Hill RHF Hous. Partners, L.P. v. City of L. A.

• Decision Date: 20 January 2023
• Docket Number: B295181,B295315
• Parties: HILL RHF HOUSING PARTNERS, L.P., et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, et al., Defendants and Respondents. MESA RHF PARTNERS, L.P., Plaintiff and Appellant, v. CITY OF LOS ANGELES, et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

HILL RHF HOUSING PARTNERS, L.P., et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, et al., Defendants and Respondents.

MESA RHF PARTNERS, L.P., Plaintiff and Appellant, v. CITY OF LOS ANGELES, et al., Defendants and Respondents.

B295181, B295315

California Court of Appeals, Second District, First Division

January 20, 2023

NOT TO BE PUBLISHED

Order Filed Date 2/16/23

APPEALS from judgments of the Superior Court of Los Angeles County, Nos. BS170352, BS170127 Mitchell L. Beckloff, Judge. Affirmed.

Reuben Raucher &Blum, Timothy D. Reuben and Stephen L. Raucher for Plaintiffs and Appellants.

Michael N. Feuer, City Attorney, Beverly A. Cook, Assistant City Attorney, and Daniel M. Whitley, Deputy City Attorney for Defendant and Respondent City of Los Angeles.

Colantuono, Highsmith &Whatley, Michael G. Colantuono, Holly O. Whatley, and Pamela K. Graham for Defendants and Respondents Downtown Center Business Improvement District Management Corporation and San Pedro Property Owners Alliance.

ORDER MODIFYING OPINION AND DENYING REHEARING

THE COURT:

It is ordered that the opinion filed herein on January 20, 2023, be modified as follows:

1. At the end of the first full sentence on page 32 (quoting from Dahms "No assessment [may] . . . exceed[ ] the reasonable cost of the proportional special benefit conferred on that parcel.") add as footnote 3 the following footnote:

In their petitions for rehearing, petitioners argue that BID discounts for nonprofit entities and residential properties in the BID underlying Dahms means that the "BID at issue in Dahms took the benefits conferred on each parcel into much greater consideration than the BIDs at issue on this appeal" and urge us to grant rehearing "to consider the importance of these distinctions." In Dahms, the BID discounted properties belonging to "nonprofit entities ('religious organizations, clubs, lodges and fraternal organizations')" (not subject to any distinction for property use) and-separately-any properties "zoned exclusively residential." (Dahms, supra, 174 Cal.App.4th at p. 713.)

In contrast to the petitioners' arguments here-that their nonprofit status must be accounted for-the argument in Dahms was that "the assessments for properties owned by nonprofit entities, such as fraternal organizations and churches," violated Proposition 218 because" '[t]he assessments are not proportional to the benefits received because the assessments are discounted.'" (Dahms, supra, 174 Cal.App.4th at p. 716.) In other words, Dahms argued that the BID could not discount based on nonprofit status under Proposition 218. That is the argument we rejected in Dahms. (Ibid.)

Cases are not authority for arguments that were not considered. (Howard Jarvis Taxpayers Assn. v. Newsom (2019) 39 Cal.App.5th 158, 169.) We will not rely on Dahms as authority to require a BID to consider a property owner's nonprofit status in a proportionality analysis.

There is no change in judgment. Appellants' petition for rehearing is denied.

CHANEY, J.

"State law provides for the formation of business improvement districts, or BIDs, through which services, activities, and improvements may be funded by assessments imposed on benefitted business or properties. When a BID is subsidized by assessments upon real property, these levies must comply with the Right to Vote on Taxes Act, an initiative measure more commonly known as Proposition 218," which was approved by voters on November 5, 1996. (Hill RHF Housing Partners, L.P. v. City of Los Angeles (2021) 12 Cal.5th 458, 468 (Hill).)

The City of Los Angeles created the Downtown Center Business Improvement District (DCBID) in 1998 and the San Pedro Historic Waterfront Business Improvement District (SPBID) in 2007 pursuant to the Property and Business Improvement District Law of 1994 (the PBID Law). (Sts. &Hy. Code, § 36600, et seq.) Hill RHF Housing Partners, L.P. (Hill), Hill Olive Housing Partners, L.P. (Olive), and Mesa RHF Partners, L.P. (Mesa) (collectively petitioners) filed petitions for writ of mandate in the trial court alleging various causes of action challenging the 2017 renewal of the two BIDs.

