Building on Success

In every new year, it is customary to look back and assess last year's gains and losses. I am happy to report that HJTA had a very successful year.

The Supreme Court in 2006 issued its long-awaited decision in Bighorn-Desert View Water Agency v. Beringson. The decision was so long-awaited, in fact, that while the case was pending, a new Registrar of Voters took office, thus changing the final name of the case to Bighorn-Desert View Water Agency v. Vergil. Bighorn was a victory for taxpayers and a vindication for HJTA. The Court ruled that fees for property-related services, such as water, sewer and garbage, are subject to Proposition 218's cost-of-service rules. In reaching that conclusion, the Court thankfully overruled HJTA v. City of Los Angeles, a case we lost in 2000 that had been a thorn in our side ever since because it held that fees measured by the amount of service consumed were exempt from Proposition 218. Many cities, relying on HJTA v. Los Angeles, have been using their water, sewer or garbage utilities to raise money for their general funds. These cities must now discontinue that practice.

Several other cases on our docket were successfully concluded last year. The case that drew the most media attention was HJTA v. City of Sacramento, where we sued Sacramento for refusing to release the details of a written offer it made to the owners of the Kings basketball franchise regarding the construction of a new arena and parking facility downtown. The Kings had walked from the negotiating table over a dispute with the City regarding parking (how many spaces the City would build, and who would receive the revenue therefrom). HJTA made a request under the Public Records Act for a copy of the offer that enticed the Kings back to the table. The City refused, asserting several theories why the document was exempt from the Act. HJTA sued. Because voters were about to decide whether to increase their sales tax to pay for the new arena, HJTA believed voters were entitled to see what the City was promising the Kings at public expense. To get the information before the election meant pushing the case through both the trial court and the court of appeal in record time, which we did. We won at both stages, and the City finally caved in and gave us the document, which we immediately shared with Sacramento’s eager press.

HJTA v. Morongo Valley involved a Community Services District, which, on the advice and approval of County Counsel, placed a measure on the March 2004 ballot to enact a new property tax on each parcel within the district. Because the District planned to deposit the money in its general fund for expenditure on general governmental services, the District touted the measure as a general tax that could be approved by a simple majority of the voters. At the election it received majority approval, but not two thirds. HJTA filed suit because special districts cannot levy general taxes. They can levy only special taxes, which require two-thirds voter approval. Moreover, Proposition 13 limits the general tax on property to the 1% collected by counties. County Counsel’s creative defense represented a major threat to Proposition 13 if we lost. The case went to trial and fortunately we prevailed. The District decided not to appeal, which ended the matter. Although bad ideas sometimes spread like a virus and we have to fight them more than once, this one has not arisen elsewhere so far.

HJTA v. City of Fairfield challenged "fees in lieu of taxes," which Fairfield was collecting from its water customers. There are two published appellate decisions on the books, HJTA v. Roseville and HJTA v. Fresno, which hold that charging in-lieu fees as a component of public utility rates violates Proposition 218. Yet the City of Fairfield rebuffed us when we contacted city officials asking them to cease collecting the illegal fees. So we were forced to file suit. The City tried to defend its fee by arguing that the fee could be justified by a future study that the City was planning to someday conduct. But when the City tested its theory by filing a demurrer (a type of motion to strike the complaint as meritless), the Court did not buy it. After that, the City asked us to propose terms of settlement and ultimately agreed to stop collecting the fees if voters reject a proposal to replace the illegal fees with a new utility tax.

Jarvis lawyers are not the only ones litigating tax cases, and there were a few interesting developments last year in cases with which we had no involvement. Andal v. City of Stockton held that taxpayers need not "exhaust administrative remedies" (i.e., request and be denied a refund) as a condition of challenging a tax if their lawsuit seeks only invalidation of the tax and not a refund of past payments. Costa v. Superior Court, a California Supreme Court decision, clarified the rules for preelection versus post election lawsuits brought by the government to keep voter initiatives off the ballot. Since many voter initiatives involve taxes, this is an issue dear to our hearts. The Court ruled that only procedural claims relating to whether the measure is technically qualified to appear on the ballot may be brought as preelection challenges. So, for example, a claim that the measure does not have enough signatures, is not legislative in character, or violates the single subject rule may be framed as a preelection challenge. A claim that the measure is substantively invalid, or preempted, or unenforceable, however, would not be sufficient grounds to disrupt the electoral process and deny exercise of the people's franchise. Had Costa been the law a few years earlier, the Bighorn case (which was a preelection challenge brought by the water agency to keep a voter initiative off the ballot) would have been dismissed.

As we move into 2007, the legal department will be working closely with the HJTA legislative department to craft a bill or an initiative that will accomplish what Proposition 90 failed to achieve last year: protection for homeowners against eminent domain. We will also continue our fight on behalf of thousands of lot owners in Lake Arrowhead who pay sewer fees to an agency that does not provide their area with sewer service. And we will move forward with litigation against the City of Petaluma on another refusal to release public finance documents under the Public Records Act, a suit against the City of Stockton challenging in-lieu fees it collects from its water and sewer customers, and a case against the City of Solana Beach to invalidate a storm drain fee it passed without voter approval. Finally, we hope to see a decision from the Supreme Court this year in our case against the Santa Clara Open Space Authority attacking an assessment imposed on every parcel within an 800-square-mile area to bankroll the future purchase of as-yet- unidentified open space. I pray our successes will continue to mount, as they did last year!