and commercial/industrial properties, as well as different rates on different sized commercial/industrial properties.

Plaintiffs and appellants contend Measure H's property classifications, differing tax rates and conditional exemptions violate section 50079's definitional language that special taxes apply “uniformly” to all taxpayers or all real property within the district. The District views this statutory language as reflecting long-established equal protection principles which allow a governmental entity to create reasonable tax classifications, so long as all taxpayers within a classification are treated the same.

As we will discuss, section 50079 is one of a number of statutes enacted in the wake of Proposition 62, a statewide initiative approved by California voters in 1986 and aimed at closing perceived loopholes in Proposition 13. In addition to defining the terms “special taxes” and “general taxes” and specifying the voter approval requirements for each, Proposition 62 specified that neither Proposition 13 nor general enabling legislation passed in response to that initiative, invested local governmental entities with the power to levy taxes. The Legislature responded with a host of statutory provisions expressly delegating taxing authority to a panoply of local districts, including school districts. Many of these statutes contain the same language appearing in section 50079 and at issue here—that special taxes are “taxes that apply uniformly to all taxpayers or all real property within the” particular district.

After examining the language and legislative history of section 50079, and that of the correlative enabling statutes, we conclude the Legislature did not include this definitional language in order to acknowledge established equal protection principles. Rather, the language at issue was intended to be a constraint on the extent of the taxing authority delegated to the local governmental entities. We therefore conclude Measure H's property classifications and differential tax burdens exceed the District's taxing authority under section 50079 and the judgment entered in favor of the District must, in part, be reversed. We also conclude these provisions can be severed from the measure and that Measure H's exemptions for senior and disabled taxpayers are permissible under the statute.

We are aware that we are being called on to interpret statutory language enacted in a different economic era and in the wake of two of the most far-reaching tax constraining measures ever passed by the state electorate (Propositions 13 and 62), that the state has since faced crippling economic conditions, and that school districts and other local governmental entities are more dependent than ever on the revenues from special taxes. The courts, however, cannot recalibrate the taxing power statutorily delegated to local entities; any adjustment in that regard must be made by the state Legislature.

II. Factual and Procedural Background

The essential facts are limited and undisputed. On March 4, 2008, the District's Board of Education adopted Resolution No. 08–0010. This resolution authorized the Alameda County Superintendent of Schools to call a district-wide election on June 3, 2008, on a measure to impose a qualified special tax on taxable residential, commercial and industrial property for a four-year period, commencing July 1, 2008, and ending June 30, 2012. District voters approved the measure (Measure H) by just over a two-thirds vote. ²

Measure H taxes residential and commercial/industrial properties differently. Non-exempt residential parcels are taxed at $120 per year. Commercial and industrial parcels less than 2,000 square feet are also taxed at $120 per year; those greater than 2,000 square feet are taxed at $0.15 per square foot to a maximum of $9,500 per year.

Measure H includes two exemptions. The first is for owners of single family residential units who live on the property as their principle residence and are 65 years of age or older during the assessment year. The second is for owners of single family residential units who live on the property and receive Supplemental Security Income for a disability, regardless of age. If eligible, property owners must apply for the exemptions.

The measure also has a severability clause providing: “If any section, subsection, sentence, phrase, part or clause of this measure is, for any reason, held to be unconstitutional, illegal or invalid, such decision shall not affect or impair the validity of the remaining portions of this measure. It is hereby declared that the intention of the Board of Education of the District and the electorate [is] that this measure would have been adopted had such unconstitutional, illegal or invalid section, subsection, sentence, phrase, part or clause thereof not been included.”

On August 21, 2008, George J. Borikas, Trustee of the George J. Borikas 1999 Revocable Trust, filed suit seeking to have the special tax authorized by Measure H declared invalid and not a lien on properties he owns. Specifically, Borikas alleged Measure H exceeded the taxing authority given to school districts under section 50079 because the tax does not apply “uniformly” to all parcels in the district. On November 10, 2008, Borikas filed a first amended complaint, adding as plaintiffs Edward Hirshberg, Trustee of the Hirshberg Trust, Santa Clara Investors II, a general partnership, and Nelco, Inc. The substance of the complaint remained the same.³

After numerous pretrial proceedings, including demurrers, motions to strike, and motions for summary judgment, the case was consolidated with another action challenging the parcel tax. The case was then tried by the court on a stipulated written record consisting of previously submitted separate statements of undisputed facts, responding statements and supporting documentation, exhibits and requests for judicial notice.⁴ The trial court ruled in favor of the District.

Looking to case law involving tax challenges on equal protection grounds, the court concluded section 50079's definitional language is satisfied if tax classifications bear a rational relationship to a legitimate governmental objective and all taxpayers within the same classification bear the same tax. The court acknowledged the legislative history of section 50079 includes comments to the contrary, but disregarded them as having been made by non-legislators and viewed the legislative history as primarily concerned with allowing an exemption for seniors. The court similarly rejected the plaintiffs' challenge to the restriction of the senior and disabled exemptions to residential property owners.⁵ Following entry of judgment for the District, plaintiffs timely appealed.⁶

III. Discussion

A. Backdrop: Propositions 13 and 62

In 1978, California voters approved Proposition 13, which added article XIII A to the state Constitution and dramatically changed state and local tax structures. ( Howard Jarvis Taxpayers Assn. v. City of Roseville (2003) 106 Cal.App.4th 1178, 1182, 132 Cal.Rptr.2d 1.) “The general purpose of Proposition 13 ... was to afford tax relief to California real property owners by imposing (1) limitations upon the tax rate applicable to real property, (2) restrictions on the valuation and assessment of real property, (3) stricter voting requirements for any change by the Legislature in tax rates or methods of computation and (4) elimination of the right of the state and local entities (i.e., cities, counties, and special districts) to impose ad valorum taxes on real property or transaction or sales taxes on the sale of real property.” ( California Building Industry Assn. v. Governing Board of the Newhall School District of Los Angeles County (1988) 206 Cal.App.3d 212, 219, 253 Cal.Rptr. 497 ( CBIA ); see also Weisblat v. City of San Diego (2009) 176 Cal.App.4th 1022, 1034, 98 Cal.Rptr.3d 366 ( Weisblat ).) To prevent local taxing entities from circumventing these tax limitations, Proposition 13 further...