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Tentative Ruling in Borikas Measure H Lawsuit

The Court handed down today a tentative ruling in favor of Alameda Unified School District in the Borikas Measure H lawsuit. Here is the text of the tentative ruling:

TR – Motion for Summary Judgment – Denied
This Tentative Ruling is issued by Judge Kenneth Mark Burr

The motion for summary judgment by Plaintiffs George J. Borikas, Trustee of the George J. Borikas 1999 Revocable Trust, Edward Hirshberg, Trustee of the Hirschberg Trust, Santa Clara Investors II, a California General Partnership, and Nelco, Inc. (“Plaintiffs”), on their complaint against the Alameda Unified School District (“District”), et al., is DENIED. In this action, all Plaintiffs are property owners in the City of Alameda who have been assessed a parcel tax under a recently enacted special tax Measure H. The tax was passed by 66.90% of the voters in the City of Alameda on June 3, 2008.

The tax money to be collected by the parcel tax is for the benefit of Defendant District. Plaintiffs contend that Measure H is void, and must be invalidated, because it is contrary to Government Code section 50079, which allows a school district to impose qualified special taxes within the district, but requires that such special taxes apply uniformly to all taxpayers or all real property within the school district.

Plaintiffs contend that the taxes imposed under Measure H do not apply uniformly because the tax rate for all residential property, and for industrial or commercial property 2,000 square feet or smaller, is set at $120 per parcel per year, whereas industrial and commercial property larger than 2,000 square feet is based on square footage. Plaintiffs also contend that there is a lack of uniformity even as to different-sized parcels of commercial and industrial property, because (1) parcels that are 2,000 square feet or less are taxed $120 per year, whereas parcels over 2,000 square feet in size are taxed $.15 per square foot per year, and (2) the tax on parcels over 2,000 square feet is capped at $9,500 per year, so that parcels larger than 63,000 square feet are taxed at a lower rate per square foot than smaller parcels between 2,001 and 63,000 square feet in size.

Plaintiffs also contend that Measure H violates Government Code section 50079 because the two exemptions it provides contain requirements not found in section 50079. Section 50079 permits a qualified special tax to include exemptions for persons 65 years old or older and persons receiving Supplemental Social Security Income. Measure H provides an exemption for taxpayers 65 years or older who (1) are owners of single family residential units, and (2) use the property as their principal place of residence. Measure H also provides an exemption for persons receiving Supplemental Social Security Income who are owners of single family residential units. Measure H requires both groups to apply for the exemption.

Plaintiffs challenge the requirements that the property be residential, and those taxpayers over 65 years of age use the property as their residence, and the requirement that those seeking an exemption must apply for it. Plaintiffs do not seek to invalidate the specific requirements imposed by Measure H on those seeking an exemption, and have not requested that Measure H be modified in some way to provide rates that Plaintiffs would find uniform. Plaintiffs request only that the tax be invalidated, and that Measure H be declared void and illegal as not in compliance with Section 4 of Article XIIIA of the California Constitution and Government Code section 50079 and therefore not a lien on any of the property of plaintiffs. The Court finds that Plaintiffs have not shown that the special tax imposed by Measure H violates the uniformity requirement of Government Code section 50079.

The term “special taxes that apply uniformly to all taxpayers or all real property within the school district” means only that the tax applies uniformly to all persons or properties in the same classification. Los Angeles SMSA Ltd. Partnership v. State Bd. of Equalization (1992) 11 Cal.App.4th 768, 780. Plaintiffs do not show that the Legislature intended for the word “uniformly” to have a different meaning in Government Code section 50079 than the meaning ascribed to it in other areas of taxation. That fact that the legislature enacted section 50079 in order to create an exception to Proposition 13 does not, on its face, show that a more limited definition of the word uniform was intended. Plaintiffs do not explain why the circumstances surrounding the enactment of the statute support their interpretation of the word “uniformly.” Assuming that the legislature did not intend the word “uniformly” to have its usual meaning when used in a taxing scheme, Plaintiffs do not explain what type of “uniformity” the Legislature intended to require.

A rational argument can be made that a special tax imposing a flat rate on each parcel, regardless of size or use, lacks uniformity because its effect is to tax smaller parcels more heavily per square foot than larger parcels. Similarly, a special tax based solely on square footage does not necessarily treat properties uniformly, in that it makes no provision for the uses made of particular property and would, for example, tend to overtax properties that are vacant and likely to receive less benefit from the special tax. In the absence of some specific indication that “uniformly” is intended to restrict the electorate’s discretion in some particular way, the Court does not find any reason to infer that this was intended. Thus, the Court concludes from the evidence before it that the legislature has not provided any indication in the statute that a particular type of uniformity beyond the usual meaning of the word was intended and Plaintiffs have not provided a persuasive showing that the legislature intended to limit the flexibility generally granted to the electorate in enacting tax measures.

The provisions in Measure H imposing requirements on those seeking exemptions do not violate Government Code section 50079. The statute allows “qualified special taxes,” such as Measure H, to include an exemption for those who are 65 years of age or older and persons receiving Supplemental Security Income for a disability, regardless of age. It does not require qualified special taxes to provide either exemption. The voters in Alameda have chosen, by enacting Measure H, to provide an exemption for some persons who are 65 years of age or older and for some persons who receive Supplemental Security Income for a disability, regardless of age, and to deny it to others.

Section 50079 does not contain any language prohibiting the electorate from exercising its discretion in this manner, and the law generally grants substantial flexibility in making classifications. Plaintiffs do not argue that the limitations on the scope of the exemptions lack any rational basis. Plaintiffs provide no argument explaining why a requirement that those seeking exemptions apply to the District for the exemption is inconsistent with Government Code section 50079, and the Court sees no facial inconsistency. That application requirement appears to create a reasonable administrative procedure for implementing the exemptions to the special tax. Assuming that the provisions in Measure H limiting the applicability of the exemptions violate Government Code section 50079, Plaintiffs would still not be entitled to summary judgment, because those provisions appear to be severable.

The language imposing limitations on exemptions can be grammatically separated, while allowing the remainder of the statute to be applied in a meaningful way. And, there is at least a triable issue as to whether it can be said with confidence that the electorate’s attention was focused on the remainder of Measure H, so that it would have adopted Measure H in the absence of the invalid portions. The provisions limiting the scope of the exemptions are tangential to the main purpose of the special tax. Defendant’s request for judicial notice is GRANTED. Plaintiffs’ request for judicial notice is GRANTED.

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