Neilson v. City of California City

• Decision Date: 03 November 2005
• Docket Number: No. F046860.,F046860.
• Citation: 35 Cal.Rptr.3d 453,133 Cal.App.4th 1296
• Court: California Court of Appeals Court of Appeals
• Parties: N.L. NEILSON, Plaintiff and Appellant, v. CITY OF CALIFORNIA CITY, Defendant and Respondent.

35 Cal.Rptr.3d 453

133 Cal.App.4th 1296

N.L. NEILSON, Plaintiff and Appellant, v. CITY OF CALIFORNIA CITY, Defendant and Respondent.

No. F046860.

Court of Appeal, Fifth District.

November 3, 2005.

N.L. Neilson, in pro. per., for Plaintiff and Appellant.

Aaron L. Katz, in pro. per., as Amicus Curiae on behalf of Plaintiff and Appellant.

Lemieux & O'Neill and W. Keith Lemieux, Westlake Village, for Defendant and Respondent.

Colantuono & Levin, Michael G. Colantuono, Los Angeles, and Amy C. Sparrow, for the League of California Cities as Amicus Curiae on behalf of Defendant and Respondent.

Jennifer B. Henning for the California State Association of Counties as Amicus Curiae on behalf of Defendant and Respondent.

OPINION

DAWSON, J.

A nonresident landowner challenged a flat-rate parcel tax imposed by a city after the city's registered voters approved the tax by a two-thirds majority. The superior court sustained the city's general demurrer to the landowner's complaint, which alleged the parcel tax violated limitations on the taxation of real property contained in the California Constitution and violated the constitutional guarantee of equal protection.

The issues raised on appeal are (1) whether taxes based on the mere ownership of real property are constitutionally required to be ad valorem taxes; (2) whether the flat-rate parcel tax is a general tax and thus unconstitutional or, alternatively, is a special tax and therefore valid; (3) whether California law concerning voter eligibility requires that nonresident landowners affected by the tax be given the right to vote on the taxing measure; and (4) whether the equal protection clause prevents the city from using a residency requirement to determine who may vote on the tax when nonresident landowners are the largest source of revenue under the tax.

We hold that, as presently written, the California Constitution does not prohibit a tax on the mere ownership of real property if the tax is a special tax and not an ad valorem tax. In this case, the flat-rate parcel tax (1) was assessed on the mere ownership of real property, (2) was not an ad valorem tax, and (3) was a valid special tax because it was approved by two-thirds of the relevant electorate and its revenues were dedicated to specific governmental purposes. Furthermore, California law governing the qualification of voters establishes that the relevant electorate for the municipal election that approved the flat-rate parcel tax was the registered voters of the municipality. We also hold, under the rational basis test, that the equal protection clause does not require that nonresident landowners be given the right to vote on the taxing measure. Therefore, judgment is affirmed.

FACTS AND PROCEEDINGS

In March 2004, the City Council of City of California City (Council) passed Resolution No. 03-04-2099, which called a municipal election for June 8, 2004, and directed that voters be presented with a measure for a city-wide special tax of up to $75 per lot or parcel for each of the next three fiscal years. The municipal election was consolidated with other elections scheduled for that date.

At the June 2004 special election, the proposed parcel tax was presented to the voters of City of California City (City) as Measure L. The impartial analysis of Measure L by City attorney, which was set forth in the sample ballot and voter information pamphlet, stated:

"If this measure is approved by two-thirds of the voters, the City will be able to levy a special tax for three years commencing July 1, 2004. The maximum amount of tax the city can levy is $75 per lot or parcel per year. The City will use proceeds of the special tax to pay for police, fire and recreational services, and to repair streets, parks, water line replacement and repair, and building maintenance."

The argument in favor of Measure L was presented by the mayor, vice mayor, and Council members, and stated:

"Save Our Services! There is no city anywhere with a greater need to renew a special tax. We have over 50,000 privately-owned subdivided lots in the City, and approximately 3,800 registered voters. This means that every voter who votes for the special tax carries over 10 times the taxing power to benefit the City, because every one of those property owners supports the city with their special tax payments. While some absentee owners object to the tax, the vast majority of them understand that it holds up property values and therefore their investment.

