California Bldg. Industry Assn. v. Governing Bd.

• Decision Date: 29 November 1988
• Citation: 206 Cal.App.3d 212,253 Cal.Rptr. 497
• Court: California Court of Appeals Court of Appeals
• Parties: , 50 Ed. Law Rep. 483 CALIFORNIA BUILDING INDUSTRY ASSOCIATION, etc., et al., Plaintiffs and Appellants, v. The GOVERNING BOARD OF THE NEWHALL SCHOOL DISTRICT OF LOS ANGELES COUNTY, etc., et al., Defendants and Respondents. Civ. B030733.

Page 497

253 Cal.Rptr. 497

206 Cal.App.3d 212, 50 Ed. Law Rep. 483

CALIFORNIA BUILDING INDUSTRY ASSOCIATION, etc., et al., Plaintiffs and Appellants, v. The GOVERNING BOARD OF THE NEWHALL SCHOOL DISTRICT OF LOS ANGELES COUNTY, etc., et al., Defendants and Respondents.

Civ. B030733.

Court of Appeal, Second District, Division 3, California.

Nov. 29, 1988.

As Modified Dec. 29, 1988.

Review Denied Feb. 16, 1989.

Nossaman, Guthner, Knox & Elliott, Alvin S. Kaufer and Winfield D. Wilson, Los Angeles, for plaintiffs and appellants.

Bion M. Gregory, Legislative Counsel, Jack I. Horton, Chief Deputy Legislative Counsel, James L. Ashford, Principal Deputy Legislative Counsel, Daniel A. Weitzman, Deputy Legislative Counsel, Ronald A. Zumbrun, Anthony T. Caso and Sharon L. Browne, Sacramento, as amici curiae on behalf of plaintiffs and appellants.

Bowie, Arneson, Kadi & Dixon, Terry E. Dixon and Carol J. Graham, Newport Beach, for defendants and respondents.

Parker and Covert, Clayton H. Parker, Charles S. Scolastico and Michelle D. English, Santa Ana, for defendants and respondents.

Burke, Williams & Sorenson, Carl K. Newton, Los Angeles, Timothy B. McOsker, San Pedro, and Karen M. Steentofte, Sacramento, as amici curiae on behalf of defendants and respondents.

CROSKEY, Associate Justice.

California Building Industry Association and the Building Industry Association of Southern California, Inc. ("Building Industry") appeal from a judgment denying their petition for a writ of mandate against the Governing Board of the Newhall School District of Los Angeles County ("Newhall"), the Board of Trustees of the Saugus Union School District of Los Angeles County ("Saugus"), the Board of Trustees of the Castaic Union School District of Los Angeles County ("Castaic"), the Board of Trustees of the William S. Hart Union High School District of Los Angeles County ("Hart"), and the Board of Trustees of the Sulpher Springs Union School District of Los Angeles County ("Sulpher Springs"). (Hereinafter, the respondents are referred to collectively as "school districts"). ¹

By this appeal we are asked to determine (1) whether certain exactions imposed by the school districts on developers of new residential housing within the respective districts are valid as special taxes under section 4 of article XIII A of the California Constitution or, if not, (2) whether such exactions can otherwise be sustained as development fees.

We conclude the exactions are invalid and cannot stand either as special taxes or development fees. First, absent enabling legislation, the school districts had no constitutional

authority to impose special taxes. Such authority was not granted by article XIII A, section 4 and the special taxes imposed have not been authorized by the Legislature. Second, what the school districts sought to impose as special taxes were not taxes at all, but were actually in the nature of development fees. The characterization of these exactions as special taxes, and their submission to voters who would not be called upon to pay them, was a poorly disguised and ineffectual attempt to avoid the statutory limitations to which development fees are subject. Third, the exactions were imposed not on an electorate which, unsurprisingly, voted overwhelmingly to approve them, but rather solely on the developers of new residential projects. Thus, these special taxes were not imposed "on such district" as required by article XIII A, section 4. Finally, [206 Cal.App.3d 219] the Legislature has enacted strict financial limitations on the imposition of development fees by school districts and to the extent the exactions imposed exceed such limits, they cannot be sustained as development fees.

FACTUAL BACKGROUND

The essential facts are undisputed. In June, 1978, California voters adopted Proposition 13, an initiative measure which amended the state Constitution by adding article XIII A ("article XIII A"). ² The general purpose of Proposition 13 (to avoid confusion, all further references to Proposition 13 shall be to "article XIII A") 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. (See Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 220, 149 Cal.Rptr. 239, 583 P.2d 1281.)

