An update on critical cases

The Supreme Court has granted review of two erroneous appellate decisions interpreting Proposition 218. Regular readers of this column already know about the first one: Bighorn-Desert View Water Agency v. Beringson, where the court of appeal ruled that water rates are not subject to Proposition 218 and therefore water rates cannot be reduced through a taxpayer initiative. The briefing before the Supreme Court is complete. We are waiting for the Court to schedule oral argument.

The second case granted review by the Supreme Court is Silicon Valley Taxpayers v. Santa Clara County Open Space Authority. HJTA brought this case to challenge an assessment even though it was approved by a majority vote, because we believe it is not a lawful assessment. Assessments are lawful when they pay for a public improvement or public service being provided exclusively to benefit a finite group of private property owners. For example, when a sewer system is built to serve a tract of homes, it may be financed by levying an assessment on the homes within that tract. In this case, however, an assessment was imposed on every parcel within an 800-square-mile area to bankroll the future purchase of as-yet-unidentified open space. Because the open space is not yet identified, it is impossible to tell which properties, if any, will be uniquely benefited. A levy like this is really a special tax and should have needed a two-thirds vote. The Court of Appeal upheld the assessment. At our urging, the Supreme Court granted review. By the time you read this, our opening brief will have been filed. The government's brief is due 30 days later.

Several other cases on our docket were successfully concluded last year. HJTA v. City of Arcata successfully challenged a fee added to the water bills of Arcata residents to subsidize a private recycling company. HJTA v. City of Fresno concluded with a published appellate decision in our favor, invalidating a fee collected from public utility customers in lieu of the property tax the City would receive if the public utility were not exempt from paying taxes. The Fresno victory was also used several times last year to force other cities to cease collecting similar in lieu fees. HJTA v. City of Encinitas successfully challenged a fee added to the trash bill, without voter approval, to fight storm water pollution. Finally, we came to the defense of two homeowners who had qualified an initiative to repeal a special fire tax and were then sued by the Fire District in hopes of keeping the initiative off the ballot. The Judge ordered the County Elections Official to proceed with the election and praised HJTA for protecting voters' rights against the bully tactics of the District.

Unfortunately, Jarvis lawyers are not the only ones litigating tax cases, and taxpayer rights suffered some defeats last year in cases brought by others. In Casteel v. County of San Joaquin, the Court of Appeal ruled that the government can record a lien against property to force the owner to pay debts incurred by his tenant. In Mancini v. County of Santa Cruz, the Court upheld the validity of a new fee added to telephone bills, without voter approval, to pay for the 911 system. And in Vargas v. City of Salinas, the Court significantly relaxed the rules regarding government use of public funds to campaign for or against ballot measures. The attorney for Vargas is petitioning the Supreme Court for review and we will file an amicus brief supporting his position if review is granted.

On the immediate horizon for 2006, we hope to receive a decision soon in an important case we tried in December called HJTA v. Morongo Valley Community Services District. In that case a Community Services District, supported by a legal opinion from County Counsel, proposed a general tax on all property within the district, which was approved by a majority vote, to cover shortfalls in the district's budget. This tax is a direct assault on Proposition 13, which limits general property taxes to the one-percent tax collected by the County. We will also continue litigating Lake Arrowhead II, which seeks to apply an earlier judgment, invalidating a sewer standby charge, to approximately 4000 parcels within the Cedar Glen subdivision of Lake Arrowhead. And we will pursue Hamlin v. State Franchise Tax Board, which challenges the constitutionality of a state statute that requires the income tax withholding on real estate sales to be based on the property's purchase price rather than the taxpayer's gain from the sale.