The Pines v. City of Santa Monica

Decision Date16 July 1981
Parties, 630 P.2d 521 The PINES et al., Plaintiffs and Respondents, v. CITY OF SANTA MONICA, Defendant and Appellant. L.A. 31338.
CourtCalifornia Supreme Court

Richard L. Knickerbocker, City Atty., Steven S. Stark, Acting City Atty., Kaplan, Livingston, Goodwin, Berkowitz & Selvin and Herman F. Selvin, Beverly Hills, for defendant and appellant.

Paul, Hastings, Janofsky & Walker and Ronald M. Oster, Los Angeles, for plaintiffs and respondents.

NEWMAN, Justice.

Plaintiffs, eight condominium developers, challenge the validity of the Santa Monica Condominium Tax Law and seek refund of taxes paid in the amount of $138,000 plus interest. The ordinance imposes a one-time charge of $1,000 per salable unit.

The trial court ruled that the tax was invalid because subdivision development and construction are matters of statewide concern, preempted by the Subdivision Map Act (Gov.Code, § 66410, et seq.). We do not agree.

The ordinance (Santa Monica Mun.Code, art. VI, ch. 6B, § 6650 et seq.) is called a "condominium business license tax" and is "imposed solely for revenue purposes." (Id., § 6651.) All monies raised go into the general fund. The $1,000 charge applies to each new condominium or condominium-conversion unit but not to previously sold units. (Ibid.)

At the times relevant here the ordinance was enforced by requiring either payment or execution of a lien agreement before issuance of a condominium license. The license, in turn, was prerequisite to all necessary project approvals and permits, including

subdivision approval. (Id., former § 6657.) It was unlawful to take any action [630 P.2d 522] to subdivide before the license was obtained. (Id., former §§ 6652(b), 6654.) 1

SUBDIVISION MAP ACT

The Subdivision Map Act (Gov.Code § 66410 et seq.) (Map Act) sets requirements for the development of subdivisions. It authorizes local governments to adopt conforming ordinances to "(r)egulat(e) and control ... the design and improvement" of subdivisions. (§ 66411.) It sets suitability, design, improvement, and procedural requirements (e. g., § 66452 et seq., § 66473 et seq., § 66478.1 et seq.) and allows local governments to impose supplemental requirements of the same kind. (E. g., § 66475 et seq., § 66479 et seq.) It requires approval of a final map that conforms to conditions applicable when the tentative map was approved. (§§ 66458, 66473.)

When the project is a condominium conversion the Act prescribes tenants' rights as preconditions to approval; but "(t)his section shall not (otherwise) diminish, limit, or expand" a government's authority "to approve or disapprove condominium projects." (§ 66427.1(e).)

Governments may impose "fees," reasonable in amount and fairly allocated, to defray costs of the approval process and construction of specified public works made necessary by the project. (§ 66451.2, 66483 et seq.) No revenue taxes are imposed or prohibited by the Act's words, and it contains no statement of intent to preempt local tax powers.

PREEMPTION

Plaintiffs invoke the principle that legislation in an area of statewide concern preempts conflicting regulation by a charter city. (See Sonoma County Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296, 315-316, 152 Cal.Rptr. 903, 591 P.2d 1; Bishop v. City of San Jose (1969) 1 Cal.3d 56, 61-62, 81 Cal.Rptr. 465, 460 P.2d 137.) They argue that by conditioning subdivision approvals on payment of a tax the Santa Monica ordinance contravenes the Map Act. We conclude that the two laws do not clash.

The taxation power is vital and is granted to charter cities by the constitution. (Cal.Const., art. XI, § 5(a).) Their ability to impose revenue taxes can be curtailed only by the charter itself or when "in direct and immediate conflict with a state statute or statutory scheme." (Weekes v. City of Oakland (1978) 21 Cal.3d 386, 392, 146 Cal.Rptr. 558, 579 P.2d 449.) That the state has preempted a field of statewide concern for purposes of regulation does not itself prevent local taxation of the persons or activities regulated. (Rivera v. City of Fresno (1971) 6 Cal.3d 132, 139, 98 Cal.Rptr. 281, 490 P.2d 793; In re Groves (1960) 54 Cal.2d 154, 156-157, 4 Cal.Rptr. 844, 351 P.2d 1028; Ainsworth v. Bryant (1949) 34 Cal.2d 465, 477, 211 P.2d 564; In re Galusha (1921) 184 Cal. 697, 699, 195 P. 406.)

Plaintiffs rely on decisions that have construed the Map Act as a limitation on local tax power. These opinions suggest that the authority granted to cities by the Act is confined to regulation of subdivision design and improvement, including imposition of specified fees for project-related expenses. Hence, the courts hold, a broader local charge on subdivision approval is invalid because it interferes with the statutory scheme. (Kelber v. City of Upland (1957) 155 Cal.App.2d 631, 636-638, 318 P.2d 561; see also, Benny v. County of Alameda (1980) 105 Cal.App.3d 1006, 1011, 164 Cal.Rptr. 776; Santa Clara County Contractors etc. Assn. v. City of Santa Clara (1965) 232 Cal.App.2d 564, 572-578, 43 Cal.Rptr. 86; Newport Bldg. Corp. v. City of Santa Ana (1962) 210 Cal.App.2d 771, 775-776, 26 Cal.Rptr. 797; Wine v. Council of City of Los Angeles (1960) 177 Cal.App.2d 157, 170-171, 2 Cal.Rptr. 94; cf. Ayres v. City Council of Los Angeles (1949) 34 Cal.2d 31, 37, 207 P.2d 1.)

