California Proposition 218 (1996)

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Proposition 218 was an adopted initiative constitutional amendment in the state of California on the November 5, 1996 ballot. Proposition 218 significantly changed local government finance in California. Called the “Right to Vote on Taxes Act,” Proposition 218 was sponsored by the Howard Jarvis Taxpayers Association, and was drafted by constitutional attorneys Jon Coupal (the current president of the Howard Jarvis Taxpayers Association) and Jack Cohen.[1]

Contents

Title[edit]

The official title of Proposition 218, as prepared by the California Attorney General, was: “Voter Approval for Local Government Taxes. Limitations on Fees, Assessments, and Charges. Initiative Constitutional Amendment.”[2] The official title appeared in the statewide ballot pamphlet and on the official ballot used by voters.

The title of Proposition 218, as contained in the text of the initiative measure, was the “Right to Vote on Taxes Act.”[3] The foregoing initiative title is most commonly used to refer to Proposition 218.

Low Profile, Profound Impact[edit]

Proposition 218 was considered a “sleeper” proposition as local governments were legally prohibited from using public funds to campaign against it, and because greater attention had been given to the Proposition 209 ban on affirmative action and the Proposition 215 medical marijuana liberalization measures which appeared on the same ballot.[4] Proposition 218 was initially estimated to cost local governments at least $100 million a year with long-term cost estimates being much greater, and Moody's Investors Service warned it would cause “significantly declining credit quality.”[5] Like Proposition 13 in 1978, Proposition 218 was opposed by the vast majority of major newspapers and the political establishment in California.

Proposition 218 was adopted by California voters on November 5, 1996. Proposition 218 easily passed with 56.55% support statewide, representing a margin of victory of 13.1 percentage points.[6] Proposition 218 passed in 54 (93%) of the 58 counties in California.[7]

What made the Proposition 218 victory so unusual was that it was behind in all the polls, including late polls just before the election. Polling from the Proposition 218 opposition campaign showed the measure was expected to lose by about 15 percentage points.[8] Proposition 218 was also significantly behind in the final Field Poll with only 36% support.[9] A significant election defeat was expected. Instead, Proposition 218 won by 13 percentage points. Such a large variation between final polling numbers and the actual election results is a politically rare event for statewide initiative measures in California.

Following the November 1996 election, a high ranking official from the California State Association of Counties wrote that Proposition 218 “profoundly changes the way California is governed” and “may prove to be the most revolutionary act in the history of California.”[10] Joel Fox, president of the Howard Jarvis Taxpayers Association when Proposition 218 passed, stated that Proposition 218 is “not in the Proposition 13 class, but it’s the next level.” [11]

Conditions Leading to the Passage of Proposition 218[edit]

The assessment and property-related fee reforms contained in Proposition 218 resulted from local government excesses in the 1980s and 1990s following the passage of Proposition 13.[12] After Proposition 13 passed in 1978, local government officials looked for ways to raise additional revenues in an effort to avoid the two-thirds vote requirement to raise taxes under Proposition 13.[13] For example, local governments discovered a way to raise revenues and avoid Proposition 13 voter approval requirements by using assessment districts.[14]

True assessments go back to ancient Roman roads and English sea walls, when property owners joined together to pay for public improvements that directly benefited their property.[15] Landowners who wanted public improvements that specially benefited their property, such as sewers, could have the improvements built by the local government and their real property assessed to pay for the cost of those improvements.[16] However, after the passage of Proposition 13, local governments expanded the use of property assessments to generate additional revenue by imposing assessments for purposes that went far beyond their traditional and historical scope.[17]

The 1992 Knox Case[edit]

The assessment loophole floodgates opened wide following a 1992 California Supreme Court decision (known as the Knox case) holding that Proposition 13 restrictions, particularly the two-thirds voter approval requirement for local taxes, did not apply to “assessments” on real property.[18]

As a result of the Knox case, local governments could legally impose “assessments” on real property for a wide range of purposes without any vote of the electorate.[19] Assessments effectively became unrestricted property tax increases appearing on the property tax bills of millions of California homeowners. There were no limits on how high assessments could go, or how many assessments could be imposed on a parcel of property. One county in northern California even had to redesign its property tax bill to accommodate the growing explosion of property assessments.[20]

Once the assessment loophole following the Knox case was created, one lawyer working with government politicians wrote that property assessments “are now limited only by the limits of human imagination.”[21] Some of the more “imaginative” assessments included: (1) A “view tax” in southern California -- the better the view of the ocean the property owner had the more the owner paid; (2) In northern California, property owners 27 miles away from a park were assessed because their property supposedly benefited from that park.[22]

Property-Related Fees and Charges[edit]

While not receiving the same level of attention as assessments, improper property-related fees and charges became a significant problem following the passage of Proposition 13, as many local governments labeled taxes as “fees” and imposed them without voter approval.[23] For example, the California Supreme Court ruled that a local municipal utility, such as one providing water service, is entitled to a reasonable “return on investment.”[24] This meant that a local municipal utility could legally overcharge its customers in excess of the cost of providing the utility service, and then transfer the excess cost revenues to the general fund of the local agency to be spent at the discretion of local politicians. All this could generally be done without voter approval.

What made the foregoing practice even more problematic was that local officials were generally not legally obligated to spend excess cost revenues for purposes related to applicable utility, such as providing greater investment in utility infrastructure or helping to finance “lifeline” utility rates for the elderly or disabled. The allowable utility overcharges were separate from government imposed utility user taxes which customers also had to pay, with many of those utility user taxes imposed without voter approval.

Rescuing Proposition 13[edit]

Proposition 218 came to the rescue of Proposition 13.[25] Section 2 of Proposition 218 contains its findings and declarations: “The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent.”[26]

Proposition 218 amended the California Constitution by adding Articles XIII C and XIII D. Proposition 218 is believed to be the first successful initiative constitutional amendment in California history to add more than one Article to the California Constitution.

Article XIII C – Local Government Taxes[edit]

Section 3 of Proposition 218 added Article XIII C to the California Constitution.[27] Article XIII C relates primarily to local government taxes.

Constitutional Definitions[edit]

Section 1 of Article XIII C contains various constitutional definitions applicable to the article.

“Local Government”[edit]

Section 1 definitions include the term “local government” setting forth the public entities subject to the requirements of the article. The term “local government” is very broadly defined under Proposition 218 to counter previous narrow interpretations given by California courts under Proposition 13 which created unintended loopholes allowing local agencies to circumvent taxpayer protections, especially those relating to voter approval requirements for tax increases. Government agencies subject to Proposition 218 are local and regional governments, including counties, cities, school districts, community college districts, public authorities, joint powers agencies, and special districts.[28] The “local government” definition also expressly states that it includes charter cities having a local charter as their primary source of power.

Tax Types (General vs. Special)[edit]

Section 1 of Article XIII C also defines the types of taxes local governments levy. A “general tax” is any tax imposed for general governmental purposes.[29] A “special tax” is any tax imposed for specific purposes, including a tax imposed for specific purposes which is placed into a general fund.[30] The general versus special tax distinction existed in California prior to Proposition 218, but Proposition 218 contains a broader definition of “special tax” as also including taxes imposed for specific purposes that are placed into a general fund.

“Tax”[edit]

During the November 2010 General Election, California voters passed Proposition 26 which, in part, added a broad constitutional definition of “tax” for purposes of Article XIII C of the California Constitution.[31] Proposition 218 did not include a constitutional definition of “tax,” but the courts, prior to the passage of Proposition 26, generally broadly construed that term such as the California Court of Appeal in San Francisco did in Bay Area Cellular Telephone Company v. City of Union City, 162 Cal. App. 4th 686 (April 2008) in concluding that a 911 “fee” was in reality a special tax subject to two-thirds voter approval.

Voter Approval Requirements for Local Tax Levies[edit]

Section 2 of Article XIII C contains the actual voter approval requirements for local government taxes. Under Proposition 218, any local government tax is either a general tax or a special tax.[32] The type of tax a local government imposes (general tax or special tax) is significant because it determines the applicable voter approval requirement. Special purpose districts or agencies, including school districts, have no power to levy general taxes and can only impose special taxes.[33] The preceding requirement is based on court interpretations of Proposition 13 prior to the passage of Proposition 218. As a practical matter, only a city or a county has the power to levy a general tax under the provisions of Proposition 218.

When Voter Approval Required[edit]

Under Section 2 of Article XIII C, the voter approval requirement for taxes under Proposition 218 is triggered when a local government imposes, extends, or increases a tax. What constitutes a tax “increase” under Proposition 218 was broadly construed by the California Court of Appeal in Los Angeles in AB Cellular LA, LLC v. City of Los Angeles, 150 Cal. App. 4th 747 (May 2007). Local government tax reductions or repeals are not constitutionally required to be submitted for voter approval under Section 2 of Article XIII C.

General Tax Vote Requirement[edit]

Under Article XIII C, a local government may not impose, extend, or increase any general tax unless the tax is first submitted to the electorate and approved by a majority vote. General tax elections are required to be consolidated with a regularly scheduled general election for members of the governing body of the local government except in cases of emergency declared by a unanimous vote of the governing body.[34]

General taxes imposed, extended, or increased by any local government without voter approval on or after January 1, 1995, and prior to the effective date of Proposition 218 (November 6, 1996), could continue to be levied only if they were approved by a majority vote of the voters in a tax election which election had to be held by November 6, 1998 (two years of the effective date of Proposition 218).[35] The preceding requirement was intended to mitigate the impact of local governments approving general tax increases without voter approval before Proposition 218 became law.

Special Tax Vote Requirement[edit]

Under Article XIII C, a local government may not impose, extend, or increase any special tax unless the tax is first submitted to the electorate and approved by a two-thirds vote.[36] Proposition 218 contains an additional requirement that any tax subject to voter approval assessed upon a parcel of real property or upon a person as an incident of real property ownership must be a special tax subject to two-thirds voter approval.[37] As a practical matter, this means all “parcel” taxes (taxes on real property not based on the assessed value of the property) must be levied as special taxes subject to two-thirds voter approval.

Validity of Voter Approval Requirement[edit]

The voter approval requirement under Proposition 218 was generally upheld by the California Court of Appeal in Los Angeles in Consolidated Fire Protection District v. Howard Jarvis Taxpayers Association, 63 Cal. App. 4th 211 (April 1998). The local agency argued that the voter approval requirement under Proposition 218 constituted an illegal referendum. The Court of Appeal rejected that argument.

Authority to Impose Local Taxes[edit]

Proposition 218 does not legally authorize any local government to levy any tax.[38] The legal authority to levy a tax must come from an independent source such as a statute enacted by the California Legislature, and may be subject to additional statutory restrictions. The California Supreme Court made it clear in Ventura Group Ventures, Inc. v. Ventura Port District, 24 Cal. 4th 1089 (February 2001) that a local government must comply with any applicable statutory requirements as well as the constitutional requirements under Proposition 218.

Initiative Power to Reduce or Repeal Local Government Levies[edit]

One of the most sweeping provisions of Proposition 218 is Section 3 of Article XIII C which constitutionally reserves to local voters the exercise of the initiative power to reduce or repeal any local tax, assessment, fee or charge. Proposition 218 is believed to be the first successful initiative measure in California history to alter the scope of the initiative power.