Another purpose of article XIII A, and the one most relevant here, was to restrict the right of local entities to raise revenue by means of special taxes. Section 4 of article XIII A provides that such taxes must be approved by a two-thirds vote of the qualified voters of the local entity.

(Id., at p. 220, 149 Cal.Rptr. 239, 583 P.2d 1281.)

In 1987 each school district adopted a resolution to submit to their respective district voters the question of whether a special tax should be levied and collected to provide funds for capital outlay purposes, including construction, acquisition and leasing of new school facilities. Section 4 of article XIII A was cited as the authority for the imposition of such taxes through the election process. It is these special taxes which are the subject of the instant action.

The Hart, Castaic, Saugus, and Newhall resolutions set forth the following reasons for imposition of the special tax (which they characterized as a "School Facilities Development Tax"): (1) increased residential development within the respective districts which caused overcrowding of existing school facilities, (2) inability of existing facilities to adequately serve the estimated increased number of students expected from approved and future residential projects and (3) insufficient funding available for construction, acquisition and leasing of required school facilities. The reason given for the special tax in the Sulpher Springs resolution was the need for new school facilities to accommodate the influx of students generated by such development. ³

On June 2, 1987, the special taxes referred to above were adopted by a two-thirds vote of the "qualified electors" of the respective Hart, Castaic, Saugus, Newhall, and Sulpher Springs districts. ⁴

Besides their resolutions for the school facilities development taxes, each school district also adopted a resolution providing for the levying of school facilities development fees under Government Code section 53080. ⁵ A credit against the special taxes approved by the voters was to be allowed in an amount equal to all such development fees paid to the school districts pursuant to section 53080. ⁶

PROCEDURAL HISTORY

On June 23, 1987, Building Industry filed a complaint for declaratory and injunctive relief challenging the validity of the special taxes, as well as a petition for a writ of mandate (Code Civ.Proc., § 1085) to compel school districts to authorize issuance of building permits without first requiring payment of the challenged exactions. On or about August 6, 1987, Hart, Castaic, Saugus, and Newhall jointly answered and denied the material allegations in the petition and complaint. On the same date, Sulpher Springs filed separately a similar answer.

Following a hearing on August 20, 1987, the petition was denied. ⁷ The judgment denying a peremptory writ of mandate was filed September 17, 1987. ⁸ The Building Industry appeals from that judgment. ⁹ The position of each of the parties has generated extensive amicus support. ¹⁰

SUMMARY OF RELEVANT LEGISLATIVE AND INITIATIVE HISTORY

Before discussing the specific issues raised by the parties and amici, it is useful to review the context in which article XIII A was presented to the voters and the subsequent legislative and initiative activity which it generated.

Section 4 of article XIII A states that cities, counties and special districts, by a two-thirds approval of the voters, may impose special taxes so long as those taxes are not ad valorem taxes on real property or transaction or sales taxes on the sale of real property. The State of California submitted to the voters written information relative to state ballot measures in the June, 1978 election, including information for article XIII A. The analysis which was provided specifically stated: "The Legislative Counsel advises us that provisions in the existing Constitution would prohibit Following voter approval of article XIII A, the Legislature moved promptly to provide such statutory authority. Section 50075 et seq., was added to the Government Code in 1979. (Stats.1979, ch. 903, § 1, p. 3112, eff. Sept. 22, 1979.) As amended in 1980 (Stats.1980, ch. 672, § 1, p. 1866, eff. July 20, 1980), section 50075 reads: "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." ¹² (Emphasis added.)

general law cities, counties, school districts ¹¹ and special districts from imposing new 'special taxes' without specific approval by the Legislature. Such restrictions limit the ability of these local governments, even with local voter approval, to replace property tax losses resulting from the adoption of this initiative." (Ballot Pamp.Proposed Amends. to Cal. Const. with arguments to voters, Primary Elec. (June 6, 1978) pp. 57, 60, emphasis added.)

Apparently unhappy with what they viewed as legislative efforts to dilute the effect of article XIII A, its backers submitted another initiative proposal, Proposition 62. On November 4, 1986, that measure was approved by California voters. It added eleven sections to the Government Code (commencing with §...