City of San Diego v. Shapiro

• Citation: 228 Cal.App.4th 756,175 Cal.Rptr.3d 670
• Decision Date: 01 August 2014
• Docket Number: D063997
• Court: California Court of Appeals
• Parties: CITY OF SAN DIEGO, Plaintiff and Respondent, v. Melvin SHAPIRO et al., Defendants and Appellants.

228 Cal.App.4th 756

175 Cal.Rptr.3d 670

CITY OF SAN DIEGO, Plaintiff and Respondent,

v.Melvin SHAPIRO et al., Defendants and Appellants.

D063997

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

Filed August 1, 2014

Law Office of Craig A. Sherman and Craig A. Sherman for Defendant and Appellant Melvin Shapiro.

Briggs Law Corporation, Cory J. Briggs, Mekaela M. Gladden, and Anthony N. Kim for Defendant and Appellant San Diegans for Open Government.

Jan I. Goldsmith, City Attorney, Donald R. Worley, Assistant City Attorney, Michael Travis Phelps and Glenn Spitzer, Deputy City Attorneys; Orrick Herrington & Sutcliffe, Michael C. Weed and Daniel C. Bort, for Plaintiff and Respondent City of San Diego.

AARON, J.

I.INTRODUCTION

In 1978, California voters enacted Proposition 13, which amended the California Constitution by adding article XIII A (article XIII A). The amendment "plac[ed] significant limits on the taxing power of local and state governments." ( State Building & Construction Trades Council of California v. City of Vista (2012) 54 Cal.4th 547, 562, fn. 3, 143 Cal.Rptr.3d 529, 279 P.3d 1022.) As pertinent here, article XIII A, section 4 provides, "Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district , may impose special taxes on such district...." (Italics added.)

In 1996, California voters enacted Proposition 218, which added article XIII C (article XIII C) and article XIII D (article XIII D) to the California Constitution in order to "close government-devised loopholes in Proposition 13." ( Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal.4th 830, 839, 102 Cal.Rptr.2d 719, 14 P.3d 930 ( Apartment Assn. of Los Angeles County, Inc. )) Article XIII C, section 2, subdivision (d) provides, "No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote." (Italics added.)

In this appeal, we must determine whether an election held by the City of San Diego (the City) to authorize the levying of a special tax complied with these provisions of the California Constitution. In the election at issue, the City did not permit the City's registered voters to vote on the special tax. Instead, the City passed an ordinance that specifically defined the electorate to consist solely of (1) the owners of real property in the City on which a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located.

We conclude that the election was invalid under the California Constitution because such landowners and lessees are neither "qualified electors" of the City for purposes of article XIII A, section 4 (see Neilson v. City of California City (2005) 133 Cal.App.4th 1296, 1313, 35 Cal.Rptr.3d 453 ( Neilson ) ["the term ‘qualified electors’ means registered voters," quoting art. XIII A, § 4] ), nor do they comprise a proper "electorate" under article XIII C, section 2, subdivision (d). (See Greene v. Marin County Flood Control and Water Conservation Dist. (2010) 49 Cal.4th 277, 297, 109 Cal.Rptr.3d 620, 231 P.3d 350 ( Greene ) ["[E]lections pertaining to special ... taxes in article XIII C, section 2, do not permit property qualifications"].)

We further conclude that the election was invalid under the San Diego City Charter (City Charter) because City Charter section 76.1 (section 76.1) requires the approval of two-thirds of the "qualified electors" voting in an election on a special tax, and section 6 of the City Charter (section 6) defines "[q]ualified [e]lectors" as those persons who are registered to vote in general state elections under state law. (Boldface omitted.) Accordingly, we reverse the trial court's judgment validating the special tax and remand the matter to the trial court with directions to enter judgment against the City.

II.FACTUAL AND PROCEDURAL BACKGROUND

A. The Convention Center Facilities District

The San Diego City Council (the City Council) passed an ordinance enacting a new division of the San Diego Municipal Code (the Division) in November 2011. (San Diego Mun. Code, ch. 6, art. 1, div. 27.) The Division authorizes the City to form a convention center facilities district (CCFD) in order to help finance the potential expansion of the San Diego Convention Center through the imposition of a special tax. The ordinance explains that the CCFD would "compris[e] the entire City," but that only hotels within the CCFD "would be subject to [the] special tax," which would be "based upon a percentage of room revenues." (San Diego Ord. No. 20106.)