The local initiative power under Proposition 218 is also subject to a significantly reduced signature requirement which cannot exceed the requirement for statewide initiatives (5 percent of the votes for all candidates for Governor at the last gubernatorial election within the boundaries of the local government).[39] After the unusually low local voter turnouts during the November 2014 gubernatorial election in California, the signature requirement to exercise the local initiative power under Proposition 218 is even lower.

Reduced Signature Requirement Example Calculation[edit]

The following is an example of how the reduced signature requirement for a local reduction or repeal initiative measure under Proposition 218 is computed. Local government “X” has 10,000 registered voters. Of those 10,000 voters, the total number of votes for all candidates for Governor at the last gubernatorial election within the boundaries of local government “X” is 4,000 votes. Five (5) percent of the 4,000 vote total is 200. A total of 200 valid signatures would be needed to qualify a local reduction or repeal initiative under Proposition 218. In this example, the 200 signature requirement represents 2% of the number of registered voters in local government “X.”

Example Uses of Local Initiative Power Under Proposition 218[edit]

The local initiative power under Proposition 218 can be used to reduce or repeal local taxes like utility user taxes, and also to reduce or repeal local government utility fees such as for sewer or water service. Exercise of the local initiative power under Proposition 218 gives voters a powerful tool to use such as when local government officials are not responsive to the needs of their constituents, when local voters have not previously voted on a levy, when there has been significant waste or mismanagement by a local agency, when the amount of a local levy is excessive or unreasonable, or when promises previously made by local politicians about the imposition of a levy are broken.

The local initiative power under Proposition 218 can also be used as an alternative to litigation, and has even been successfully used as a legislative remedy to reduce or repeal a local levy following the defeat of a lawsuit challenging the validity of the levy under Proposition 218.[40]

Types of Local Initiatives Under Proposition 218[edit]

An initiative to reduce or repeal a local levy under Proposition 218 may be as simple as a straight reduction or repeal of the levy, or more complex such as tying the reduction or repeal of the levy to satisfaction of specific performance standards set forth in the initiative. Local initiatives under Proposition 218 generally fall into three broad types.

Traditional Initiatives[edit]

The first type is a traditional initiative involving a straight reduction or repeal of a local tax, assessment, fee or charge. Traditional initiatives also usually include specific findings describing the policy reasons for pursuing the initiative. However, conditions attached to the reduction or repeal of a levy are generally not included.

Tie-In Initiatives[edit]

The second type is a tie-in initiative. A tie-in initiative generally ties the magnitude of a levy reduction, or the timing of a levy repeal, to satisfaction of specified objective performance standards or conditions contained in the local initiative.

The California Supreme Court has ruled that the local initiative power under Proposition 218 extends only to the reduction or repeal of local levies.[41] However, there is significant flexibility in determining the magnitude of a levy reduction or the timing of a levy repeal. That flexibility is manifested with a tie-in initiative. Whether or not specified objective performance standards or conditions are satisfied determines the magnitude of a levy reduction or the timing when a levy is repealed.

Tie-in initiatives can be applied to existing revenue sources where voter approval may not have been previously received. They may also be applied to revenue sources approved by voters in an election required under Proposition 218 but where voters want to hold local government officials accountable for obtaining continued positive results after the election.

Satisfaction of Objective Performance Standards – Examples[edit]

An example of a tie-in initiative is the reduction or repeal of a transportation tax if traffic and/or road conditions over time do not significantly improve relative to conditions existing before the imposition of the tax. This might include the establishment of traffic improvement benchmarks over time with the continued imposition of the tax contingent on satisfaction of traffic improvement benchmarks at specified time intervals.

Other examples of tie-in initiatives include tying an education tax to improved student achievement, tying a public safety tax to reduced crime, and tying a utility service fee to completion of specified public improvement projects on schedule and without cost overruns.

Matching Contributions[edit]

A tie-in initiative under Proposition 218 can also include specific conditions associated with the continued imposition of a levy. For example, a local initiative could attach an annual matching contribution condition whereby a levy such as a tax would be reduced or repealed if the specified annual matching contribution condition is not satisfied. A matching contribution condition is intended to leverage additional financial support as well as to demonstrate a strong financial commitment to the purposes for which the levy is imposed, especially from those interests who promoted the levy. Matching contributions typically come from either other government sources or from the private sector in the form of voluntary payments.

The following illustrates a matching contribution condition in a local initiative. Suppose various organizations and groups promoted a successful sales tax increase within a local government. After passage of the tax increase, there remained questions concerning the fairness and burden of the tax. A tie-in initiative is pursued containing an annual matching contribution condition in which the sales tax would either by reduced or repealed unless the private sector, particularly the various organizations and groups that promoted the sales tax increase, provides annual matching funds (typically in an amount equal to or greater than the annual revenues received from the sales tax) to make the revenue burden more equitable. An annual matching condition does not create a legal obligation to pay, but if at any time during the life of the sales tax the condition is not satisfied, the tax would either be reduced or repealed in accordance with the terms of the local initiative. In this example, a policy is also advanced whereby if those organizations and groups that promoted the sales tax increase aren’t willing to voluntarily contribute additional funds on an annual basis for their promoted purpose, then taxpayers would not be legally obligated to pay for that purpose in the form of higher taxes.

Compensatory Initiatives[edit]

The third type is a compensatory initiative. A compensatory initiative targets one or more alternative revenue sources for reduction or repeal to compensate for the inability, such as for legal reasons, to reduce or repeal a particular revenue source.

Sometimes, such as for political or legal reasons, it may not be possible or feasible to target a specific revenue source for reduction or repeal. For example, it may not be legally possible to target a particular utility service fee for reduction or repeal because the fee revenues have been pledged to repay bonds, and a violation of the contract impairment clause of the U.S. Constitution would occur if the pledged revenue source were reduced or repealed using the initiative power under Proposition 218. A compensatory initiative would target an alternative revenue source for reduction or repeal, such as a related utility users tax or a legally permissible component of a related utility service fee, to compensate for the desired utility fee relief not otherwise available due to legal constraints.

Another example involves a revenue source outside the scope of the local initiative power under Proposition 218. Parking ticket revenues illustrate the foregoing. Some cities in California generate substantial parking ticket revenues, but the initiative power under Proposition 218 may not be available to reduce or repeal high parking fine amounts as a government revenue source. A compensatory initiative would target an alternative revenue source subject to the initiative power under Proposition 218 to at least offset parking ticket revenues and thereby provide a strong incentive for the local agency to reduce reliance on high parking fines as a revenue source.

Yet another example involves franchise fees. Franchise fees are paid for the governmental grant of a relatively long possessory right to use land to provide essential services to the general public.[42] Especially in cases where the amount of a franchise fee imposed by a local government exceeds the prevailing rate for the area, a compensatory initiative targeting an alternative revenue source for reduction or repeal, such as a related utility users tax, would compensate for and offset excessive franchise fees.

Compensatory initiatives typically contain specific findings describing the compensatory policy reasons for pursuing the initiative, including reasons why the particular revenue source cannot be pursued and the compensatory nature of the alternative revenue source(s).

Validity of Local Initiative Power Under Proposition 218[edit]

Exercise of the local initiative power under Proposition 218 was generally confirmed and upheld by the California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (July 2006). Although the California Supreme Court has yet to more precisely define the limits of the local initiative power under Proposition 218, the California Legislative Analyst has opined that, based on the constitutional language, the only limits appear to be those under federal law, such as the federal debt impairment clause.[43]

Article XIII D – Assessment and Property-Related Fee Reforms[edit]

Section 4 of Proposition 218 added Article XIII D to the California Constitution.[44] Article XIII D relates primarily to special assessments on real property and property-related fees and charges. Significant and detailed constitutional requirements for such levies are contained in the article.

Application of Article[edit]

Section 1 of Article XIII D specifies that its provisions apply to all special assessments and property-related fees and charges irrespective of whether such levies are imposed pursuant to state statute or local charter authority.[45]

Authority to Impose Local Levies[edit]

Section 1 of Article XIII D further specifies that nothing in Proposition 218 provides any new authority to any local government to impose any tax, special assessment, or property-related fee or charge.[46] Under the preceding provision, the legal authority to impose a local tax, special assessment, or property-related fee or charge must come from an independent source such as a state statute.

Laws Not Affected by Article[edit]

Section 1 also specifies two types of laws that are not affected by the provisions of Article XIII D. First, existing laws relating to the imposition of fees or charges as a condition of property development (developer fees).[47] Second, existing laws relating to the imposition of timber yield taxes.[48]

Constitutional Definitions[edit]

Section 2 of Article XIII D contains various constitutional definitions applicable to the article. A summary of the more significant definitions follows.

“Agency”[edit]

Section 2 definitions include the term “agency” setting forth the public entities subject to the requirements of the article. The term “agency” in Article XIII D incorporates the same broad definition of “local government” used in Article XIII C.[49] This means that if a public entity is a “local government” under Article XIII C it is also an “agency” under Article XIII D.

“Assessment”[edit]

The term “assessment” is defined in Section 2 as “any levy or charge upon real property by an agency for a special benefit conferred upon the real property.”[50] If a levy or charge is an “assessment,” it is subject to the procedures and requirements applicable to assessments in Article XIII D.[51] The detailed procedures and requirements for “assessments” are primarily contained in Section 4 of Article XIII D. The historical rationale behind imposing an assessment, otherwise known as a special assessment, is that the assessed property receives a special benefit over and above that received by the general public.[52]

Proposition 218 maintains the traditional requirement that the subject of a special assessment, such as a public improvement like a sidewalk, has to specially benefit the assessed property. This distinguishes a special assessment from a tax which is not legally required to specially benefit the taxed property.[53] However, a key reform under Proposition 218 is that it significantly tightens what constitutes a “special benefit” for purposes of levying a lawful special assessment. This is intended to limit the imposition of inappropriate special assessments that are in reality taxes not approved by local voters under Proposition 13.

“Special Benefit”[edit]

Under Proposition 218, a “special benefit” means “a particular and distinct benefit over and above general benefits conferred on real property locate in the district or to the public at large. General enhancement of property value does not constitute ‘special benefit.’”[54] The California Supreme Court confirmed the tighter “special benefit” definition in interpreting it to mean that a special benefit must affect an assessed property in a way that is particular and distinct from its effect on other parcels, and that real property in general and the public at large do not share.[55]

Property-Related Fee or Charge[edit]

Proposition 218 created a new species of fee or charge in California known as a “property-related” fee or charge. Whether or not an agency fee or charge is “property-related” is legally significant because if a fee or charge is “property-related,” it is subject to the procedures and requirements applicable to such levies in Article XIII D.[56] The detailed procedures and requirements for property-related fees or charges are primarily contained in Section 6 of Article XIII D.

Definition[edit]

Under Proposition 218, a “property-related” fee or charge means “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.”[57] A “property-related service” is defined as “a public service having a direct relationship to property ownership.”[58]

Court Interpretations of Definition[edit]

Initially, the California Supreme Court in 2001 narrowly interpreted what constitutes a “property-related” fee or charge under Article XIII D in concluding that a residential rental inspection fee was not “property-related.”[59] Thereafter, the courts generally gave a more expansive interpretation of the term “property-related” fee or charge under Proposition 218.

