Howard Jarvis Taxpayers Assn. v. City of Riverside

• Decision Date: 16 July 1999
• Docket Number: No. E022717,E022717
• Citation: 86 Cal.Rptr.2d 592,73 Cal.App.4th 679
• Parties: , 99 Cal. Daily Op. Serv. 5739, 99 Daily Journal D.A.R. 7303 HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Appellants, v. CITY OF RIVERSIDE, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

Page 592

86 Cal.Rptr.2d 592

73 Cal.App.4th 679, 99 Cal. Daily Op. Serv. 5739,

99 Daily Journal D.A.R. 7303

HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Appellants, v. CITY OF RIVERSIDE, Defendant and Respondent.

No. E022717.

Court of Appeal, Fourth District, Division 2, California.

July 16, 1999.

Jonathan M. Coupal, Sacramento, Timothy A. Bittle, and Richard D. Gann, San Diego, for Plaintiffs and Appellants.

Stan T. Yamamoto, City Attorney, Howard, Rice, Nemerovski, Canady, Falk & Rabkin and Steven L. Mayer, San Francisco, for Defendant and Respondent.

OPINION

RICHLI, J.

The question before us is whether streetlighting assessments come within Proposition 218's exemption for assessments imposed exclusively to finance the maintenance and operation of streets and sidewalks. We will hold that they do and therefore that preexisting streetlighting assessments are "grandfathered" under Proposition 218.

I STATUTORY BACKGROUND

Proposition 218 can best be understood against its historical background, which begins in 1978 with the adoption of Proposition 13. "The purpose of Proposition 13 was to cut local property taxes. [Citation.]" (County of Los Angeles v. Sasaki (1994) 23 Cal.App.4th 1442, 1451, 29 Cal.Rptr.2d 103.) Its principal provisions limited ad valorem property taxes to one percent of a property's assessed valuation and limited increases in the assessed valuation to two percent per year unless and until the property changed hands. (Cal. Const., art. XIII A, §§ 1, 2.)

To prevent local governments from subverting its limitations, Proposition 13 also prohibited counties, cities, and special districts from enacting any special tax without a two-thirds vote of the electorate. (Cal. Const., art. XIII A, § 4; Rider v. County of San Diego (1991) 1 Cal.4th 1, 6-7, 2 Cal.Rptr.2d 490, 820 P.2d 1000.) It has been held, however, that a special assessment is not a special tax within the meaning of Proposition 13. (Knox v. City of Orland (1992) 4 Cal.4th 132, 141, 14 Cal.Rptr.2d 159, 841 P.2d 144, and cases cited.) Accordingly, a special assessment could be imposed without a two-thirds vote.

In November 1996, in part to change this rule, the electorate adopted Proposition 218, which added Articles XIII C and XIII D to the California Constitution. Proposition 218 allows only four types of local property taxes: (1) an ad valorem property tax; (2) a special tax; (3) an assessment; and (4) a fee or charge. (Cal. Const., art. XIII D, § 3, subds. (a)(1)-(a)(4); see also Cal. Const., art. XIII D, § 2, subd. (a).) It buttresses Proposition 13's limitations on ad valorem property taxes and special taxes by placing analogous restrictions on assessments, fees, and charges.

First, Proposition 218 defines an "assessment" as "any levy or charge upon real property ... for a special benefit conferred upon the real property." (Cal. Const., art. XIII D, § 2, subd. (b).) It defines a "special benefit" as "a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does not constitute 'special benefit.' " (Cal. Const., art. XIII D, § 2, subd. (i).) Proposition 218 then provides that an assessment may be imposed only if: (1) it is supported by an engineer's report (Cal. Const., art. XIII D, § 4, subd. (b)), (2) it does not exceed the reasonable cost of the proportionate special benefit conferred on each affected parcel (Cal. Const., art. XIII D, § 4, subds. (a), (f)), and (3) it receives, by mailed ballot, a vote of at least half of the owners of affected parcels, weighted "according to the proportional financial obligation of the affected property." (Cal. Const., art. XIII D, § 4, subds. (c)-(e)).

In general, an assessment already in existence on the effective date of Proposition 218 (preexisting assessment) must comply with Proposition 218 by July 1, 1997. Four specified classes of preexisting assessments, however, are "exempt from the procedures and approval process set forth in Section 4 [.]" (Cal. Const., art. XIII D, § 5.) This case turns on the meaning of one of these four exemptions.

