Silicon Val. Taxpayers v. Open Space Auth.

• Decision Date: 06 July 2005
• Docket Number: No. H026759.,H026759.
• Citation: 130 Cal.App.4th 1295,30 Cal.Rptr.3d 853
• Court: California Court of Appeals Court of Appeals
• Parties: SILICON VALLEY TAXPAYERS ASSN., INC., et al., Plaintiffs and Appellants, v. SANTA CLARA COUNTY OPEN SPACE AUTHORITY, Defendant and Respondent.

30 Cal.Rptr.3d 853

130 Cal.App.4th 1295

SILICON VALLEY TAXPAYERS ASSN., INC., et al., Plaintiffs and Appellants, v. SANTA CLARA COUNTY OPEN SPACE AUTHORITY, Defendant and Respondent.

No. H026759.

Court of Appeal, Sixth District.

July 6, 2005.

Rehearing Denied August 4, 2005.

Review Granted October 12, 2005.

COPYRIGHT MATERIAL OMITTED

Law Offices of Tony J. Tanke, Tony J. Tanke, Law Offices of Gary Simms, Gary L. Simms, San Mateo, Howard Jarvis Taxpayers Association, Timothy Arthur Bittle, Sacramento, Attorneys for Plaintiffs/Appellants Silicon Valley Taxpayers Assn., Inc.

Nielsen, Merksamer, Parrinello, Mueller & Naylor, James R. Parrinello, John E. Mueller, Christopher E. Skinnell, Mill Valley, Attorneys for Defendant/Respondent Santa Clara County Open Space Authority.

Heller Ehrman White & McAuliffe, Vanessa OttilieWells, Ingrid S. Leverett, David A. Thomas, San Francisco, Attorneys for Amicus Curiae The Trust for Public Land.

Office of the County Counsel, Steven M. Woodside, Sue Andra Gallagher, Deputy County Counsel, Attorney for Amicus Curiae for respondent Cal. State Assoc. of Counties et al.

Hopkins & Carley, Jay M. Ross, San Jose, Attorney for Amicus Curiae for respondent San Jose Silicon Valley Chamber of Commerce.

Pacific Legal Foundation, James Sherman Burling, Sacramento, Attorneys for Amicus Curiae for appellant Pacific Legal Foundation.

PREMO, Acting P.J.

A. INTRODUCTION

Two taxpayer organizations and several individual taxpayers appeal from a judgment of the trial court validating an assessment levied by the Santa Clara County Open-Space Authority (OSA) in 2001. Plaintiffs claim that the assessment, which is intended to fund the acquisition and maintenance of open space land, runs afoul of Proposition 218, the Right to Vote on Taxes Act.

We hold that although Proposition 218 tightened the required procedure by which special assessment districts are formed and increased judicial scrutiny of an assessment as finally confirmed, Proposition 218 did not alter the fundamental rule that the courts shall not interfere with legislative acts except where those acts clearly depart from constitutional requirements. We further hold that Proposition 218 did not narrow the historical concept of special benefit, the sole justification for any special assessment.

Applying these holdings to the facts of this case we conclude that OSA formed the 2001 assessment district consistent with Proposition 218's requirements. In particular, OSA demonstrated that the acquisition and maintenance of open space would provide a special benefit to the assessed properties and that the 2001 assessment was levied in proportion to the special benefits conferred. Accordingly, we shall affirm the judgment.

B. FACTUAL AND LEGAL BACKGROUND

1. The Creation of OSA and the Nature of Special Assessments

OSA was created by the Santa Clara County Open-Space Authority Act. (Pub. Res.Code, § 35100 et seq.) The express purpose of the act was to preserve open space within Santa Clara County in order to counter the conversion of land to urban uses, to preserve quality of life, and to encourage agricultural activities. (Pub. Res.Code, § 35101, subd. (a).) The act does not provide any particular mechanism to fund the acquisition of open space; it leaves that to OSA. Among other things, the act gives OSA the power to levy special assessments¹ pursuant to the Streets and Highways Code. (Pub.Res.Code, § 35173.)