In 2002, the California Court of Appeal in Sacramento held that an in-lieu franchise fee for water, sewer, and refuse collection services was a “property-related” fee subject to the requirements of Article XIII D.[60]

Also in 2002, the California Court of Appeal in San Jose held that a stormwater drainage fee imposed on developed parcels of land was a “property-related” fee subject to the requirements of Article XIII D.[61]

In 2004, the California Supreme Court held that a fire suppression fee imposed as a condition for making a new connection to a water system was not a “property-related” fee subject to Article XIII D because the fee was not imposed by virtue of property ownership, but instead was imposed as an incident of the voluntary act of the property owner in applying for a water service connection.[62] However, the court also observed that a fee for ongoing water service through an existing connection is “property-related” under Article XIII D because it requires nothing other than normal ownership and use of property.[63]

In 2005, the California Court of Appeal in Fresno held that a fee in lieu of property taxes assessed upon municipal utility departments providing water, sewer, and solid waste collection services was a “property-related” fee subject to the requirements of Article XIII D.[64]

In 2006, the California Supreme Court definitively held that a utility charge imposed by an agency for ongoing water delivery, including a consumption based charge, was a “property-related” fee subject to the requirements of Article XIII D.[65] In reaching the preceding conclusion about consumption based charges, the court relied on the “user fee or charge for a property related service” component of the constitutional definition.[66] Based on the court’s reasoning, the implication is strong that fees for ongoing sewer and refuse collection services are also “property-related” fees subject to the requirements of Article XIII D.[67]

In 2007, the California Court of Appeal in San Jose held that a fee on the extraction of groundwater was a “property-related” fee subject to the requirements of Article XIII D.[68] However, in March 2015 the California Court of Appeal in Ventura held that a fee on the extraction of groundwater was not a “property-related” fee subject to the requirements of Article XIII D.[69] On June 24, 2015, the California Supreme Court accepted the 2015 case from Ventura for review in order to resolve the legal conflict on the groundwater fee issue.[70]

In August 2015, the California Court of Appeal in San Jose held in Great Oaks Water Company v. Santa Clara Valley Water District (Case No. H035260, August 2015, Decision on Rehearing) that a fee on the extraction of groundwater was a “property-related” fee subject to the requirements of Article XIII D.

Proposition 218 Levy Limitations[edit]

Section 3 of Article XIII D specifies that no tax, assessment, or property-related fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (1) constitutionally permitted property taxes based on the assessed value of the property; (2) special taxes receiving a two-thirds vote pursuant to Proposition 13; (3) assessments on real property as provided by Article XIII D; and (4) property-related fees or charges for property-related services as provided by Article XIII D.[71]

The preceding requirement generally means that all “parcel” taxes (property taxes not based on the assessed value of the property) must be levied as special taxes subject to two-thirds voter approval. The preceding requirement also means that property-related fees or charges may only be imposed for property-related services.

Electrical or Gas Service Exemption[edit]

Section 3 of Article XIII D also contains an exemption that for purposes of Article XIII D, fees for electrical or gas service are not property-related fees or charges imposed as an incident of property ownership.[72] This means that electrical or gas service fees imposed by agencies are not subject to the procedures and requirements applicable to property-related fees or charges contained in Article XIII D.

Scope of Exemption[edit]

The scope of the exemption for electrical or gas service fees only applies to Article XIII D. Depending upon the circumstances of imposition, electrical or gas service fees could constitute a “tax” subject to voter approval under Article XIII C.[73]

Local Initiative Power to Reduce or Repeal Exempt Electrical or Gas Service Fees[edit]

Electrical or gas service fees exempt under Article XIII D and levied by an agency should also generally be subject to reduction or repeal using the local initiative power under Proposition 218, including the significantly reduced signature requirement thereunder.[74]

Assessments – Procedures and Requirements[edit]

Section 4 of Article XIII D contains the detailed procedures and requirements applicable to the levying of assessments on real property. The assessment procedures and requirements are designed to ensure that any assessment levied by an agency under Proposition 218 is a legitimate assessment and not a tax imposed without two-thirds voter approval.

Proposition 218 also requires an agency to have a vote of the affected property owners (known as an assessment ballot proceeding) for any proposed new or increased assessment before it could be levied.[75] Prior to Proposition 218, an agency was not required to obtain ballot approval from property owners before levying special assessments on real property; only approval by the local agency governing body was required, even if there were significant protests from property owners.

The assessment process under Proposition 218 is formally initiated by the local agency. For some assessments, other laws (such as a state statute or a local law) may also require a property owner petition in order to initiate the imposition of an assessment, but a property owner petition or similar requirement is not constitutionally required under Proposition 218.

Identification of Parcels Subject to Assessment[edit]

An agency that proposes to levy an assessment under Proposition 218 must first identify all parcels of property which will have a special benefit conferred upon them and upon which an assessment is proposed for imposition.[76] The geographic area determined by an agency to contain all parcels which will have a special benefit conferred upon them is referred to as an assessment district.[77]

Then, the proportionate special benefit derived by each identified parcel of property must be determined by the agency in relationship to the entirety of the capital costs of the public improvement(s) being financed, the maintenance and operation expenses of the public improvement(s), or the cost of the property-related service(s) being provided.[78]

The language of Proposition 218 does not preclude assessments for services, but it appears that only “property-related” services are assessable under Proposition 218.[79] A “property-related service” is “a public service having a direct relationship to property ownership.”[80]

Engineer’s Report[edit]

All assessments under Proposition 218 must be supported by a detailed engineer’s report prepared by a registered professional engineer certified by the State of California.[81] The required engineering report is ordinarily prepared by a registered civil engineer, although other types of engineers may be involved depending upon the nature of the public improvements being financed.

The engineer’s report is a critical document in the assessment process because it contains the detailed supporting basis for levying the assessment. This includes a detailed supporting basis for compliance with the substantive requirements for assessments such as presence of special benefits, proper apportionment of special benefits between parcels, separability of general benefits from special benefits, proper assessment of parcels owned by public agencies, detailed cost information, and the manner of calculating assessments upon specific parcels. In a legal challenge concerning the validity of an assessment, the courts typically refer to the engineer’s report to determine whether or not the assessment complies with the constitutional requirements of Proposition 218.

Proposition 218 does not require the engineer’s report be mailed to property owners as part of the assessment notification process. However, the engineer’s report is a “public record”[82] whereby a member of the public, including property owners subject to a proposed assessment, may make a written request and receive a copy of an engineer’s report under the California Public Records Act.[83] The payment of a fee covering the direct costs of duplicating any requested pages from an engineer’s report may also be required.[84]

The engineer’s report is also sometimes available in electronic format where it can be conveniently downloaded by the public. However, Proposition 218 does not require an engineer’s report be made available in electronic format. The California Public Records Act generally requires that public records in an electronic format be made available when requested by a member of the public.[85]

Electronic Data Files[edit]

Electronic data files containing information relating to the calculation and/or amount of a proposed assessment for each parcel within an assessment district may also be available. Some assessment districts may contain many thousands of parcels, and sometimes the assessment calculations for each parcel are only available as an electronic data file. Such data files are generally “public records” subject to disclosure under the California Public Records Act.[86] The data files must also generally be made available in the electronic format requested by the member of the public if the requested format is one that has been used by the agency to create copies for its own use or for provision to other public agencies.[87] The foregoing is important to facilitate independent analysis of electronic data files by members of the public for purposes of verifying Proposition 218 compliance.

GIS Data Files[edit]

Related electronic data files may also be used to help verify Proposition 218 compliance. In particular, use of geographic information system (GIS) data files. The use of GIS helps to improve the management and analysis of location based information. GIS data files containing location based information relating to a proposed assessment for each parcel within an assessment district may also be available. In addition, separate GIS data files may have also been used as part of the assessment calculation process such as GIS data files containing the location and attributes of streetlights and parcels within the assessment district boundary. The California Supreme Court has ruled that GIS database files are generally deemed “public records” subject to disclosure under the California Public Records Act.[88] The viewing and analysis of GIS data files ordinarily requires the use of specialized software.

Special Benefit and Proportionality Requirements[edit]

Under Proposition 218, only special benefits are assessable.[89] Proposition 218 contains its own constitutional definition of “special benefit”[90] that significantly tightens the kind of benefit assessments an agency can levy on real property.[91] What this means is some assessments that may have been permissible prior to Proposition 218 are no longer legally permissible because of a lack of “special benefit” under the tightened constitutional definition.

Separating General Benefits From Special Benefits[edit]

Proposition 218 also requires an agency to separate the general benefits from the special benefits conferred on a parcel.[92] Pre-Proposition 218 case law did not invalidate assessments because they also provided general benefits in addition to special benefits, and the courts did not demand a strict separation of general benefits from special benefits.[93] The benefit separation requirement under Proposition 218 helps to ensure compliance with the requirement that only special benefits are assessable. Since general benefits on real property are not assessable, they must be excluded and financed using revenue sources other than assessments.

The constitutional definition of an “assessment” refers to a levy on real property for a “special benefit” conferred upon the real property.[94] Since permissible assessments are limited to special benefits conferred upon real property, in addition to separating the general benefits conferred on a parcel, benefits to persons or to personal property must also be excluded from assessment. This makes it much more difficult to legally justify the imposition of assessments for public improvements or services that primarily benefit people instead of real property.

Proportionality Requirement[edit]

Under Proposition 218, no assessment may be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel.[95] The proportionality requirement ensures that the aggregate assessment imposed on all parcels is distributed among all assessed parcels in proportion to the special benefits conferred on each parcel.[96] The proportionality provisions contained in Proposition 218 have been referred to as “fair share” requirements.[97]

An agency may provide a discounted assessment less than the reasonable cost of the proportional special benefit conferred so long as any discounts do not cause the assessments imposed on the remaining parcels in the assessment district to exceed the reasonable cost of the proportional special benefit conferred on those parcels.[98]

Public Parcels Also Subject to Assessment[edit]

Proposition 218 provides that parcels of property within an assessment district that are owned or used by any agency, the state of California, or the United States are not exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit.[99] What this means is publicly owned parcels have to pay their fair share of assessments just like privately owned parcels.

Historically, publicly owned parcels were exempt from paying assessments on real property. The courts construed an implied exemption for special assessments under the provision of the California Constitution[100] exempting local governments from property taxation.[101] The practical effect of the historical exemption was to require private property owners, in addition to paying an assessment share attributable to their own parcel, to also pay the share of assessments that would otherwise be attributable to publicly owned parcels. In assessment districts containing a large number of publicly owned parcels, requiring private property owners to also pay the share attributable to publicly owned parcels significantly increased the amount of the assessment private property owners had to pay.

While elimination of the assessment exemption applies to all levels of government, there may be instances where federally owned property, due to restrictions under federal law, will continue to be exempt from assessment. To the extent any such exemption for federal property remains, Proposition 218 prohibits an agency from shifting the assessment burden of federally exempt parcels to other parcels within the assessment district.[102]

What was particularly frustrating for taxpayers prior to the passage of Proposition 218 was that the courts construed special assessments to be a tax for purposes of exempting public parcels from assessment but that special assessments were not a tax for purposes of requiring voter approval under Proposition 13. Such detrimental inconsistencies of interpretation by the courts helped fuel the passage of Proposition 218.