"What we pay now for special tax is our personal investment in our city; public safety services, parks and recreation, street repair and maintenance, and this time, funding for emergency repairs of water main breaks that cost the city hundreds of thousands of dollars every year. The only practical way to pay for the infrastructure needs of our city is a special tax. Passage of Measure `L' is a renewal of our previous $75.00 special tax for three years, not a new tax on top of old. [¶] "The most important reason for a California City special tax is that it is the only one we do not share with County, State or Federal agencies. Vote `Yes' on Measure `L'. Save Our Services."

Of the 4,011 registered voters in City, approximately 40.1 percent voted. Measure L passed by a vote of 1,128 (70.11 percent) to 481 (29.89 percent), which exceeded a two-thirds majority requirement.

On July 6, 2004, Council passed Resolution No. 07-04-2130 levying the special tax that the voters had approved. That resolution stated in part:

"2. Special Tax Levy.

"A special tax in the amount of $75.00 per lot or parcel is levied for the fiscal year commencing July 1, 2004. The City Clerk is authorized and directed to transmit a certified copy of this resolution to the Kern County Tax Collector and the Kern County Auditor-Controller with a request for the tax to be levied and collect [sic] on the property tax rolls.

"3. Special Tax Expenditures.

"(a) The proceeds of the special tax levy shall be deposited into a special tax fund to be spent, as nearly as practicable, as follows:

                  "(1) Fire Services               $  800,000
                  "(2) Parks and Recreation        $  320,000
                  "(3) Police Services             $  800,000
                  "(4) Water Services              $  480,000
                  "(5) Street Improvements         $  800,000
                                                    _________
                       "TOTAL                      $3,200,000
                

"(b) On or before August 1, 2004, the City Council shall reconcile expenditures of special tax proceeds. Future expenditures within a category will be increased if the expenditure for the 2004-2005 fiscal year is less than the above amounts. Future expenditures within a category will be reduced if the expenditure for the 2004-2005 fiscal year exceeds the above amount. Unexpended (surplus) amounts shall be reserved for future expenditure within the category with the surplus. The annual reconciliation will be reported.

"4. Compliance.

"The City Council certifies this tax complies with California Constitution, Article XIII D."

Within three weeks of the passage of the foregoing resolution by Council, plaintiff filed a complaint for declaratory and injunctive relief to invalidate the $75 parcel tax. The complaint alleged, as relevant here, that (1) the tax violated section 1 of article XIII A of the California Constitution,¹ (2) the tax was not a "special tax" for purposes of section 4 of article XIII A, (3) the tax violated the equal protection clause by making absentee landowners subsidize local residents, and (4) the tax amounted to taxation without representation because the vast majority (85 percent) of those paying the tax were absentee landowners who could not vote on the tax.

City filed a demurrer, and the hearing was scheduled for September 30, 2004. Prior to the hearing, plaintiff submitted a first amended complaint, but the superior court did not receive a copy until the beginning of the hearing. The superior court sustained the demurrer to the original complaint, stated it would treat the first amended complaint as plaintiff's attempt to correct the failure to state a claim, set the matter for a further hearing on October 29, 2004, and told plaintiff that if he wanted to file further papers he should do so by October 22, 2004. Plaintiff filed a second amended complaint on October 8, 2004.

Shortly thereafter, City filed a supplemental demurrer to the first and second amended complaints based on the ground that the plaintiff failed to allege facts sufficient to demonstrate that the $75 parcel tax was unlawful. City argued that the flat-rate parcel tax was a special tax dedicated to specific purposes and, "as a legal matter, the fact that the tax [wa]s dedicated to multiple special purposes does not in any [way] diminish its character as a special tax."

In opposition to the supplemental demurrer, plaintiff argued, among other things, that there must be some limit on when a series of stacked "specific purposes" crosses the line into "general governmental services" and, thus, the tax involved is a "general tax" rather than a "special tax." Plaintiff further argued that the determination of when that line was crossed required a trial on the merits. Finally, at oral argument on the supplemental demurrer, plaintiff suggested that the trial court grant him summary judgment, and concluded: "everything we wanted in the record ... is in there.... So everything we want to take up is in there."

The superior court sustained the demurrer without leave to amend and, on December 20, 2004, signed and filed a judgment in favor of City.

On appeal, the League of California Cities, joined by the California State Association of Counties, have filed an amici curiae brief in support of the position of respondent City, and Aaron L. Katz has filed an amicus curiae brief in support of plaintiff's position.²

DISCUSSION

I. Standard of review

An appellate court must independently decide questions of law without deference to the...