Southern Cal. Rapid Transit Dist. v. Bolen

• Decision Date: 30 January 1992
• Docket Number: No. S015986,S015986
• Citation: 3 Cal.Rptr.2d 843,1 Cal.4th 654,822 P.2d 875
• Court: California Supreme Court
• Parties: , 822 P.2d 875, 60 USLW 2518 SOUTHERN CALIFORNIA RAPID TRANSIT DISTRICT, Plaintiff and Respondent, v. Helen M. BOLEN, Defendant and Appellant; Atchison, Topeka and Santa Fe Railway Company et al., Interveners and Appellants.

Page 843

3 Cal.Rptr.2d 843

1 Cal.4th 654, 822 P.2d 875, 60 USLW 2518

SOUTHERN CALIFORNIA RAPID TRANSIT DISTRICT, Plaintiff and Respondent, v. Helen M. BOLEN, Defendant and Appellant Atchison, Topeka and Santa Fe Railway Company et al., Interveners and Appellants.

No. S015986.

Supreme Court of California In Bank.

Jan. 30, 1992.

Rehearing Denied March 26, 1992.

Marilyn L. Garcia, Brobeck, Phleger & Harrison, John J. Wasilczyk and Earle Miller, Los Angeles, for defendant and appellant.

MacDonald, Halsted & Laybourne, John R. Shiner, Stephanie Berrington McNutt, Lisa Winfield Liberatore, Hill, Farrer & Burrill, William M. Bitting, Vincent C. Page, Kevin H. Brogan and Dean E. Dennis, Los Angeles, for interveners and appellants.

Bird, Marella, Boxer, Wolpert & Matz, Vincent J. Marella, Dorothy Wolpert, Mark T. Drooks and Diane P. Shakin, Los Angeles, for plaintiff and respondent.

De Witt W. Clinton, County Counsel, Los Angeles, David B. Kelsey, Asst. County Counsel, Nossaman, Guthner, Knox & Elliott, James C. Powers and Alvin S. Kaufer, Los Angeles, as amici curiae on behalf of plaintiff and respondent.

ARABIAN, Justice.

The principal question before us is whether the equal protection guarantees of the state and federal Constitutions are violated by a statute conditioning the right to vote on the ownership of real property and alloting votes on the basis of its assessed value. We hold that, under the narrow circumstances presented, such a voting scheme is reasonably related to the objectives of the statute and thus survives constitutional scrutiny.

I

A

The Southern California Rapid Transit District (hereafter SCRTD or transit district) is the lead agency for the construction, financing, and operation of "a comprehensive mass rapid transit system in the southern California area, and particularly in Los Angeles County." (Pub.Util.Code, § 30001, subd. (a).) The initial segment of the transit system, an 18.6-mile subway line connecting the central business district of downtown Los Angeles with North Hollywood and known as "Metro Rail," was approved by SCRTD in 1983. The first operating element of Metro Rail, a 4.4-mile rapid transit line extending from Union Station to Wilshire Boulevard and Alvarado Street, will cost an estimated $1.25 billion. ¹ Financing for the project comes from a combination of sources--federal, state, and local--and, as a condition of federal funds, from the private sector. To help defray part of the enormous cost of the project, the Legislature has authorized SCRTD to establish "special benefit assessment districts" surrounding planned Metro Rail subway stations along the rapid transit corridor. (Pub.Util.Code, §§ 33000-33020.)

Although the transit district is statutorily authorized to establish assessment districts without voter approval, a referendum must be held if requested by the "owners of at least 25 percent of the assessed value of real property" within a proposed assessment district. (Pub.Util.Code, §§ 33002.1, 33002.2.) The statute limits voting at such a referendum, however, to those owners of real property who will be subject to assessment in the event an assessment district is approved. (Pub.Util.Code, § 33002.3.) Because in the present case residential property has been exempted from assessment, participation in any referendum is denied to non property-owning residents and residential property owners alike within the proposed districts.

In addition to the forgoing franchise restrictions, the statute directs that votes in any referendum be alloted on the basis of the assessed value of the real property for ad valorem tax purposes. Qualified owners are alloted one vote for each $1,000 of assessed value of their real property. (Pub.Util.Code, § 33002.3, subd. (b).) Although votes are alloted according to assessed value, the statute requires that any assessments actually levied by the transit district be calculated on the basis of the parcel or floor area, depending on the condition of the real property. (Pub.Util.Code, § 33002, subd. (a).)