Written Notice Requirement[edit]

Once an agency has identified the parcels subject to assessment, the agency must then calculate the amount of the proposed assessment for each identified parcel and must give the record owner of each identified parcel written notice by mail of the proposed assessment. The required written notice must state the total assessment amount chargeable to the entire assessment district, the amount chargeable to the record owner’s particular parcel, the duration of the assessment payments, the reason(s) for the assessment and the basis upon which the amount of the proposed assessment was calculated, together with the date, time, and location of a public hearing on the proposed assessment.[103]

The required notice must also include, in a conspicuous place thereon, a summary of the procedures applicable to the completion, return, and tabulation of the assessment ballots required under Proposition 218, including a disclosure statement that the assessment will not be imposed if the ballots submitted in opposition to the assessment exceed the ballots submitted in favor of the assessment, with ballots weighted according to the proportional financial obligation of the affected property.[104][105]

Some property owners do not realize the significance of the notice and assessment ballot and throw away the mailing thinking it was junk mail. To help address this matter, the California Legislature enacted additional legal requirements relating to the envelope containing the assessment notice and ballot. On the face of each envelope mailed to the record owner in which the required notice and assessment ballot are enclosed, there must appear in substantially the following form the phrase “OFFICIAL BALLOT ENCLOSED” in no smaller than 16-point bold type. A local agency may additionally place the phrase “OFFICIAL BALLOT ENCLOSED” on the face of the envelope in a language or languages other than English.[106]

Inclusion of Assessment Ballot[edit]

Every notice mailed to owners of identified parcels within an assessment district must also contain an assessment ballot which includes the agency’s address for receipt of the assessment ballot once completed by any record owner receiving the notice whereby the record owner may indicate his or her name, reasonable identification of the parcel owned, and his or her support or opposition to the proposed assessment.[107]

The California Legislature has enacted additional legal requirements relating to the completion and delivery of assessment ballots under Proposition 218. While not constitutionally required by Proposition 218, these additional statutory requirements need to be followed in order for an assessment ballot to be counted. An assessment ballot must be signed and either mailed or otherwise delivered to the address indicated on the assessment ballot. Regardless of the method of delivery, all assessment ballots must be received at the address indicated, or the location of the public testimony, in order to be included in the tabulation of a majority protest.[108] An assessment ballot may be submitted, changed, or withdrawn by the person who submitted the ballot prior to the conclusion of the public testimony on the proposed assessment at the required public hearing.[109]

Public Hearing Requirement[edit]

The agency must conduct at least one public hearing upon the proposed assessment not less than 45 days after mailing the notice of the proposed assessment to the record owners of each identified parcel subject to the proposed assessment.[110] At the public hearing, any person is permitted to present written or oral testimony to the agency. The public hearing may also be continued from time to time.[111]

Assessment Ballot Tabulation; Weighted Ballots[edit]

At the public hearing, the agency must consider all protests against the proposed assessment. At the conclusion of the public hearing, an impartial person designated by the agency who does not have a vested interest in the outcome of the proposed assessment must tabulate the assessment ballots.[112] The governing body of the agency may, if necessary, continue the assessment ballot tabulation at a different time or location accessible to the public, provided the governing body announces the time and location at the hearing. The impartial person may use technological methods of tabulating the assessment ballots, including, but not limited to, punchcard or optically readable (bar-coded) assessment ballots.[113]

In tabulating the assessment ballots, the ballots must be weighted according to the proportional financial obligation of the affected parcel.[114] If more than one of the record owners of an identified parcel submits an assessment ballot, the amount of the proposed assessment to be imposed upon the identified parcel must be allocated to each ballot submitted in proportion to the respective record ownership interests or, if the ownership interests are not shown on the record, as established to the satisfaction of the agency by documentation provided by those record owners.[115] The assessment ballot process under Proposition 218 is referred to as an “assessment ballot proceeding” and is not technically regarded as an election.[116]

The weighted assessment ballot requirement under Proposition 218 is not new. Neither is the requirement that the assessment ballot process be limited to property owners. Prior to the passage of Proposition 218, the majority protest process was generally limited to property owners subject to a proposed assessment. For a small number of assessments, a property owner election with weighted voting was required. These property owner elections have previously been upheld by the California Supreme Court.[117]

Secrecy of Assessment Ballots[edit]

Proposition 218 does not directly address issues associated with the secrecy of assessment ballots. However, these issues have been addressed by statutes adopted by the California Legislature. Such statutes can be subsequently amended by the Legislature without a vote of the electorate.

An assessment ballot must be in a form that conceals its contents once it is sealed by the person submitting the assessment ballot, and must remain sealed until the tabulation of assessment ballots starts.[118] Assessment ballots must be unsealed and tabulated in public view at the conclusion of the required public hearing so as to permit all interested persons to meaningfully monitor the accuracy of the ballot tabulation process.[119] During and after the ballot tabulation, assessment ballots and the information used to determine the weight of each assessment ballot are disclosable public records under the California Public Records Act, and must be made equally available for inspection by the proponents and the opponents of the proposed assessment.[120] Assessment ballots must be preserved for a minimum of two years, after which they may be destroyed as provided by law.[121]

The California Supreme Court has ruled that constitutional voting secrecy protections do not apply to assessment ballot proceedings under Proposition 218.[122] To the extent that any secrecy protections exist for assessment ballots, they generally come from state statutes.

Prior to Proposition 218, assessment protests by property owners were generally treated as public records subject to disclosure under the California Public Records Act. Proposition 218 did not alter the “public record” status of assessment protests by property owners.

Majority Protest for Assessments[edit]

An agency may not impose a proposed assessment if there is a majority protest. A “majority protest” exists if, upon the conclusion of the public hearing, assessment ballots submitted in opposition to the proposed assessment exceed the assessment ballots submitted in favor of the proposed assessment.[123] The assessment ballots are weighted by the amount of the proposed assessment to be imposed upon the identified parcel for which each assessment ballot was submitted.[124]

Historical Background[edit]

Proposition 218 continues the concept of a “majority protest” regarding the imposition of assessments on real property. However, prior to Proposition 218, a majority protest typically required an absolute majority of property owners to protest against a proposed assessment.[125] No assessment ballot was involved. If a property owner did not affirmatively protest an assessment (i.e., if a property owner did nothing), that effectively counted as a “yes” vote in support of the assessment.

Also prior to Proposition 218, even if an absolute majority of property owners protested an assessment and a majority protest existed, state laws often allowed local governments to overrule a majority protest by a specified supermajority vote requirement (typically by a four-fifths vote) of the governing body of the local government. What this meant in practical terms for a typical five-member governing body such as a local city council was that it would take at least three votes to approve an assessment in the absence of a majority protest and at least four votes would be required (one additional vote) to overrule a majority protest. Prior to Proposition 218, majority protests were rare events.

One of the significant assessment reforms under Proposition 218 is how a majority protest is determined. Rather than being based on an absolute majority, a majority protest is determined based on the assessment ballots actually received. If a property owner did not return an assessment ballot, that fact would not count either for or against the proposed assessment. Proposition 218 also does not allow an agency to overrule a majority protest. If a majority protest exists, the agency is constitutionally prohibited from imposing the proposed assessment.[126]

Validity of Assessment Ballot Process Under Proposition 218[edit]

The validity of the assessment ballot process under Proposition 218, particularly as it relates to the weighted vote requirement for assessment ballots, was generally upheld by the California Court of Appeal in San Francisco in Not About Water Committee v. Solano County Board of Supervisors, 95 Cal. App. 4th 982 (January 2002).

Property owner elections with weighted voting do not violate the federal constitutional requirement of “one man, one vote” under the limited circumstances of a special-purpose unit of government assigned the performance of functions affecting definable groups of constituents more than others. Such is the case with assessment districts under Proposition 218.[127] Furthermore, since only special benefits are assessable under Proposition 218, voters residing within the boundaries of an assessment district who do not own property within the assessment district are also not deemed under the California Constitution to have been deprived of the right to vote for any assessment.[128]

Federal Law Invalidity Provision[edit]

Proposition 218 contains a special additional requirement in the event a court determines the assessment ballot process violates the United States Constitution or other federal law. If any such violation were to occur, an assessment may not be levied under Proposition 218 unless approved by a two-thirds vote of the electorate in the assessment district.[129] The courts to date have upheld the validity of the assessment ballot process under Proposition 218, and no violations of federal law have been found.

The practical effect of the federal law invalidity provision is that if the assessment ballot process were invalidated under federal law, the approval requirements for assessments under Proposition 218 would become even more restrictive than if either no legal challenge under federal law had occurred or if any such legal challenge were unsuccessful. This provides a very strong disincentive, especially for local governments, to legally challenge the assessment ballot process under Proposition 218.

Local Agency Burden to Demonstrate Compliance[edit]

Prior to Proposition 218, a person challenging an assessment had the burden to prove that the assessment was not legal.[130] An important assessment reform under Proposition 218 is that it shifted the burden of demonstrating compliance to the local agency in a lawsuit challenging an assessment. In any legal action contesting the validity of an assessment under Proposition 218, the burden is on the local agency to demonstrate that the properties in question receive a special benefit over and above the benefits conferred on the public at large and that the amount of any contested assessment is proportional to, and no greater than, the benefits conferred on the properties in question.[131] This change makes it significantly easier for taxpayers to win a legal challenge.[132]

The 2008 Silicon Valley Taxpayers Case[edit]

The detailed and substantial assessment reforms contained in Proposition 218 were generally confirmed and upheld by the California Supreme Court in Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th 431 (July 2008).

The Silicon Valley Taxpayers case is one of the most important taxpayer cases in a generation in large part because of the court’s holding on the “standard of review” issue. The standard of review issue addresses the level of deference a court will ordinarily give a local government in reviewing its legislative actions such as the approval of an assessment. The extent of deference given by the courts has a major bearing on the outcome of a lawsuit. The greater the amount of deference given by the courts, the greater the likelihood a local government will prevail in a lawsuit. On the other hand, if the courts were to use a more rigorous standard of review giving significantly less deference to the actions of a local government, the greater the likelihood the local government will lose a lawsuit.

Historical Deferential Standard of Review for Assessments[edit]

Before Proposition 218 became law, in a legal challenge to an assessment the courts reviewed the actions of the local agency under a highly deferential standard. Under this highly deferential standard, the courts presumed that an assessment was valid and the person challenging the assessment had to show that the record before the local agency clearly did not support the underlying determinations of benefit and proportionality.[133] Property owners rarely won assessment lawsuits prior to Proposition 218. Because it was so difficult to win a legal challenge, lawyers were candidly urged not to bother trying to challenge an assessment in court.[134]

The underlying legal basis for the historical deferential standard of review applicable to assessments was that the establishment of a special assessment district takes place as a result of a peculiarly legislative process.[135] As a result, the constitutional separation of powers doctrine demanded a more deferential standard of review by the courts.[136]

Independent Standard of Review After Proposition 218[edit]

The constitutional status of the substantive assessment requirements under Proposition 218 altered the standard of review analysis. The substantive requirements for assessments are contained in constitutional provisions of dignity at least equal to the constitutional separation of powers provision. Prior to Proposition 218, special assessment laws were generally statutory, and the constitutional separation of powers doctrine served as a foundation for a more deferential standard of review by the courts. However, after Proposition 218 passed, an assessment’s validity is now a constitutional question.