Kelber and the cases following it contravene the principle that a tax for revenue is not invalid simply because it conditions the local exercise of a right or privilege articulated by the state. For example, cities may tax the privilege of doing work governed by a comprehensive state licensing scheme. (In re Groves, supra, 54 Cal.2d 154, 156-157, 4 Cal.Rptr. 844, 351 P.2d 1028 (milk products plant); In re Galusha, supra, 184 Cal. 697, 699, 195 P. 406 (practice of law); Marsh & McLennan of Cal., Inc. v. City of Los Angeles (1976) 62 Cal.App.3d 108, 122-124, 132 Cal.Rptr. 796 (insurance broker).)

Galusha declared that "(t)he imposition of an occupational tax by a municipality upon those engaged in (occupations the state has licensed) is not an interference with state affairs. The mere compliance with certain prerequisites, in return for which (an occupational) license is granted by the state, does not place a person beyond the range of additional regulation of the conditions upon which the license may be used. The municipality, in imposing an occupational tax upon (state-licensed professionals), is not interfering with state regulations, for it is not attempting to prescribe qualifications different from or additional to those prescribed by the state. It is merely providing for an increase in its revenue by imposing a tax on those who, by pursuing their profession within its limits, are deriving benefits from the advantages especially afforded by the city...." (184 Cal. at p. 699, 195 P. 406, quoted in Groves, supra, 54 Cal.2d at p. 157, 4 Cal.Rptr. 844, 351 P.2d 1028.)

California courts also have been ready in other contexts to uphold local taxes against arguments that they conflict with state regulation. Rivera v. City of Fresno, supra, 6 Cal.3d 132, 98 Cal.Rptr. 281, 490 P.2d 793 rejected contentions that a local utility user's tax, collectible by the utility, "invades the field of regulation of public utilities" preempted by the state. (P. 139, 98 Cal.Rptr. 281, 490 P.2d 793.) And state proscriptions of local use of certain tax methods have been construed narrowly. (Weekes v. City of Oakland, supra, 21 Cal.3d 386, 392-398, 146 Cal.Rptr. 558, 579 P.2d 449 (employer-collected, gross-receipts tax on commuter's income within city is not a prohibited income tax); A. B. C. Distributing Co. v. City and County of San Francisco (1975) 15 Cal.3d 566, 570-576, 125 Cal.Rptr. 465, 542 P.2d 625 (liquor retailer not exempt from general payroll tax despite prohibition of local taxation of income and manufacture, importation, and sale of alcohol); Ainsworth v. Bryant, supra, 34 Cal.2d 465, 211 P.2d 564 (use tax on personalty not in conflict with prohibition of alcohol tax); but cf. Century Plaza Hotel Co. v. City of Los Angeles (1970) 7 Cal.App.3d 616, 620-624, 87 Cal.Rptr. 166 ("tippler's" tax invalid).)

Cases where license-tax ordinances were struck down as preempted are distinguishable. Lynch v. City of Los Angeles (1952) 114 Cal.App.2d 115, 249 P.2d 856, Agnew v. City of Los Angeles (1958) 51 Cal.2d 1, 330 P.2d 385, and Agnew v. City of Culver City (1959) 51 Cal.2d 474, 334 P.2d 571 invalidated ordinances requiring additional licenses for state-licensed contractors doing business in those cities. As explained in Groves, supra, each ordinance imposed not only license fees but substantive regulations beyond those provided by the state scheme. Because the ordinances affected aspects of regulation already covered by state law they were preempted. (54 Cal.2d at p. 157, 4 Cal.Rptr. 844, 351 P.2d 1028; see also County of Los Angeles v. City of Alhambra (1980) 27 Cal.3d 184, 189-193, 165 Cal.Rptr. 440, 612 P.2d 24.)

Biber Electric Co., Inc. v. City of San Carlos (1960) 181 Cal.App.2d 342, 5 Cal.Rptr. 261 (ordinance requiring business-license sticker on commercial vehicles and $1 fee per business vehicle if more than one) and In re Lane (1962) 58 Cal.2d 99, 22 Cal.Rptr. 857, 372 P.2d 897 (ordinance that proscribed going from one room to another for purposes of sexual intercourse with a person other than spouse) found preemption by virtue of parallel state regulation of the conduct or business sought to be regulated locally. Those rulings do not conflict with our analysis here.

Plaintiffs urge that when the Legislature without material change recodified the Map Act in 1974 it ratified the Kelber doctrine. They invoke the canon that reenactment of a statute in substantially identical language adopts prior judicial constructions. (E. g., State of South Dakota v. Brown (1978) 20 Cal.3d 765, 774, 144 Cal.Rptr. 758, 576 P.2d 473; Los Angeles Met....

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