Props. 218 &Props. 218 &AssessmentsAssessments

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Colantuono & LevinColantuono & Levin

Internal MCLE PresentationInternal MCLE Presentation

June 28, 2012June 28, 2012

MICHAEL G. COLANTUONOMICHAEL G. COLANTUONO

Colantuono & Levin, PCColantuono & Levin, PC11364 Pleasant Valley Road11364 Pleasant Valley RoadPenn Valley, CA 95946Penn Valley, CA 95946--90009000(530) 432(530) 432--7359 7359

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(213) 542(213) 542--5739 5739 (530) 432(530) 432--7356 (fax)7356 (fax)

MColantuono@MColantuono@CCLLAW.USLLAW.USWWW.CLLAW.USWWW.CLLAW.USTwitter: @MColantuonoTwitter: @MColantuonoLinkedLinked--In: Michael ColantuonoIn: Michael Colantuono

Assessment DefinedAssessment Defined

13D, 13D, §§2(b) “Assessment” means any 2(b) “Assessment” means any levy or charge upon real property by levy or charge upon real property by an agency for a special benefit an agency for a special benefit conferred upon real property. conferred upon real property. conferred upon real property. conferred upon real property. “Assessment” includes, but is not “Assessment” includes, but is not limited to, “special assessment,” limited to, “special assessment,” “benefit assessment,” “maintenance “benefit assessment,” “maintenance assessment,” and “special assessment,” and “special assessment tax.”assessment tax.”

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Assessment DefinedAssessment Defined

13D, 13D, §§2(b) excludes assessments that 2(b) excludes assessments that are not imposed on real propertyare not imposed on real property•• HJTA v. San Diego HJTA v. San Diego (1999) 72 CA4th 280 (1999) 72 CA4th 280

(Business Improvement District collected (Business Improvement District collected as surcharge on business license taxes is as surcharge on business license taxes is (Business Improvement District collected (Business Improvement District collected as surcharge on business license taxes is as surcharge on business license taxes is not an assessment governed by Prop. 218)not an assessment governed by Prop. 218)

•• Cf. Cf. Evans v. San Jose Evans v. San Jose (1992) 3 CA4th 728 (1992) 3 CA4th 728 (similar assessment under charter city (similar assessment under charter city ordinance not a tax under Prop. 13)ordinance not a tax under Prop. 13)

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Special Benefit DefinedSpecial Benefit Defined

§§2(i): “Special benefit” means a 2(i): “Special benefit” means a particular and distinct benefit over particular and distinct benefit over and above general benefits conferred and above general benefits conferred on real property located in the on real property located in the on real property located in the on real property located in the district or to the public at large. district or to the public at large. General enhancement of property General enhancement of property value does not constitute “special value does not constitute “special benefit.”benefit.”

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Assessment ProceduresAssessment Procedures

§§4(a4(a): ): Identify all benefited parcelsIdentify all benefited parcels•• Determine proportionate special benefit Determine proportionate special benefit

derived by each parcel in relationship to derived by each parcel in relationship to entire capital cost of improvement, entire capital cost of improvement, entire capital cost of improvement, entire capital cost of improvement, maintenance & operation cost, or the maintenance & operation cost, or the cost of the property related servicecost of the property related service

•• No assessment may exceed the No assessment may exceed the reasonable cost of the proportional reasonable cost of the proportional special benefit conferredspecial benefit conferred

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Assessment ProceduresAssessment Procedures

§§4(a): Only special benefits assessable; 4(a): Only special benefits assessable; agency must separate general from agency must separate general from special benefits.special benefits.