Relying on various provisions of Proposition 218, including the burden of demonstration provision applicable to assessments,[137] as well as the Proposition 218 ballot pamphlet, the California Supreme Court concluded that because Proposition 218’s underlying purpose was to limit government’s power to exact revenue and to curtail the deference that had been traditionally accorded legislative enactments on fees, assessments, and charges, a more rigorous standard of review was warranted.[138] The separation of powers doctrine no longer justified allowing a local agency to usurp the judicial function of interpreting and applying the constitutional provisions that governed assessments under Proposition 218.[139]

Under the new standard, courts must exercise their independent judgment in reviewing whether an assessment imposed by a local agency violates the constitutional provisions of Proposition 218.[140] The new standard will make it significantly easier for taxpayers to win lawsuits challenging the validity of assessments under Proposition 218.[141]

Local Initiative Power to Reduce or Repeal Approved Assessments[edit]

After approval of an assessment, the local initiative power under Proposition 218 can generally be used to reduce or repeal the assessment since that power expressly applies to assessments.[142] This includes the significantly reduced signature requirement thereunder.

An example of where such an initiative may be appropriate involves inequities that occasionally occur from the weighted ballot requirement for assessments, particularly in assessment districts containing a large number of publicly owned parcels. An assessment district consisting of residential parcels paying lower assessments and a significant number of larger parcels paying higher assessments, such as large publicly owned or commercial parcels, can sometimes result in an assessment being approved under weighted voting even though a majority of the residential property owners opposed the assessment. A local initiative to reduce or repeal the assessment is an available remedy to address such an inequity. Should an assessment reduction or repeal initiative qualify for the ballot, the election would be by the registered voters and the ballots would not be weighted.

Article Effective Date; Assessment Exemptions[edit]

Section 5 of Article XIII D sets forth the effective date of the article. Section 5 also includes four exemptions from the assessment procedures and approval process contained in Section 4 of Article XIII D.

Effective Date[edit]

Section 5 states that Article XIII D becomes effective the day after the election unless otherwise provided.[143] The day after the Proposition 218 election was November 6, 1996.

Assessment Compliance and Exemptions[edit]

Section 5 further states that beginning July 1, 1997, all existing, new, or increased assessments must comply with Article XIII D.[144] However, Section 5 specifies that four classes of assessments existing on the effective date of Article XIII D (November 6, 1996) are exempt (grandfathered) from the procedures and approval process contained in Section 4 of Article XIII D.

Traditional Purpose Exemption[edit]

The first exemption is for any assessment imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems, or vector control.[145] This exemption is referred to as the “traditional purpose” exemption, and was intended to carve out traditionally appropriate, nonabusive assessments.[146] Technically, if an existing assessment is not imposed exclusively for an enumerated traditional purpose, it should not qualify for the exemption.

For purposes of the traditional purpose exemption, Proposition 218 expressly defines the terms “capital costs”[147] and “maintenance and operation expenses.”[148] In 1999, the California Court of Appeal in Riverside interpreted the traditional purpose exemption to also include streetlighting.[149] Any subsequent increases in a traditional purpose assessment must comply with the procedures and approval process contained in Section 4 of Article XIII D.[150]

Petition Exemption[edit]

The second exemption is for any assessment imposed pursuant to a petition signed by the person(s) owning all of the parcels subject to the assessment at the time the assessment was initially imposed.[151] This exemption typically involves circumstances where a developer approves one or more assessments as a condition for developing property. Any subsequent increases in a petition exempt assessment must comply with the procedures and approval process contained in Section 4 of Article XIII D.[152]

Bonded Indebtedness Exemption[edit]

The third exemption is for any assessment the proceeds of which are used to repay bonded indebtedness of which the failure to pay would violate the United States Constitution.[153] In particular, the exemption applies where the Contract Impairment Clause of the U.S. Constitution[154] would be violated. There must be an actual violation of the federal Contract Impairment Clause for this exemption to apply.

Prior Voter Approval Exemption[edit]

The fourth exemption is for any assessment which previously received majority voter approval from the voters voting in an election on the issue of the assessment.[155] Prior to Proposition 218, voter approval of an assessment was generally not required, but a local agency could voluntarily decide to conduct an election on the approval of an assessment. Such elections typically involved the registered voters and not the property owners subject to the assessment.

The prior voter approval exemption also served as an incentive for local agencies to hold an election on approval of an assessment before Proposition 218 became law. Technically, to qualify for the exemption the election had to be binding and not advisory. Local assessment elections held on the same date as the Proposition 218 election (November 5, 1996) should be acceptable since the voter approval occurred before Proposition 218 became effective.

Any subsequent increases in a prior voter approval exempt assessment must comply with the procedures and approval process contained in Section 4 of Article XIII D.[156] The approval process in Section 4 requires an assessment ballot proceeding involving the property owners subject to the assessment instead of a registered voter election.[157]

Local Initiative Power to Reduce or Repeal Exempt Assessments[edit]

Although assessments exempt under Section 5 are not subject to the mandatory assessment approval process contained in Section 4 of Article XIII D, the local initiative power under Proposition 218, including the significantly reduced signature requirement thereunder, can generally be used to reduce or repeal an exempt assessment since that power expressly applies to assessments.[158] The only exception should be for the bonded indebtedness exemption where a violation of the Contract Impairment Clause of the United States Constitution would be implicated if the local initiative power under Proposition 218 were exercised to reduce or repeal an assessment subject to that particular exemption.

Property-Related Fees and Charges – Procedures and Requirements[edit]

Section 6 of Article XIII D contains the detailed procedures and requirements applicable to property-related fees and charges. These procedures and requirements are designed to ensure that any property-related fee or charge levied by a local agency under Proposition 218 is a legitimate fee or charge and not an unlawful tax imposed without voter approval.

The property-related fee and charge provisions only apply if a fee or charge is “property-related” under the constitutional definition contained in Proposition 218.[159] Some property-related fees are levied upon parcels and appear on the annual property tax bill sent to property owners while other property-related fees are levied upon persons and may even be paid by a renter instead of the property owner. Detailed information about the constitutional definition of a “property-related” fee or charge, including court cases interpreting the constitutional definition, can be found in the Article XIII D “Constitutional Definitions” section of this article.

If a fee or charge is not “property-related” under Proposition 218, it may nonetheless be subject to voter approval as a “tax” under Proposition 26 which California voters approved during the November 2010 General Election. Proposition 26 amended Proposition 218 by adding a broad constitutional definition of “tax”[160] for purposes of determining the scope of levies subject to the voter approval requirement for taxes under Proposition 218.[161]

Property-related fees or charges may only be levied for “property-related services.”[162] A “property-related service” is a public service having a direct relationship to property ownership.[163] Some of the more common property-related fees or charges levied by local agencies include utility fees for ongoing water, sewer or refuse collection services, stormwater fees, and flood control fees.

The type of property-related service involved as well as whether the property-related fee or charge is new, increased, or already existing determines to what extent a levy is subject to the various procedures and requirements contained in Section 6 of Article XIII D, including whether an election is required. Starting July 1, 1997, all property-related fees or charges must comply with Section 6 of Article XIII D.[164]

Procedures for New or Increased Property-Related Fees or Charges[edit]

Subdivision (a) of Section 6 of Article XIII D sets forth the procedures a local agency must follow for any new or increased property-related fees or charges. These procedures generally require written notice, at least one public hearing, and an opportunity to formally protest the property-related fee or charge.

The property-related fee or charge process under Proposition 218 is initiated by the local agency. A property owner typically doesn’t find out about a proposal for a new or increased property-related fee or charge until after receiving the required written notice. The procedures for a new or increased property-related fee or charge help ensure that a property owner receives appropriate notice and an opportunity to provide input prior to the local agency voting on a property-related fee or charge proposal.

Written Notice Requirement[edit]

The parcels upon which a new or increased property-related fee or charge is proposed for imposition must be identified by the local agency. The amount or rate of the property-related fee or charge proposed for imposition upon each identified parcel must also be calculated by the agency. The agency must then provide written notice by mail of the proposed property-related fee or charge to the record owner of each identified parcel upon which the property-related fee or charge is proposed for imposition. The written notice must include the amount or rate of the property-related fee or charge proposed to be imposed upon each parcel, the basis upon which the amount or rate of the proposed property-related fee or charge was calculated, the reason(s) for the property-related fee or charge, together with the date, time and location of at least one public hearing on the proposed property-related fee or charge.[165]

The required notice may be given by including it in the local agency’s regular billing statement for the property-related fee or charge, or by any other mailing by the local agency to the address to which the agency customarily mails the billing statement for the property-related fee or charge.[166] However, if the local agency desires to preserve any authority it may have to record or enforce a lien on the parcel to which a property-related service is provided, the local agency must also mail notice to the record owner’s address shown on the last equalized assessment roll if that address is different than the billing or service address.[167]

While allowing local agencies to include a property-related fee or charge notice in the regular billing statement may be cost-effective for the local agency, it places a greater responsibility on the record owner to thoroughly review the billing statement mailing so as not to unintentionally disregard a property-related fee or charge notice under Proposition 218.

Public Hearing Requirement[edit]

The local agency must conduct at least one public hearing upon the proposed property-related fee or charge not less than 45 days after mailing the notice of the proposed property-related fee or charge to the record owners of each identified parcel upon which the property-related fee or charge is proposed for imposition.[168] A local agency may also hold public informational meetings about a proposed property-related fee or charge in addition to the required public hearing.

Majority Protest for Property-Related Fees and Charges[edit]

Proposition 218 allows record owners of each identified parcel upon which the property-related fee or charge is proposed for imposition to formally protest the proposed levy. At the required public hearing, the local agency must consider all protests against the proposed property-related fee or charge. Only one written protest per parcel, filed by an owner or tenant of the parcel, may be counted in calculating a majority protest to a proposed new or increased property-related fee or charge.[169] If written protests against the proposed property-related fee or charge are presented by a majority of owners of the identified parcels, the local agency is constitutionally prohibited from imposing the property-related fee or charge.[170]

The majority protest provision for property-related fees and charges requires an absolute majority of the owners of the identified parcels to protest against a proposed property-related fee or charge to preclude imposition of the levy. This is different from the majority protest requirement for assessments under Section 4 of Article XIII D which does not use an absolute majority standard. If a majority protest for a proposed property-related fee or charge is attained, the local agency cannot legally override the majority protest.

As a result of the absolute majority requirement, majority protests for proposed property-related fees and charges occasionally occur but not that often. They are most likely to occur in situations where the proposed levy is controversial and the number of identified parcels is small such as in a small community. Where the number of identified parcels is large, a majority protest is very difficult to attain even for controversial levies.

Proposition 218 does not constitutionally require that a protest form for a proposed property-related fee or charge be included with the required written notice. However, some local agencies may include a protest form with the required notice as a courtesy.

Local Initiative Power to Reduce or Repeal Agency Approved Property-Related Levies[edit]

Sometimes a proposed property-related fee or charge may be controversial and have significant opposition but not enough opposition to attain a majority protest, especially in a larger local agency where it would be very difficult to attain a majority protest. The lack of a majority protest does not legally obligate a local agency to levy a property-related fee or charge as proposed. Occasionally, the governing body of a local agency may be responsive to the objections and protests by the public concerning a proposed property-related fee or charge. Responses may take the form of not levying the property-related fee or charge or modifying the property-related fee or charge to make it more acceptable to the public.

However, in situations where the governing body of a local agency is not responsive to the objections and protests by the public and votes to approve a controversial property-related fee or charge, the local initiative power under Proposition 218 can generally be used to reduce or repeal the property-related fee or charge.[171] This includes the significantly reduced signature requirement thereunder.

