Helton v. City of Long Beach

• Decision Date: 26 February 1976
• Citation: 55 Cal.App.3d 840,127 Cal.Rptr. 737
• Court: California Court of Appeals Court of Appeals
• Parties: Bonnie A. HELTON et al., Plaintiffs and Respondents, v. CITY OF LONG BEACH, a Municipal Corporation, et al., Defendants and Appellants. Civ. 46345.

Page 737

127 Cal.Rptr. 737

55 Cal.App.3d 840

Bonnie A. HELTON et al., Plaintiffs and Respondents, v. CITY OF LONG BEACH, a Municipal Corporation, et al., Defendants and Appellants.

Civ. 46345.

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

Feb. 26, 1976.

Leonard Putnam, City Atty., and Robert G. Austin, Deputy City Atty., for defendants and appellants.

Charles T. Smith, Long Beach, for plaintiffs and respondents.

THOMPSON, Associate Justice.

This is an appeal from a judgment enjoining enforcement of Long Beach Ordinance C--5106 as amended by Ordinance C--5145. It raises the issue of the constitutionality of a city business license tax surcharge differing by region imposed to implement a municipal parking and business improvement area plan adopted pursuant to Streets and Highway Code sections 36000 et seq. We conclude that: (1) the validity of the surcharge must be determined by the 'rational basis' rather than 'suspect classification' test of equal protection; (2) that a legislative classification of businesses based upon a reasoned conclusion of anticipated benefits to be derived from a municipal project is a rational basis for differences in taxes; (3) the City of Long Beach has applied such a reasoned conclusion in the ordinances here involved; and (4) the ordinances, therefore, do not deny equal protection of the law and are valid. Accordingly, we reverse the judgment.

The California Parking and Business Improvement Area Law of 1965 was enacted 'to authorize cities to impose a tax on businesses within a parking and business improvement area . . . in addition to the general business license tax, if any, in the city, and to use such proceeds for the following purposes: ( ) (a) The acquisition, construction or maintenance of parking facilities for the benefit of the area. ( ) (b) Decoration of any public place in the area. ( ) (c) Promotion of public events which are to take place on or in public places in the area. ( ) (d) Furnishing of music in any public place in the area. ( ) (e) The general promotion of retail trade activities in the area.' (Sts. & Hy.Code, § 36000.)

City councils are authorized to designate parking and business improvement areas by following procedure prescribed by the act. (Sts. & Hy.Code, § 36020.) The statute provides that the municipality 'may make a reasonable classification of businesses, giving consideration to various factors, including the degree of benefit received from parking only' in determining any additional tax to be imposed. (Sts. & Hy.Code, § 36040.) The special tax levied pursuant to the authority of The Parking and Business Improvement Area Law of 1965 must be used for the purposes of the areas established by the authority of the act. (Sts. & Hy.Code, § 36063.)

The City of Long Beach imposes a business license tax in the traditional form, classifying businesses by their specific type of activity and imposing tax upon them at varying amounts depending upon the classification. Long Beach adopted a parking and improvement area ordinance conforming to the procedural and substantive requirements of the state enabling legislation. The amended ordinance which encompasses the plan includes a special business license tax as permitted by the state law. The amount of the tax is determined by classification of business and 'benefit zone.' Two benefit zones, designated 'Zone No. 1' and 'Zone No. 2,' are included within the parking and business improvement area. Zone 2 apparently encompasses an area surrounding a core segment consisting of Zone 1. Businesses are classified by their type of activity in classes 'A' through 'G.' The rate of special parking and business improvement tax varies from one-fourth of the regular business license tax for class A businesses in Zone 1 to four times the regular business license tax for class F businesses in Zone 1. Class G businesses in Zone 1 pay a tax based upon gross receipts. Except for class A businesses in Zone 2, which are exempt from the tax, businesses in Zone 2 are taxed at one-half the rate of those in Zone 1. Long Beach businesses outside both Zones 1 and 2 are not subject to the tax.

Plaintiffs filed the action at bench seeking to enjoin the Long Beach parking and business improvement ordinances and contended that the taxing scheme denied them equal protection of the law. Concluding that 'the imposition of greater license taxes upon businesses located in one area of the City than are imposed upon the same or similar businesses located in other parts of the city' violates equal protection of the law, the trial court permanently enjoined enforcement of the amended ordinance. This appeal followed.

'Two tests are applied . . . in examining . . . statutory classifications for violations of the constitutional guarantees of equal protection. In ordinary equal protection cases not involving suspect classifications or the alleged infringement of a fundamental interest, the classification is upheld if it bears a rational relationship to a legitimate state purpose. (Citations.) But if the statutory scheme imposes a suspect classification, such as one based on race (citations) or a classification which infringes on a fundamental interest, such as the right to pursue a lawful occupation (citations) or the right to vote (citations) the classification must be closely scrutinized and...