Measure H was passed by Alameda voters in June, 2008, and charged residential property owners $120 per year, and charged commercial or industrial property at the rate of $0.15 per square foot per year. Owners of commercial or industrial property under 2,000 square feet paid a minimum of $120, and owners of commercial or industrial property larger than 2,000 square feet had their payments capped at $9,500 per year.
The tax was expected to raise over $16 million over its planned four-year life span.
Attorney David Brillant led a legal challenge against the tax on behalf of Alameda property owners George Borikas and Ed Hirshberg, primarily arguing that the tax was illegal because different property types were taxed at different rates.
In 2010, a trial court judge ruled in favor of the school district, ruling the tax legal. However, yesterday, the California appeals court handed down a unanimous decision that reversed part of the lower court decision, ruling that the tax was not uniform, and therefore, not legal.
As a result, the school district may have to refund to commercial and industrial property owners tax payments above the flat $120 per parcel rate.
“I have yet to calculate the exact exposure for the District, but it is significant. Some taxpayers alone with multiple parcels could stand to receive tens of thousands of dollars in refunds for each of the three years the District collected a parcel tax,” said Mr. Brillant.
Because of the sums of money at stake, possibly measured in the millions of dollars, Brillant expects litigation on the matter to be ongoing.
On behalf of the school district, AUSD Superintendent Kirsten Vital and Board President Margie Sherratt issued a press release today stressing that yesterday’s ruling will have no impact on the funding provided by the current school parcel tax, Measure A, passed by voters in March of last year. Measure A replaced Measure H.
The release stresses that “Measure A funding is secure for the remaining five years of Measure A’s seven year term.”
That measure implemented a tax that applies a $0.32 per building square foot rate on parcels with one or more buildings, capped at $7,999. Other real property is taxed at a rate of $299 per parcel.
The appeals court has remanded the Measure H case to the trial court, with the direction to determine appropriate remedies.
Addressing the question of remedies in the press release, Ms. Vital said, “If the trial court orders refunds of tax revenues already collected and spent, this decision has the potential to be a significant blow to our budget with many negative consequences for our students, teachers and staff. The decision also has significant public policy and budget implications for school districts across the state. Accordingly, we are carefully evaluating all of our options in the courts and the legislature.”
Outgoing AUSD board member Ron Mooney was the treasurer for Keep Alameda Schools Excellent (KASE), the political action committee that campaigned for Measure H in 2008. Mooney was elected in November of that same year, citing his support of Measure H as one of his credentials, but in last month’s election, he was unable to keep his seat for a second term.
He had not responded to an e-mail request for comment by press time.