Reducing or Repealing Drought Fee and Charge Increases[edit]

California has been experiencing a severe drought over the past several years. The California Water Resources Control Board adopted emergency regulations mandating urban water conservation, including significant reductions in water use.[172] The resulting reduced water usage by customers in response to conservation mandates has caused a reduction in revenues received by local water agencies. Although water customers have reduced water usage, many local water agencies have not significantly reduced their spending in response to revenue reductions from decreased water usage. Many local water agencies are responding, or plan to respond, by significantly increasing water utility fees and charges to make up for lost revenues resulting from their customers conserving water during the drought.

Some water customers may believe it is unfair or unreasonable for local water agencies to increase water fees and charges in response to customers conserving water during a severe drought. This is especially the case where customers believe their local water agency has not made reasonable spending reductions in response to revenue losses from mandated water conservation. Such water fee or charge increases may also create a significant financial hardship for many water customers. A local initiative under Proposition 218 to reduce or repeal water fee or charge increases, resulting from customers conserving water during the drought, is an available remedy.

Applicability to Tenancies of Real Property[edit]

For purposes of the property-related fee and charge provisions of Proposition 218, “property ownership” includes tenancies of real property where tenants are directly liable to pay the property-related fee or charge in question.[173] This means that if a tenant, whether commercial or residential, is directly liable to pay a property-related fee or charge, that tenant is also regarded as a “property owner” for purposes of the procedures and requirements applicable to property-related fees and charges, including entitlement to notice and the right to protest.

Requirements for Existing, New, or Increased Property-Related Fees and Charges[edit]

Subdivision (b) of Section 6 of Article XIII D sets forth five requirements that every property-related fee or charge must satisfy. A local agency may not extend, impose, or increase any property-related fee or charge unless it meets all five requirements.[174] The five requirements help ensure that any property-related fee or charge levied by a local agency is a legitimate fee or charge and not a tax. All property-related fees and charges are subject to and must comply with the five requirements.[175] Property-related fees or charges existing when Proposition 218 became effective (November 6, 1996) must be in compliance with the five requirements by July 1, 1997.[176]

If a property-related fee or charge is constitutionally prohibited under any of the five requirements, Proposition 218 does not prohibit that levy from being imposed as a tax so long as all other legal requirements are satisfied, including the applicable voter approval requirement.[177]

Total Cost Requirement[edit]

The first requirement is that the revenues derived from the property-related fee or charge must not exceed the funds required to provide the property related service.[178]

Use Requirement[edit]

The second requirement is that revenues derived from the property-related fee or charge must not be used for any purpose other than that for which the property-related fee or charge was imposed.[179]

Proportional Cost Requirement[edit]

The third requirement is that the amount of a property-related fee or charge must not exceed the proportional cost of the property-related service attributable to the parcel.[180]

Actual Use or Immediate Availability Requirement[edit]

The fourth requirement is that no property-related fee or charge may be imposed for a property-related service unless that service is actually used by, or immediately available to, the owner of the property in question. In addition, property-related fees or charges based on potential or future use of a property-related service are not permitted.[181]

Classification of Standby Charges[edit]

A standby charge has historically been considered an assessment levied upon real property according to the availability of water.[182] Under Proposition 218, a standby charge, regardless of whether characterized as a charge or an assessment, is classified as an assessment and may not be levied by a local agency without compliance with the procedures and requirements for assessments contained in Section 4 of Article XIII D.[183]

General Governmental Services Prohibition[edit]

The fifth requirement is that no property-related fee or charge may be levied for general governmental services including, but not limited to, police, fire, ambulance or library services, where the general governmental service is available to the public at large in substantially the same manner as it is to property owners.[184]

Tiered Water Rates (Capistrano Decision)[edit]

On April 20, 2015, the California Court of Appeal in Orange County in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th 1493 (April 2015) construed Proposition 218 as prohibiting local governments from charging higher water rates on heavier water users (tiered water rates) without complying with the "cost of service" requirements under the measure.[185][186] The Capistrano decision received international coverage in the media because the decision came down during a severe drought in California. The Capistrano decision was also criticized by California Governor Jerry Brown.[187]

Tiered Water Rates Not Prohibited[edit]

The Court of Appeal in the Capistrano decision did not hold that Proposition 218 invalidated all tiered water rates in California. The court merely stated that “tiers must still correspond to the actual cost of providing service at a given level of usage. The water agency here did not try to calculate the cost of actually providing water at its various tier levels. It merely allocated all its costs among the price tier levels, based not on costs, but on predetermined usage budgets.”[188]

The Court of Appeal in the Capistrano decision further stated that “[t]he way Proposition 218 operates, water rates that exceed the cost of service operate as a tax, similar to the way a ‘carbon tax’ might be imposed on use of energy. But, we should emphasize: Just because such above-cost rates are a tax does not mean they cannot be imposed—they just have to be submitted to the relevant electorate and approved by the people in a vote. . . . However, if a local government body chooses to impose tiered rates unilaterally without a vote, those tiers must be based on cost of service for the incremental level of usage, not predetermined budgets.”[189]

The gist of the Capistrano decision is that local agencies cannot act in an arbitrary manner and must “show their work” if they want to levy tiered water rates as a proper fee without approval by the voters in an election.

Depublication Requests[edit]

On July 22, 2015, the California Supreme Court denied requests by California Attorney General Kamala Harris (representing the State Water Resources Control Board) and local government interest organizations (Association of California Water Agencies, League of California Cities, and California State Association of Counties) to “depublish” the Court of Appeal’s Capistrano decision which, if granted, would have precluded the case from being cited as legal precedent in similar lawsuits around the state.[190] Despite the best efforts by the state’s top lawyers and water experts to depublish the groundbreaking ruling, the California Supreme Court decision to keep it published means the Capistrano decision can continue to be cited as precedent throughout California in other lawsuits involving the legality of tiered water rates charged by other local governments.[191]

The Capistrano decision is also considered a milestone in the debate over to what extent appellate court decisions in California should be published as precedent.[192]

Voter Approval for New or Increased Property-Related Fees and Charges[edit]

Voter approval is required for certain new or increased property-related fees or charges. The voter approval requirement is in addition to the other requirements for a property-related fee or charge. Except for fees or charges for sewer, water, or refuse collection services, no property related fee or charge may be imposed or increased unless and until that property-related fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the property-related fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area.[193]

A property-related fee or charge election must be conducted not less than 45 days after the required public hearing. An agency is allowed to adopt procedures similar to those for increases in assessments in the conduct of property-related fee or charge elections.[194] A property-related fee or charge election cannot be used to validate or override a property-related fee or charge otherwise prohibited under Proposition 218.[195]

Voter Approval Exemptions[edit]

Property-related fees or charges for sewer, water, or refuse collection services are exempt from the voter approval requirement.[196] Since the exemptions represent exceptions to a voter approval requirement, the election exemptions are strictly construed.[197] Nevertheless, most property-related fees or charges fall within an election exemption as typical utility fees for water, sewer, or refuse collection services. The California Court of Appeal in San Jose held that groundwater augmentation fees are subject to the election exemption as a charge for “water service.”[198] Examples of new or increased property-related fees or charges that ordinarily require an election include stormwater fees[199] or flood control fees.

Property-Related Fee or Charge Election Procedures[edit]

If a property-related fee or charge election is required, the local agency decides whether the election will be a property owner election requiring a majority vote or a two-thirds vote registered voter election.[200] The vast majority of property-related fee or charge elections have been majority vote property owner elections. The California Supreme Court has ruled that property owner elections for property-related fees and charges are not subject to the voting secrecy provision[201] in the California Constitution.[202]

The California Legislature has enacted additional legal procedures relating to property-related fee or charge elections under Proposition 218. These procedures are mandatory and are in addition to any other procedures that may be adopted by the local agency, as allowed by Proposition 218.[203] The new procedural requirements became legally operative on July 1, 2014.[204]

If the agency submits the proposed property-related fee or charge for approval by a two-thirds vote of the registered voters residing in the affected area, the election must be conducted by the agency’s elections official or his or her designee. If the election is conducted by a county elections official, the agency, if other than the county, must reimburse the county for the actual and reasonable costs incurred by the county elections official in conducting the election.[205]

Property Owner Election Procedures[edit]

If the agency submits the proposed property-related fee or charge for approval by a majority vote of the property owners who will be subject to the fee or charge, then additional procedures apply and must be followed.

On the face of each envelope in which the notice of election and ballot are mailed, there must appear in substantially the following form the phrase “OFFICIAL BALLOT ENCLOSED” in no smaller than 16-point bold type. A local agency may additionally place the phrase “OFFICIAL BALLOT ENCLOSED” on the face of the envelope in a language or languages other than English.[206] The ballot must include the agency’s address for return of the ballot, the date and location where the ballots will be tabulated, and a place where the person returning it may indicate his or her name, a reasonable identification of the parcel, and his or her support or opposition to the proposed property-related fee or charge. The ballots must be tabulated in a location accessible to the public. The ballot must be in a form that conceals its content once it is sealed by the person submitting it. The ballot must remain sealed until the ballot tabulation starts.[207]

An impartial person designated by the agency who does not have a vested interest in the outcome of the proposed property-related fee or charge must tabulate the ballots.[208] An impartial person includes, but is not limited to, the clerk of the agency. If the agency uses agency personnel for the ballot tabulation, or if the agency contracts with a vendor for the ballot tabulation and the vendor or its affiliates participated in the research, design, engineering, public education, or promotion of the property-related fee or charge, the ballots must be unsealed and tabulated in public view to permit all interested persons to meaningfully monitor the accuracy of the ballot tabulation process.[209]

The ballot tabulation may be continued to a different time or different location accessible to the public, provided that the time and location are announced at the location at which the tabulation started and is posted by the agency in a location accessible to the public. The impartial person may use technological methods to tabulate the ballots, including, but not limited to, punchcard or optically readable (bar-coded) ballots.[210] During and after the tabulation, the ballots are be treated as public records subject to public disclosure under the California Public Records Act, and must be made available for inspection by any interested person. The ballots must be preserved for a minimum of two years, after which they may be destroyed as provided by law.[211]

Historically, including prior to Proposition 218, the constitutional right to vote in secret did not apply to property owner elections.[212] This was not altered by the passage of Proposition 218.

Stormwater Fees and Charges[edit]

One of the most significant issues under the Proposition 218 election requirement for property-related fees and charges is whether stormwater fees and charges are exempt from the election requirement as either a fee for water or sewer service. In an effort to comply with California and federal “clean water” laws, local agencies must take steps to reduce or eliminate stormwater pollutants, and that requires significant funding. Many local agencies use existing revenues from their general fund to help finance such efforts. Local agencies can also finance these efforts through voter approved tax increases. However, legal issues arise under Proposition 218 when local agencies seek to raise stormwater revenues in the form of a new or increased fee or charge, particularly if voter approval is not first obtained.