Few case find no special benefit:Few case find no special benefit: Few case find no special benefit:Few case find no special benefit:•• Saratoga v. Hinz Saratoga v. Hinz (2004) 114 CA4th 1202 (2004) 114 CA4th 1202

(acquiring land to convert private cul(acquiring land to convert private cul--dede--sac into public street)sac into public street)

•• Tiburon v. Bonander Tiburon v. Bonander (2009) 180 CA4th (2009) 180 CA4th 1057 (undergrounding to enhance views of 1057 (undergrounding to enhance views of SF Bay)SF Bay)

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Assessment ProceduresAssessment Procedures

Parcels owned by public agency Parcels owned by public agency “shall not be exempt from “shall not be exempt from assessment unless the agency can assessment unless the agency can demonstrate by clear and convincing demonstrate by clear and convincing demonstrate by clear and convincing demonstrate by clear and convincing evidence evidence that those publicly owned that those publicly owned parcels in fact receive no special parcels in fact receive no special benefitbenefit.”.”

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Assessment ProceduresAssessment Procedures

But 13D, But 13D, §§1(a): 1(a): ““Nothing in this Nothing in this article or [13C] shall be construed article or [13C] shall be construed to: (a) provide any new authority to to: (a) provide any new authority to any agency to impose a tax, any agency to impose a tax, any agency to impose a tax, any agency to impose a tax, assessment fee or chargeassessment fee or charge.”.”

We are litigating this now in We are litigating this now in Reclamation District 501 v. CalTrans, Reclamation District 501 v. CalTrans, Solano CountySolano County..

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Assessment ProceduresAssessment Procedures

§§4(b): All assessments shall be 4(b): All assessments shall be supported by a detailed engineer’s supported by a detailed engineer’s report prepared by a registered report prepared by a registered professional engineer ….”professional engineer ….”professional engineer ….”professional engineer ….”

This is This is THETHE crucial document in the crucial document in the record of an assessment and legal record of an assessment and legal review is essential.review is essential.

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Assessment ProceduresAssessment Procedures

§§4(c): Ballot must be mailed to each 4(c): Ballot must be mailed to each property owner with notice listing:property owner with notice listing:•• Proposed assessmentProposed assessment•• Total of all assessmentsTotal of all assessments•• Total of all assessmentsTotal of all assessments•• DurationDuration•• Reason for the assessment (advisable to Reason for the assessment (advisable to

state this broadly)state this broadly)•• Basis on which calculatedBasis on which calculated•• Date, time and place of hearingDate, time and place of hearing

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Assessment ProceduresAssessment Procedures

§§4(c): Notice must also include 4(c): Notice must also include “summary of the procedures “summary of the procedures applicable to the completion, return, applicable to the completion, return, and tabulation of the ballots … and tabulation of the ballots … and tabulation of the ballots … and tabulation of the ballots … including a disclosure that the including a disclosure that the existence of a majority protest … will existence of a majority protest … will result in the assessment not being result in the assessment not being imposed.”imposed.”

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Assessment ProceduresAssessment Procedures

§§4(d): Notice must include ballot 4(d): Notice must include ballot “which includes the agency’s address “which includes the agency’s address for receipt of the ballot once for receipt of the ballot once completed by any owner receiving completed by any owner receiving completed by any owner receiving completed by any owner receiving the notice whereby the owner may the notice whereby the owner may indicate his or her name, reasonable indicate his or her name, reasonable identification of the parcel, and his or identification of the parcel, and his or her support or opposition to the her support or opposition to the proposed assessment.”proposed assessment.”

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Assessment ProceduresAssessment Procedures

§§4(e): Hearing held at least 45 days 4(e): Hearing held at least 45 days after notice mailed. Agency must after notice mailed. Agency must consider and tabulate consider and tabulate all all protests. protests. Agency may not impose assessment Agency may not impose assessment Agency may not impose assessment Agency may not impose assessment if there is a majority protest.if there is a majority protest.

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Majority Protest DefinedMajority Protest Defined

§§4(e): “A majority protest exists if, 4(e): “A majority protest exists if, upon the conclusion of the hearing, upon the conclusion of the hearing, ballot submitted in opposition to the ballot submitted in opposition to the assessment exceed the ballots assessment exceed the ballots assessment exceed the ballots assessment exceed the ballots submitted in favor of the submitted in favor of the assessment. … [T]he ballots shall be assessment. … [T]he ballots shall be weighted according to the weighted according to the proportional financial obligation of proportional financial obligation of affected property.”affected property.”