The Division incorporates and modifies numerous provisions of the Mello–Roos Community Facilities Act of 1982 ( Gov.Code, § 53311 et seq. )¹ (Mello–Roos Act), including portions of various "election procedures" (San Diego Mun. Code, § 61.2710, subd. (a)) specified in the Mello–Roos Act as necessary to authorize the imposition of a special tax. The Mello–Roos Act special tax election procedures are defined in Government Code section 53326 and provide in relevant part:

"(a) The legislative body shall ... submit the levy of any special taxes to the qualified electors of the proposed community facilities district or to the qualified electors of the territory to be annexed by the community facilities district in the next general election or in a special election....

"[¶].... [¶]

"(c) If the proposed special tax will not be apportioned in any tax year on any portion of property in residential use in that tax year, as determined by the legislative body, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the tax if it were levied at the time of the election. Each of these landowners shall have one vote for each acre, or portion thereof, that the landowner owns within the proposed district that would be subject to the proposed tax if it were levied at the time of the election."

The Division incorporates and modifies the election procedures of the Mello–Roos Act as follows:

"All election procedures set forth in the [Mello–Roos Act] shall apply to this Division with the following exceptions:

"(a) The qualified electors shall in all cases be the Landowners .

"(b) The City Clerk shall in all cases be the elections official.

"(c) Votes shall not be allocated on the basis of acreage of real property but instead shall be allocated to each Landowner on the basis of one vote for each dollar of special tax that would have been the obligation of that parcel as determined by the City Council if the proposed special tax had been in place for the 12–month period ending at the end of the month which is three months prior to the month in which the resolution calling the special mailed-ballot election is adopted by the City Council." (San Diego Mun. Code, § 61.2710.)

The Division defines landowner (Landowners) as follows: "Landowner means the owner of the real property upon which a Hotel² is located except that if the fee owner of the real property is a government entity, Landowner means the lessee of the government entity." (San Diego Mun. Code, § 61.2705.)

The Division further provides, "Any special tax imposed pursuant to this Division shall be levied on the property for use of the property as a Hotel (or, as the case may be, levied on the leasehold interest of a publicly-owned Hotel parcel). The special tax shall not, in any year, be levied on the residential use of the property for that year. Hotel use is not residential use." (San Diego Mun.Code, § 61.2712.)

The City Council passed a resolution of formation in January 2012, through which the City finalized the proposal to finance the CCFD. (San Diego Res. No. 307243.) The resolution of formation incorporates a rate and method of apportionment (RMA) of the proposed special tax to be levied upon eligible taxable parcels within the CCFD. (Ibid .) The RMA provides that the special tax would be calculated based on a percentage of hotel room revenues at one of three different rates, depending on the hotel's geographic location. (Ibid .) Hotels in the downtown area would pay 3 percent of room revenues, while those in other areas would pay either 1 or 2 percent of their room revenues. (Ibid .)

Also in January 2012, the City Council passed a resolution proposing that the CCFD authorize the City to issue up to $575 million in bonds to be repaid by special tax revenues levied in the CCFD. (San Diego Res. No. 307244.) The City Council adopted a resolution authorizing a special election to submit the special tax and bond authorizations to a vote of the qualified electors within the CCFD. (San Diego Res. No. 307245.) The election authorization resolution states that the qualified electors would be asked the following question:

"Shall the San Diego Convention Center Facilities District authorize the San Diego City Council to levy a special tax, and issue not to exceed $575,000,000 in bonds secured thereby and by other revenues, to finance the contiguous expansion, construction, reconstruction, rehabilitation, equipping, replacement and upgrade of the San Diego Convention Center and related expenditures, and establish the appropriations limit for the District ...?" (Ibid .)

B. The CCFD special tax election

The City Clerk conducted a mail-in ballot election of the Landowners in the CCFD in March and April 2012. On April 24, 2012, the City Clerk certified that 19,454,222.42 votes were cast in the election, and that 92.03 percent, or 17,904,588.30 of the total votes cast, were "Yes" votes. (San Diego Res. No. 307413.) Based on these results, the City Council declared that the special tax measure had been approved. (Ibid .)

C. The City directs that the City Clerk record a notice of special tax lien and adopts an ordinance authorizing the levying of the special tax upon a final judicial determination that the special tax is valid

The City Council directed the City Clerk...