The California Court of Appeal in San Jose held in 2002 that a stormwater drainage fee imposed on developed parcels of land was not only a “property-related” fee subject to the requirements of Article XIII D, but also that a property-related fee or charge election was constitutionally required.[213] In addressing the issue of whether the sewer or water election exemptions applied, the court formulated the rule that the property-related fee or charge election exemptions under Proposition 218 must be strictly construed.[214]

In applying the strict construction rule to the sewer service exemption, the court construed that exemption to include only its narrower and more common meaning applicable to sanitary sewerage. Using similar reasoning, the court also concluded that the stormwater drainage fee did not qualify under the water service exemption. The court noted that the “average voter would envision ‘water service’ as the supply of water for personal, household, and commercial use, not a system or program that monitors storm water for pollutants, carries it away, and discharges it into the nearby creeks, river, and ocean.”[215]

Local Initiative Power to Reduce or Repeal Existing Stormwater Fees and Charges[edit]

The property-related fee or charge election requirement for stormwater fees and charges only applies to new or increased levies.[216] Already existing stormwater fees and charges are not subject to the mandatory election requirement. However, existing stormwater fees and charges are generally subject to reduction or repeal using the local initiative power under Proposition 218, including the significantly reduced signature requirement thereunder.[217]

Local Agency Burden to Demonstrate Compliance[edit]

Prior to Proposition 218, the courts allowed local agencies significant flexibility in determining property-related fee amounts. In lawsuits challenging property-related fees or charges, the challenger generally had the burden to show that they were not legal.[218] Proposition 218 shifted the burden of demonstrating compliance to the local agency in a lawsuit challenging a property-related fee or charge. In any legal action contesting the validity of a property-related fee or charge, the burden is on the local agency to demonstrate compliance with the procedures and requirements applicable to property-related fees and charges.[219] This change makes it significantly easier for taxpayers to win a legal challenge involving a property-related fee or charge.

Independent Standard of Review For Property-Related Fees and Charges[edit]

The independent standard of review for assessments adopted by the California Supreme Court in the Silicon Valley Taxpayers case[220] also applies to legal challenges involving property-related fees and charges.[221] As a result, courts will exercise their independent judgment in determining whether a property-related fee or charge violates the provisions of Proposition 218. This will also make it easier for taxpayers to win legal challenges involving property-related fees or charges.

Local Initiative Power to Reduce or Repeal Voter Approved Property-Related Fees and Charges[edit]

After voter approval of a property-related fee or charge, the local initiative power under Proposition 218 can generally be used to reduce or repeal that property-related fee or charge.[222] This includes the significantly reduced signature requirement thereunder.

An example of where such an initiative may be appropriate involves election issues or controversies that may occur in a property owner election, particularly where the local agency adopted controversial election procedures. Should a property-related fee or charge reduction or repeal initiative qualify for the ballot, the election would be by the registered voters.

Liberal Interpretation Provision[edit]

Section 5 of Proposition 218 contains a liberal interpretation provision constitutionally commanding that its provisions be “liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent.”[223] The liberal interpretation provision is legally binding on all California courts in interpreting Proposition 218, and has positively affected the outcome of numerous Proposition 218 lawsuits.

Historical Context[edit]

The importance of the liberal interpretation provision under Proposition 218 can be traced to prior judicial interpretations of Proposition 13 strictly construing key provisions of that measure. In two cases in 1982, the California Supreme Court formulated and applied a special rule of interpretation applicable to Proposition 13 that strictly construed the circumstances in which local governments must get two-thirds voter approval to approve local tax increases.[224]

The court majority reasoned that due to the “fundamentally undemocratic nature” of a two-thirds vote supermajority requirement, the applicable voter approval requirement for local taxes under Proposition 13 must be strictly construed.[225] The preceding rule of interpretation was not consistent with the interpretation of initiative measures, and has not been applied in circumstances other than Proposition 13 where a supermajority vote is required. A vigorous dissenting opinion was filed in the 1982 Richmond case.[226]

As a result of the two-thirds voter approval requirement for local taxes under Proposition 13 being strictly construed, local governments were able to enact many local tax increases with either majority voter approval or no voter approval at all. The resulting impact frustrated the effective tax relief provisions of Proposition 13. The strict construction standard also provided a legal basis for narrowly interpreting the circumstances in which nontax levies such as benefit assessments, fees, and charges were in reality taxes subject to two-thirds voter approval under Proposition 13. The strict construction standard applicable to Proposition 13 served as a catalyst that ultimately led to the subsequent qualification and passage of Proposition 218.

See also[edit]

References[edit]