The nature of a special assessment was explained by our Supreme Court in the pre-Proposition 218 case of Knox v. City of Orland (1992) 4 Cal.4th 132, 141-143, 14 Cal.Rptr.2d 159, 841 P.2d 144 (Knox). As Knox explained, a special assessment is a "`"`compulsory charge placed by the state upon real property within a pre-determined district, made under express legislative authority for defraying in whole or in part the expense of a permanent public improvement therein. . . .'" [Citation.]' [Citation.] In this regard, a special assessment is `levied against real property particularly and directly benefited by a local improvement in order to pay the cost of that improvement.' [Citation.] `The rationale of special assessment is that the assessed property has received a special benefit over and above that received by the general public. The general public should not be required to pay for special benefits for the few, and the few specially benefited should not be subsidized by the general public. [Citation.]' [Citation.] . . .

"A tax, on the other hand, is very different. Unlike a special assessment, a tax can be levied `"without reference to peculiar benefits to particular individuals or property."' [Citations.] Indeed, `[n]othing is more familiar in taxation than the imposition of a tax upon a class or upon individuals who enjoy no direct benefit from its expenditure, and who are not responsible for the condition to be remedied.' [Citations.] . . .

"Therefore, while a special assessment may, like a special tax, be viewed in a sense as having been levied for a specific purpose, a critical distinction between the two public financing mechanisms is that a special assessment must confer a special benefit upon the property assessed beyond that conferred generally." (Knox, supra, 4 Cal.4th 132, 141-142, 14 Cal.Rptr.2d 159, 841 P.2d 144.)

The power of a local agency to form an assessment district is based upon statute. The pertinent statutory scheme in this case is the Landscape and Lighting Act (LLA). (Sts. & Hy.Code, § 22500 et seq.) The basic procedure for forming an assessment district under the LLA begins with a resolution by the assessing agency's governing board. (Sts. & Hy.Code, § 22585.) The resolution must include an order directing an engineer to prepare a report containing plans and specifications for the proposed improvement, an estimate and assessment of its costs, and a diagram of the proposed assessment district. (Sts. & Hy.Code, §§ 22567, 22585, subd. (d), 22586.) After approving the engineer's report, the agency must provide notice and an opportunity for the affected property owners to be heard. (Sts. & Hy.Code, § 22588.) If a majority of the property owners protest the proposal, the agency must abandon it. (Sts. & Hy.Code, § 22593.)

OSA formed an assessment district in 1994 under the procedures then provided by the LLA. Certain taxpayers challenged the 1994 assessment and this court subsequently found it to be valid. (Coleman v. Santa Clara County Open Space Authority (Oct. 20, 1997) H014730 [nonpub. opn.].) The 1994 assessment raised approximately $4 million annually and led to the acquisition of thousands of acres of open space.

2. Creation of the 2001 Assessment District and Proposition 218

Toward the end of 2000, OSA concluded that it needed to seek additional funding sources and considered the formation of another assessment district. Since the formation of the 1994 assessment district, however, the voters of this state had passed Proposition 218, which changed the law pertaining to special assessments. The history and purpose of Proposition 218 has been well-described by others:

"`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.]" [Citation.] Its principal provisions limited ad valorem property taxes to 1 percent of a property's assessed valuation and limited increases in the assessed valuation to 2 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. [Citation.] 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, subd. (a)(1)-(4); see also [id.], § 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.'" (Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal.4th 830, 836-837, 102 Cal.Rptr.2d 719, 14 P.3d 930, quoting Howard Jarvis Taxpayers Assn. v. City of Riverside (1999) 73 Cal.App.4th 679, 681-682, 86 Cal.Rptr.2d 592.)

Article XIII D of the California Constitution contains the provisions at issue in this case.² Section 4(a) of that article³ provides that an agency proposing to levy an assessment "shall identify all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed. The proportionate special benefit derived by each identified parcel shall be determined in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the property related service being provided. No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and an agency shall separate the general benefits from the special benefits conferred on a parcel. Parcels within a district that are owned or used by any agency, the State of California or the United States shall not be exempt from assessment unless the agency can demonstrate...