Under article XIII D, section 5, subdivision (a) of the California Constitution (section 5(a)), a preexisting special assessment is exempt if it is "imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems or vector control." (Italics added.) "Maintenance and operation expenses" are defined as "the cost of rent, repair, replacement, rehabilitation, fuel, power, electrical current, care, and supervision necessary to properly operate and maintain a permanent public improvement." (Cal. Const., art. XIII D, § 2, subd. (f), italics added.) ¹

A preexisting assessment which is not exempt could be reauthorized by taxpayer consent in one of two ways. First, it could be reauthorized as an assessment, provided it met Proposition 218's "special benefit" requirement, it was supported by an engineer's report, and it received a weighted majority vote of owners of the affected property in a mail election. (Cal. Const., art. XIII D, § 4.) Second, it could be reauthorized as a special tax, provided it received a two-thirds vote of the general electorate. (Cal. Const., art. XIII A, § 4; Cal. Const., art. XIII D, § 3, subd. (a)(2).) ² Unless either properly reauthorized or exempt, however, a preexisting assessment is now unconstitutional. (Cal. Const., art. XIII D, § 5.)

Proposition 218 recited: "FINDINGS AND DECLARATIONS. The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent." (Historical Notes, 2A West's Ann. Constitution (1999 pocket supp.) art. XIII C, § 1, p. 22.) It also stated: "LIBERAL CONSTRUCTION. The provisions of this act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent." (Ibid.)

II FACTUAL AND PROCEDURAL BACKGROUND

The plaintiffs in this action (plaintiffs) are three organizations which allegedly advocate tax reduction -- Howard Jarvis Taxpayers Association, Paul Gann's Citizens Committee, and Riverside Taxpayer Revolt -- and four individuals. The defendant is the City of Riverside (the City). Plaintiffs' complaint alleged that:

Prior to 1988, the City paid for electricity for streetlights out of its general fund. In 1988, pursuant to the Landscaping and Lighting Act of 1972 (Sts. & Hy.Code, § 22500 et seq.), it created the Street Light Assessment District (the District). ³ The District covers the entire City. The District levies an annual assessment, which almost all private property owners in the City must pay. The total annual assessment is approximately $3 million. The assessment is used to pay for electricity for streetlights.

On November 6, 1996, Proposition 218 became effective. On June 17, 1997, the City held an election on Measure EE, which proposed to continue the District. Measure EE received 50.5 percent of the vote. This was less than the two-thirds it would have needed to qualify as a special tax.

Plaintiffs filed a motion for summary adjudication of their cause of action for declaratory relief. A week later, the City filed a motion for judgment on the pleadings.

After hearing argument, the trial court granted the City's motion for judgment on the pleadings. It ruled: "Riverside's Street Light Assessment District is exempt from Proposition 218 under Article XIII D, Section 5(a)." It dismissed plaintiffs' motion for summary adjudication as moot. Accordingly, it entered judgment for the City.

III

A PREEXISTING STREETLIGHTING ASSESSMENT

IS EXEMPT UNDER PROPOSITION 218

The issue before us arises in the context of an order granting judgment on the pleadings. "A defendant is entitled to judgment on the pleadings if the plaintiff's complaint does not state a cause of action. In considering whether a defendant is entitled to judgment on the pleadings, we look only to the face of the pleading under attack.... All facts alleged in the complaint are admitted for purposes of the motion, and the court determines whether those facts constitute a cause of action. The court also may consider matters subject to judicial notice. [Citations.]" (Hunt v. County of Shasta (1990) 225 Cal.App.3d 432, 440, 275 Cal.Rptr. 113; see also Code Civ. Proc., § 438, subds. (c)(1)(B)(ii), (d).) We review an order granting judgment on the pleadings independently. (Smiley v. Citibank (1995) 11 Cal.4th 138, 146, 44 Cal.Rptr.2d 441, 900 P.2d 690, affd. (1996) 517 U.S. 735 [116 S.Ct. 1730, 135 L.Ed.2d 25].)

" 'We begin with the fundamental rule that our primary task is to determine the lawmakers' intent. [Citation.] In the case of a constitutional provision adopted by the voters, their intent governs. [Citations.] To determine intent, " 'The court turns first to the words themselves for the answer.' " [Citation.]' " (People v. Jones (1993) 5 Cal.4th 1142, 1146, 22 Cal.Rptr.2d 753, 857 P.2d 1163, quoting Delaney v. Superior Court (1990) 50 Cal.3d 785, 798, 268 Cal.Rptr. 753, 789 P.2d 934, quoting Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 724, 257 Cal.Rptr. 708, 771 P.2d 406, quoting Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, 514 P.2d 1224.) " 'When statutory language is clear and unambiguous, there is no need for construction and courts should not indulge in it.' [Citations.]" (People...