The petitioners' challenges fall into three categories of contentions petitioners make in this court. First, petitioners argue that the BIDs' assessments are unconstitutional under Proposition 218 because they rely on facially unconstitutional legislative amendments to the PBID Law. Second, petitioners contend that the BIDs' assessments are themselves unconstitutional because the assessments are not based solely on special benefits, the engineers' reports upon which the assessments are based fail to separate general benefits from special benefits, and the BIDs failed to consider the unique circumstances of the petitioners' properties in levying the assessments. Third, petitioners contend that the engineers' reports upon which the BIDs based their assessments are legally insufficient to support the assessments. Because the assessments are invalid for any one of these reasons, petitioners contend, they constitute taxes, from which the petitioners are exempt.

The trial court rejected the petitioners' arguments, relying largely on this court's opinion in Dahms v. Downtown Pomona Property &Business Improvement Dist. (2009) 174 Cal.App.4th 708 (Dahms), and entered judgment for the City on both petitions. We also disagree with the petitioners, and will affirm the trial court's judgments.

BACKGROUND

The Supreme Court recited much of the relevant procedural and factual background, which we draw on here, in its opinion in Hill, supra, 12 Cal.5th 458.

The petitioners "are nonprofit providers of housing and services to low-income seniors. Mesa owns real property known as Harbor Tower, in San Pedro. Hill owns a property known as Angelus Plaza and Olive owns another property, Angelus Plaza North, in downtown Los Angeles. Harbor Tower is within the boundaries of the [SPBID], and the Angelus Plaza and Angelus Plaza North properties are within the [DCBID].

"These two BIDs were created pursuant to the [PBID Law]. The [SPBID] was originally established in [2007]; the [DCBID] in 1998. In 2012, petitioners brought legal challenges against these BIDs. Those disputes were resolved through settlement agreements, reached in 2013, in which it was determined that the City of Los Angeles would reimburse petitioners for their BID assessment payments.

"In 2017 [the City of Los Angeles] proposed that the [BIDs] be renewed for 10-year terms. Each proposal engaged the process for approving a BID, as set out in the PBID Law, Proposition 218, and the Proposition 218 Omnibus Implementation Act (Gov. Code, § 53750 et seq....). As part of this process, the Los Angeles City Council . . . adopted two ordinances, one for each BID, expressing an intent to consider the establishment of the BID. Each of these ordinances adopted and approved a detailed management district plan and associated engineer's report for the relevant BID, provided a general description of the BID's boundaries, gave the total projected assessment for the BID over its 10-year term as well as for its first year, identified the number of assessed parcels in the proposed BID (804 parcels owned by 270 stakeholders for the [SPBID]; 2,865 parcels owned by 1,710 stakeholders for the [DCBID]), and summarized the improvements and activities to be undertaken through the BID.

For each BID, the appropriate ordinance also announced the date, time, and place of a public hearing before the City Council at which, per the ordinances, 'all interested persons will be permitted to present written or oral testimony, and the City Council will consider all objections or protests to the proposed assessment' used to fund the BID." (Hill, supra, 12 Cal.5th at pp. 469-470.)

The petitioners received notices of the public hearings before the City Council, and their authorized representatives voted against establishment of the BIDs. (Hill, supra, 12 Cal.5th at p. 470.) "Meanwhile, on the same day as the hearing on the [SPBID] (which took place three weeks after the hearing on the [DCBID]), a City of Los Angeles representative advised petitioners' counsel that due to differences between the BIDs as formerly constituted and as renewed, the previously negotiated 2013 settlement agreements-which by their terms applied for so long as the earlier-established BIDs 'continue[d] in [their] current formulation[s]'-were no longer in effect.

"When all ballots were counted, petitioners were substantially outvoted; there was no majority protest against either BID. Shortly after each tabulation, the City Council adopted an ordinance regarding the relevant BID, announcing in each instance that the City Council had 'heard all testimony and received all evidence concerning the establishment of the District and desires to establish the District.'" (Hill, supra, 12 Cal.5th at pp. 470-471.)

A. The SPBID

According to the engineer's report supporting the SPBID renewal the SBPID "incorporates two dynamic centers: [¶] A) The revitalized pedestrian oriented Historic Downtown San Pedro [teeming] with unique shops, restaurants, offices, entertainment venues[,] and mixed use newer developments, and [¶] B) The international based Port of Los Angeles-a hub of tourism, culture, commerce and recreation." The SPBID's Management District Plan indicates that SPBID "include[s] a mix of retail, office, entertainment, light industrial, manufacturing, . . . parking, residential[,] and government facilities." SPBID is divided into three benefit districts, with some SPBID activities designated for all districts, but others designated for less than the entire SPBID. As an example, "Ambassador/Security Services," described below, "are only provided...