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Burden of ProofBurden of Proof

§§4(f): “In any legal action contesting 4(f): “In any legal action contesting the validity of any assessment, the the validity of any assessment, the burden shall be on the agency to burden shall be on the agency to demonstrate that the properties in demonstrate that the properties in demonstrate that the properties in demonstrate that the properties in question receive a special benefit … and question receive a special benefit … and that the amount of any contested that the amount of any contested assessment assessment iis proportional to, and no s proportional to, and no greater than, the benefits conferred on greater than, the benefits conferred on the property … in question.”the property … in question.”

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Burden of ProofBurden of Proof

Beutz v. County of Riverside Beutz v. County of Riverside (2010) (2010) 184 CA4th 1516:184 CA4th 1516:•• No duty to exhaust administrative No duty to exhaust administrative

remedies as to special benefit and remedies as to special benefit and remedies as to special benefit and remedies as to special benefit and proportionalityproportionality

•• No duty to plead these issuesNo duty to plead these issues

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Grandfathered AssessmentsGrandfathered Assessments

§§5: Assessments existing when Prop. 5: Assessments existing when Prop. 218 was adopted in November 1996 218 was adopted in November 1996 may continue without a majority may continue without a majority protest proceeding until they are protest proceeding until they are protest proceeding until they are protest proceeding until they are increased if they are in any of four increased if they are in any of four favored classes.favored classes.

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Grandfathered AssessmentsGrandfathered Assessments

§§5:5:•• Sidewalks, streets, sewers, water flood Sidewalks, streets, sewers, water flood

control, drainage systems or vector control, drainage systems or vector controlcontrolcontrolcontrol

•• Imposed pursuant to petition of all Imposed pursuant to petition of all assesseesassessees

•• Protected by the Contracts Clause Protected by the Contracts Clause ((cfcf. Gov’t Code 5854). Gov’t Code 5854)

•• Imposed pursuant to voter approvalImposed pursuant to voter approval1919

Prop. 218 OmnibusProp. 218 OmnibusImplementation ActImplementation Act

Elections Code Elections Code §§ 4000; GC 4000; GC §§53753(e)(6)53753(e)(6)•• Majority protest proceedings are not Majority protest proceedings are not

electionselections Gov’t Gov’t Code Code §§§§ 53739 & 53750(h)53739 & 53750(h) Gov’t Gov’t Code Code §§§§ 53739 & 53750(h)53739 & 53750(h)

•• CPI provision or range of assessment CPI provision or range of assessment amounts (i.e., stepped amounts over amounts (i.e., stepped amounts over time) can be implemented w/o new time) can be implemented w/o new protest proceedingprotest proceeding

Gov’t Code Gov’t Code §§ 53750 53750 –– definitionsdefinitions2020

Omnibus ActOmnibus Act

§§53753(a): Omnibus Act supersedes 53753(a): Omnibus Act supersedes provisions of assessment statutes re provisions of assessment statutes re “notice, protest and hearing “notice, protest and hearing requirements.”requirements.”requirements.”requirements.”

Most statutes have been updated, Most statutes have been updated, but not all and this is an issue in the but not all and this is an issue in the SolanoSolano case.case.

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Omnibus ActOmnibus Act

§§53753(b): Mandatory language for 53753(b): Mandatory language for envelopes in which notices and envelopes in which notices and ballots mailed.ballots mailed.

§§53753(c): Envelopes must be 53753(c): Envelopes must be §§53753(c): Envelopes must be 53753(c): Envelopes must be opaque and ballots sealed until opaque and ballots sealed until counted, at which point they become counted, at which point they become public records.public records.

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Omnibus ActOmnibus Act

§§53753(d): Tally by impartial person 53753(d): Tally by impartial person and in public and in public place place if if tallied by tallied by agency personnel or agency personnel or vvendor who endor who “participated in research, design, “participated in research, design, “participated in research, design, “participated in research, design, engineering, public education or engineering, public education or promotion.”promotion.”