  1. ^ Coupal & Cohen. "Water Rates Under Prop. 218". Howard Jarvis Taxpayers Association. 
  2. ^ Ballot Pamphlet, California General Election (November 5, 1996), Official Title and Summary of Proposition 218 Prepared by the Attorney General, p. 72.
  3. ^ Prop. 218, § 1.
  4. ^ Lucas, Greg (6 November 1996). "Surprise win for anti-tax 218". San Francisco Chronicle. Retrieved 21 April 2015. 
  5. ^ Wilson, Yumi (5 October 1996). "PAGE ONE Tax Revolt Revisits State Ballot". San Francisco Chronicle. Retrieved 21 April 2015. 
  6. ^ Votes: 5,202,429 (56.55%) in favor; 3,996,702 (43.45%) against. See Statement of the Vote, page xiii.
  7. ^ California Secretary of State, Statement of Vote November 5, 1996, pp. 43-45.
  8. ^ Fox, Joel (2003). The Legend of Proposition 13. p. 204. 
  9. ^ Akizuki, Dennis (November 6, 1996). "218’s Win Echoes Tax Revolt". San Jose Mercury News. 
  10. ^ Wall, Dan (March 1997). "The New Tax Revolution". Cal-Tax Digest: page 23. 
  11. ^ Morain & Slater (November 7, 1996). "Cities Brace for Tighter Budgets After Prop. 218". Los Angeles Times. 
  12. ^ Doerr, David (February 1997). "The Genesis of Proposition 218: A History of Local Taxing Authority". Cal-Tax Digest: p. 3. 
  13. ^ Fox, Joel (October 20, 1996). "Closing the Assessment Loophole in Proposition 13". Los Angeles Times. 
  14. ^ Catania, Sara (October 18, 1996). "Taxed Out: Anti-tax group goes for jugular with Proposition 218". Los Angeles Weekly. 
  15. ^ Fox, Joel (May 29, 1996). "A Tax by Any Other Name . . .". Los Angeles Times. 
  16. ^ Kanner, Gideon (December 4, 1996). "Bertha’s Revenge: Prop. 218 Compensates for Outrages Against Small Landowners". Los Angeles Daily Journal. 
  17. ^ Doerr, David (February 1997). "The Genesis of Proposition 218: A History of Local Taxing Authority". Cal-Tax Digest: p. 5. 
  18. ^ Knox v. City of Orland, 4 Cal. 4th 132 (December 1992).
  19. ^ Fox, Joel (May 29, 1996). "A Tax by Any Other Name . . .". Los Angeles Times. 
  20. ^ Fox, Joel (October 20, 1996). "Closing the Assessment Loophole in Proposition 13". Los Angeles Times. 
  21. ^ Ballot Pamphlet, California General Election (November 5, 1996), argument in favor of Proposition 218, p. 76.
  22. ^ Ballot Pamphlet, California General Election (November 5, 1996), argument in favor of Proposition 218, p. 76.
  23. ^ Doerr, David (February 1997). "The Genesis of Proposition 218: A History of Local Taxing Authority". Cal-Tax Digest: p. 5. 
  24. ^ Hansen v. City of San Buenaventura, 42 Cal. 3d 1172 (December 1986).
  25. ^ "Propositions". Howard Jarvis Taxpayers Association. 
  26. ^ Prop. 218, § 2.
  27. ^ "California Constitution Article XIII C [Voter Approval for Local Tax Levies]". 
  28. ^ Cal. Const., art. XIII C, § 1, subd. (b).
  29. ^ Cal. Const., art. XIII C, § 1, subd. (a).
  30. ^ Cal. Const., art. XIII C, § 1, subd. (d).
  31. ^ Cal. Const., art. XIII C, § 1, subd. (e).
  32. ^ Cal. Const., art. XIII C, § 2, subd. (a).
  33. ^ Cal. Const., art. XIII C, § 2, subd. (a).
  34. ^ Cal. Const., art. XIII C, § 2, subd. (b).
  35. ^ Cal. Const., art. XIII C, § 2, subd. (c).
  36. ^ Cal. Const., art. XIII C, § 2, subd. (d).
  37. ^ Cal. Const., art. XIII D, § 3, subd. (a), par. (2).
  38. ^ Cal. Const., art. XIII D, § 1, subd. (a).
  39. ^ Cal. Const., art. XIII C, § 3.
  40. ^ Brooktrails Township Community Services District v. Board of Supervisors of Mendocino County, 218 Cal. App. 4th 195 (June 2013).
  41. ^ Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205, page 218 (July 2006).
  42. ^ Santa Barbara County Taxpayers Association v. Board of Supervisors of Santa Barbara County, 209 Cal. App. 3d 940, page 949 (April 1989).
  43. ^ California Legislative Analyst, Understanding Proposition 218, December 1996, pages 36-37.
  44. ^ "California Constitution Article XIII D [Assessment and Property-Related Fee Reform]". 
  45. ^ Cal. Const., art. XIII D, § 1.
  46. ^ Cal. Const., art. XIII D, § 1, subd. (a).
  47. ^ Cal. Const., art. XIII D, § 1, subd. (b).
  48. ^ Cal. Const., art. XIII D, § 1, subd. (c).
  49. ^ Cal. Const., art. XIII D, § 2, subd. (a).
  50. ^ Cal. Const., art. XIII D, § 2, subd. (b).
  51. ^ Cal. Const., art. XIII D, § 3, subd. (a), par. (3).
  52. ^ Knox v. City of Orland, 4 Cal. 4th 132 (December 1992).
  53. ^ Ventura Group Ventures, Inc. v. Ventura Port District, 24 Cal. 4th at page 1106.
  54. ^ Cal. Const., art. XIII D, § 2, subd. (i).
  55. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 452.
  56. ^ Cal. Const., art. XIII D, § 3, subd. (a), par. (4).
  57. ^ Cal. Const., art. XIII D, § 2, subd. (e).
  58. ^ Cal. Const., art. XIII D, § 2, subd. (h).
  59. ^ Apartment Association of Los Angeles County, Inc. v. City of Los Angeles, 24 Cal. 4th 830 (January 2001).
  60. ^ Howard Jarvis Taxpayers Association v. City of Roseville, 97 Cal. App. 4th 637 (April 2002).
  61. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th 1351 (June 2002).
  62. ^ Richmond v. Shasta Community Services District, 32 Cal.4th 409 (February 2004).
  63. ^ Richmond v. Shasta Community Services District, 32 Cal.4th at pages 426-427.
  64. ^ Howard Jarvis Taxpayers Association v. City of Fresno, 127 Cal. App. 4th 914 (March 2005).
  65. ^ Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (July 2006).
  66. ^ Cal. Const., art. XIII D, § 2, subd. (e).
  67. ^ Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th at page 215.
  68. ^ Pajaro Valley Water Management Agency v. Amrhein, 150 Cal. App. 4th 1364 (May 2007).
  69. ^ City of San Buenaventura v. United Water Conservation District, 185 Cal. Rptr. 3d 207 (March 2015), Depublished by Grant of Review.
  70. ^ "California Supreme Court Case Information". 
  71. ^ Cal. Const., art. XIII D, § 3, subd. (a).
  72. ^ Cal. Const., art. XIII D, § 3, subd. (b).
  73. ^ Cal. Const., art. XIII C, § 1, subd. (e).
  74. ^ Cal. Const., art. XIII C, § 3.
  75. ^ Cal. Const., art. XIII D, § 4.
  76. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  77. ^ Cal. Const., art. XIII D, § 2, subd. (d).
  78. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  79. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  80. ^ Cal. Const., art. XIII D, § 2, subd. (h).
  81. ^ Cal. Const., art. XIII D, § 4, subd. (b).
  82. ^ Cal. Gov. Code, § 6252, subd. (e).
  83. ^ Cal. Gov. Code, § 6253, subd. (b).
  84. ^ Cal. Gov. Code, § 6253, subd. (b).
  85. ^ Cal. Gov. Code, § 6253.9.
  86. ^ Cal. Gov. Code, § 6253.9.
  87. ^ Cal. Gov. Code, § 6253.9, subd. (a).
  88. ^ Sierra Club v. Superior Court, 57 Cal. 4th 157 (July 2013).
  89. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  90. ^ Cal. Const., art. XIII D, § 2, subd. (i).
  91. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 438.
  92. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  93. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 451.
  94. ^ Cal. Const., art. XIII D, § 2, subd. (b).
  95. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  96. ^ Beutz v. County of Riverside, 184 Cal. App. 4th at page 1522.
  97. ^ Morgan v. Imperial Irrigation District, 223 Cal. App. 4th at page 908.
  98. ^ Dahms v. Downtown Pomona Property & Business Improvement District, 174 Cal. App. 4th at page 716.
  99. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  100. ^ Cal. Const., art. XIII, § 3, subd. (b).
  101. ^ San Marcos Water District v. San Marcos Unified School District, 42 Cal. 3d 154 (July 1986).
  102. ^ Cal. Const., art. XIII D, § 4, subd. (a).
  103. ^ Cal. Const., art. XIII D, § 4, subd. (c).
  104. ^ Cal. Const., art. XIII D, § 4, subd. (c).
  105. ^ Cal. Gov. Code, § 53753, subd. (b).
  106. ^ Cal. Gov. Code, § 53753, subd. (b).
  107. ^ Cal. Const., art. XIII D, § 4, subd. (d).
  108. ^ Cal. Gov. Code, § 53753, subd. (c).
  109. ^ Cal. Gov. Code, § 53753, subd. (c).
  110. ^ Cal. Const., art. XIII D, § 4, subd. (e).
  111. ^ Cal. Gov. Code, § 53753, subd. (d).
  112. ^ Cal. Gov. Code, § 53753, subd. (e), par. (1).
  113. ^ Cal. Gov. Code, § 53753, subd. (e), par. (2).
  114. ^ Cal. Const., art. XIII D, § 4, subd. (e).
  115. ^ Cal. Gov. Code, § 53753, subd. (e), par. (3).
  116. ^ Cal. Elec. Code, § 4000, subd. (c), par. (8).
  117. ^ Southern California Rapid Transit District v. Bolen, 1 Cal. 4th 654 (January 1992).
  118. ^ Cal. Gov. Code, § 53753, subd. (c).
  119. ^ Cal. Gov. Code, § 53753, subd. (e), par. (1).
  120. ^ Cal. Gov. Code, § 53753, subd. (e), par. (2).
  121. ^ Cal. Gov. Code, § 53753, subd. (e), par. (2).
  122. ^ Greene v. Marin County Flood Control & Water Conservation District, 49 Cal. 4th 277 (June 2010).
  123. ^ Cal. Const., art. XIII D, § 4, subd. (e).
  124. ^ Cal. Gov. Code, § 53753, subd. (e), par. (4).
  125. ^ Fox, Joel (October 20, 1996). "Closing the Assessment Loophole in Proposition 13". Los Angeles Times. 
  126. ^ Cal. Const., art. XIII D, § 4, subd. (e).
  127. ^ Not About Water Committee v. Solano County Board of Supervisors, 95 Cal. App. 4th 982 (January 2002).
  128. ^ Cal. Const., art. XIII D, § 4, subd. (g).
  129. ^ Cal. Const., art. XIII D, § 4, subd. (g).
  130. ^ Ballot Pamphlet, California General Election (November 5, 1996), analysis of Proposition 218 by Legislative Analyst, p. 74.
  131. ^ Cal. Const., art. XIII D, § 4, subd. (f).
  132. ^ Ballot Pamphlet, California General Election (November 5, 1996), analysis of Proposition 218 by Legislative Analyst, p. 74.
  133. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 444.
  134. ^ Kanner, Gideon (December 4, 1996). "Bertha’s Revenge: Prop. 218 Compensates for Outrages Against Small Landowners". Los Angeles Daily Journal. 
  135. ^ Knox v. City of Orland, 4 Cal. 4th at page 146.
  136. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 448.
  137. ^ Cal. Const., art. XIII D, § 4, subd. (f).
  138. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 448.
  139. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 449.
  140. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 450.
  141. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 445.
  142. ^ Cal. Const., art. XIII C, § 3.
  143. ^ Cal. Const., art. XIII D, § 5.
  144. ^ Cal. Const., art. XIII D, § 5.
  145. ^ Cal. Const., art. XIII D, § 5, subd. (a).
  146. ^ Howard Jarvis Taxpayers Association v. City of Riverside, 73 Cal. App. 4th 679 (July 1999).
  147. ^ Cal. Const., art. XIII D, § 2, subd. (c).
  148. ^ Cal. Const., art. XIII D, § 2, subd. (f).
  149. ^ Howard Jarvis Taxpayers Association v. City of Riverside, 73 Cal. App. 4th 679 (July 1999).
  150. ^ Cal. Const., art. XIII D, § 5, subd. (a).
  151. ^ Cal. Const., art. XIII D, § 5, subd. (b).
  152. ^ Cal. Const., art. XIII D, § 5, subd. (b).
  153. ^ Cal. Const., art. XIII D, § 5, subd. (c).
  154. ^ U.S. Const., art. I, § 10, cl. 1.
  155. ^ Cal. Const., art. XIII D, § 5, subd. (d).
  156. ^ Cal. Const., art. XIII D, § 5, subd. (d).
  157. ^ Cal. Const., art. XIII D, § 4, subd. (e).
  158. ^ Cal. Const., art. XIII C, § 3.
  159. ^ Cal. Const., art. XIII D, § 2, subd. (e).
  160. ^ Cal. Const., art. XIII C, § 1, subd. (e).
  161. ^ Cal. Const., art. XIII C, § 2.
  162. ^ Cal. Const., art. XIII D, § 3, subd. (a), par. (4).
  163. ^ Cal. Const., art. XIII D, § 2, subd. (h).
  164. ^ Cal. Const., art. XIII D, § 6, subd. (d).
  165. ^ Cal. Const., art. XIII D, § 6, subd. (a), par. (1).
  166. ^ Cal. Gov. Code, § 53755, subd. (a), par. (1).
  167. ^ Cal. Gov. Code, § 53755, subd. (a), par. (3).
  168. ^ Cal. Const., art. XIII D, § 6, subd. (a), par. (2).
  169. ^ Cal. Gov. Code, § 53755, subd. (b).
  170. ^ Cal. Const., art. XIII D, § 6, subd. (a), par. (2).
  171. ^ Cal. Const., art. XIII C, § 3.
  172. ^ State Water Resources Control Board, Resolution No. 2015-0032 (May 5, 2015).
  173. ^ Cal. Const., art. XIII D, § 2, subd. (g).
  174. ^ Cal. Const., art. XIII D, § 6, subd. (b).
  175. ^ Howard Jarvis Taxpayers Association v. City of Fresno, 127 Cal. App. 4th 914 (March 2005).
  176. ^ Cal. Const., art. XIII D, § 6, subd. (d).
  177. ^ Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th at pages 1515-1516.
  178. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (1).
  179. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (2).
  180. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (3).
  181. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (4).
  182. ^ Trumbo v. Crestline Lake Arrowhead Water Agency, 250 Cal. App. 2d 320 (April 1967).
  183. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (4).
  184. ^ Cal. Const., art. XIII D, § 6, subd. (b), par. (5).
  185. ^ Egelko, Bob (20 April 2015). "Appeals court rejects higher water rates for big users". San Francisco Chronicle. Retrieved 21 April 2015. 
  186. ^ Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano No. G048969
  187. ^ "Governor Brown Issues Statement on 4th District Court of Appeal Decision". Office of Governor Edmund G. Brown Jr. April 20, 2015. 
  188. ^ Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th at page 1498.
  189. ^ Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th at pages 1515-1516.
  190. ^ "Supreme Court Denies Request to Depublish Capistrano Ruling". Association of California Water Agencies. July 22, 2015. 
  191. ^ "California Supreme Court says Capistrano tiered water rate ruling will remain published, keeping precedent for future legal battles". Orange County Register. July 22, 2015. 
  192. ^ Walters, Dan (July 27, 2015). "Publishing appellate decisions". Sacramento Bee. 
  193. ^ Cal. Const., art. XIII D, § 6, subd. (c).
  194. ^ Cal. Const., art. XIII D, § 6, subd. (c).
  195. ^ Cal. Const., art. XIII D, § 3, subd. (a), par. (4).
  196. ^ Cal. Const., art. XIII D, § 6, subd. (c).
  197. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th at page 1358.
  198. ^ Griffith v. Pajaro Valley Water Management Agency, 220 Cal. App. 4th 586 (October 2013).
  199. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th 1351 (June 2002).
  200. ^ Cal. Const., art. XIII D, § 6, subd. (c).
  201. ^ Cal. Const., art. II, § 7.
  202. ^ Greene v. Marin County Flood Control & Water Conservation District, 49 Cal. 4th 277 (June 2010).
  203. ^ Cal. Gov. Code, § 53755.5.
  204. ^ Cal. Gov. Code, § 53755.5, subd. (d).
  205. ^ Cal. Gov. Code, § 53755.5, subd. (a).
  206. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (1).
  207. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (2).
  208. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (3).
  209. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (3).
  210. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (4).
  211. ^ Cal. Gov. Code, § 53755.5, subd. (b), par. (4).
  212. ^ Greene v. Marin County Flood Control & Water Conservation District, 49 Cal. 4th 277 (June 2010).
  213. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th 1351 (June 2002).
  214. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th at page 1358.
  215. ^ Howard Jarvis Taxpayers Association v. City of Salinas, 98 Cal. App. 4th at page 1358.
  216. ^ Cal. Const., art. XIII D, § 6, subd. (c).
  217. ^ Cal. Const., art. XIII C, § 3.
  218. ^ Ballot Pamphlet, California General Election (November 5, 1996), analysis of Proposition 218 by Legislative Analyst, p. 74.
  219. ^ Cal. Const., art. XIII D, § 6, subd. (b).
  220. ^ Silicon Valley Taxpayers’ Association, Inc. v. Santa Clara County Open Space Authority, 44 Cal. 4th at page 450.
  221. ^ City of Palmdale v. Palmdale Water District, 198 Cal. App. 4th 926 (August 2011).
  222. ^ Cal. Const., art. XIII C, § 3.
  223. ^ Prop. 218, § 5.
  224. ^ Los Angeles County Transportation Commission v. Richmond, 31 Cal. 3d 197 (April 1982); City and County of San Francisco v. Farrell, 32 Cal. 3d 47 (August 1982).
  225. ^ Los Angeles County Transportation Commission v. Richmond, 31 Cal. 3d at page 205.
  226. ^ Los Angeles County Transportation Commission v. Richmond, 31 Cal. 3d at pages 209-219.

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