B

We have described special or local assessments of the sort authorized by the Legislature here as 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...." (San Marcos Water Dist. v. San Marcos Unified School Dist. (1986) 42 Cal.3d 154, 161, 228 Cal.Rptr. 47, 720 P.2d 935 (quoting Spring Street Co. v. City of Los Angeles (1915) 170 Cal. 24, 29, 148 P. 217, internal quotation marks omitted); their use as a means of financing the cost of municipal improvements has a lengthy pedigree in the law of public finance. (See, generally, 14 McQuillin, The Law of Municipal Corporations (3d ed. 1987 rev.) §§ 38.01-38.338.) Analogous to but differing in important respects from the power of taxation, the essential feature of the special assessment is that the public improvement financed through it confers a special benefit on the property assessed beyond that conferred generally. (See, e.g., Norwood v. Baker (1898) 172 U.S. 269, 19 S.Ct. 187, 43 L.Ed. 443; Spring Street Co. v. City of Los Angeles, supra, 170 Cal. 24, 30-31, 148 P. 217.)

The uses of the special assessment as a financing device for public improvements are as manifold as the forms of such improvements themselves. It has been employed to finance such variegated public improvements as the construction of drains and sewers (Dawson v. Town of Los Altos Hills (1976) 16 Cal.3d 676, 129 Cal.Rptr. 97, 547 P.2d 1377 (Dawson )), residential subdivisions (Burrey v. Embarcadero Mun. Improvement Dist. (1971) 5 Cal.3d 671, 97 Cal.Rptr. 203, 488 P.2d 395 (Burrey )), gas distribution works (County of Riverside v. Whitlock (1972) 22 Cal.App.3d 863, 99 Cal.Rptr. 710 (Whitlock )), flood control projects (City of Larkspur v. Marin County Flood Control etc. Dist. (1985) 168 Cal.App.3d 947, 214 Cal.Rptr. 689), the redevelopment of blighted areas (In re Redevelopment Plan for Bunker Hill (1964) 61 Cal.2d 21, 37 Cal.Rptr. 74, 389 P.2d 538), and the construction of a transit tunnel (Larsen v. San Francisco (1920) 182 Cal. 1, 186 P. 757).

In recent years, the special assessment has found a new field of application in the context of the construction of massive urban rapid transit systems, the extraordinary capital costs of which have heightened pressure for the exploration of novel forms of financing. Grounded in the fact that the installation of a transit station and related facilities at a point along a rapid transit corridor enhances the value of real property in the immediate vicinity by generating intensified commercial activity, the special assessment has been promoted as a means by which transit authorities can recoup some of the value added to the surrounding real property and the resulting "windfall" enrichment of property owners. (See Note, Rapid Transit Financing: Use of the Special Assessment (1977) 29 Stan.L.Rev. 795.)

As applied to rapid transit financing, the mechanics of the assessment process do not differ materially from its use in conjunction with other public improvements. Briefly, the authorized public entity adopts a resolution of its intention to impose an assessment, determines the boundaries of the planned assessment district, and computes the proposed levy. It is then generally required to submit the issue to voter approval through some form of referendum or protest procedure. On approval, bonds are issued to finance construction of the public improvement, the principal and interest being paid and the bonds retired from income obtained through annual assessments.

C

In 1984, as part of its implementation of the assessment district revenue device, the SCRTD board appointed a benefit assessment policy task force, composed of representatives of a cross-section of property owners along the planned Metro Rail transit corridor, and charged it with the task of conducting a study and making recommendations for structuring the benefit assessment districts. Following a series of public hearings, the task force submitted its recommendations to the SCRTD board in 1985. In substance, it found that the property within the proposed assessment districts would benefit from the installation of Metro Rail transit stations through enhanced land values, higher lease rates and occupancy levels, increased retail sales, easier visitor access, reduced parking costs, and the intensification of land development. Following public notice and additional hearings, the SCRTD board adopted the resolutions necessary to proceed with the establishment of the benefit districts.

After submission of the resolutions to the Los Angeles City Council as required by statute and modification by that body to exempt residential property owners within the proposed districts from assessment, the transit district took final action on the matter in July of 1985 by establishing two benefit districts, one covering real property within the one-half mile radii of the four Metro Rail transit stations planned for the downtown central business district, and a second covering the real property within a one-third mile radius of the Wilshire-Alvarado transit station.

The SCRTD board's final resolutions established an initial assessment rate of $.30 per square foot of assessable property, with a maximum rate of $.42 per square foot--a rate calculated to raise a total of $130.3 million in capital funding over a multiyear assessment period, or roughly 11 percent of the total cost of the 4.4-mile segment. The board also acceded to the exemption of residential property within the two benefit districts, required as a condition for Los Angeles City Council approval, and directed that the assessments otherwise be levied uniformly throughout the two districts and that they expire in the year 2008 or earlier. Although assessment notices for the 1986-1987 year were...