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Assessment LitigationAssessment Litigation

HJTA v. City of Riverside HJTA v. City of Riverside (1999) 73 (1999) 73 Cal.App.4Cal.App.4thth 679679•• PrePre--218 ’72 Act assessment need not 218 ’72 Act assessment need not

comply w/ 218 until increasedcomply w/ 218 until increasedcomply w/ 218 until increasedcomply w/ 218 until increased•• Streetlights are “streets” w/in meaning Streetlights are “streets” w/in meaning

of of §§55

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Assessment LitigationAssessment Litigation

Not Not About Water Comm. About Water Comm. v. v. Bd. of Bd. of Sups. Sups. (2002) 95 (2002) 95 Cal.App.4Cal.App.4thth 982982•• Weighted voting on assessments does Weighted voting on assessments does

not violate due process or equal not violate due process or equal not violate due process or equal not violate due process or equal protectionprotection

•• Other aspects of decision overruled by Other aspects of decision overruled by Silicon ValleySilicon Valley..

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Assessment LitigationAssessment Litigation

Silicon Valley Taxpayers Ass’n v. Sta. Silicon Valley Taxpayers Ass’n v. Sta. Clara Co. Open Space Auth. Clara Co. Open Space Auth. (2008)(2008)•• Independent judicial review of findings Independent judicial review of findings

of special benefit & proportionalityof special benefit & proportionalityof special benefit & proportionalityof special benefit & proportionality•• Struck down assessment b/c engineer’s Struck down assessment b/c engineer’s

report failed to provide basis for report failed to provide basis for conclusions re special benefit and conclusions re special benefit and proportionalityproportionality

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Assessment LitigationAssessment Litigation

Dahms v. Downtown Pomona PBID Dahms v. Downtown Pomona PBID (2009) 174 Cal.App.4(2009) 174 Cal.App.4thth 708708•• Deferential review of PBIDDeferential review of PBID•• Supplemental muni. services always Supplemental muni. services always •• Supplemental muni. services always Supplemental muni. services always

provide special benefitprovide special benefit•• Gentle review of proportionalityGentle review of proportionality

Town of Tiburon v. Bonander Town of Tiburon v. Bonander (2009) (2009) 180 Cal.App.4180 Cal.App.4thth 10571057•• Undergrounding=100% special benefitUndergrounding=100% special benefit

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Assessment LitigationAssessment Litigation

Beutz v. Co. of Riverside Beutz v. Co. of Riverside (2010)(2010)•• 100% assessment funding of M&O 100% assessment funding of M&O

permitted b/c other funds used for permitted b/c other funds used for capitalcapitalcapitalcapital

•• Agency always bears burden to prove Agency always bears burden to prove special benefit and proportionality even special benefit and proportionality even when petitioner fails to exhaust when petitioner fails to exhaust administrative remedies on these issuesadministrative remedies on these issues

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Assessment LitigationAssessment Litigation

Golden Hill Neighborhood Ass’n v. Golden Hill Neighborhood Ass’n v. City of San Diego City of San Diego (2011) 199 (2011) 199 Cal.App.4Cal.App.4thth 416416•• Charter city assessment for Charter city assessment for •• Charter city assessment for Charter city assessment for

supplemental services invalidated b/c supplemental services invalidated b/c record lacked support for voting power record lacked support for voting power assigned to City propertiesassigned to City properties

•• Helpful discussion of how to Helpful discussion of how to demonstrate proportionalitydemonstrate proportionality

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Assessment LitigationAssessment Litigation

Concerned Citizens for Responsible Concerned Citizens for Responsible Gov’t v. West Point FPDGov’t v. West Point FPD, Cal. S. Ct. , Cal. S. Ct. Case No. S195152Case No. S195152•• Do fire suppression services provide Do fire suppression services provide •• Do fire suppression services provide Do fire suppression services provide

special benefit?special benefit?•• How demanding is Prop. 218 as to How demanding is Prop. 218 as to

showing of special benefit and showing of special benefit and proportionality?proportionality?

•• Fully briefed as of 3/15/12Fully briefed as of 3/15/12

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Questions?Questions?

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