An Update on Critical Cases

Silicon Valley Taxpayers Assn. v. Santa Clara Open Space Authority — Landmark Victory!
In November 2001, the Santa Clara Open Space Authority levied a flat $20 annual assessment on every homeowner within an 800-square-mile area to pay for open space preservation. However, since the Authority does not possess the power of eminent domain, it could not commit to acquiring any specific property.

HJTA challenged the assessment under Proposition 218, arguing first and foremost that open space provides general benefits to the public at large, not special benefits to just property owners. In the alternative, we attacked the proportionality of a uniform $20 rate because parcels abutting the open space or in close proximity to it would obviously benefit more than parcels too far away to use or even view the open space.

After defeats in the trial court and the court of appeal, the California Supreme Court granted review. In July, the Supreme Court finally issued its ruling, vindicating HJTA by reversing the courts below.

In a decision that will have wide application to other taxpayer cases, the Supreme Court ruled that Proposition 218 eliminated the deference courts formerly gave to agency findings regarding the justification for levying assessments. Before Proposition 218, courts presumed an assessment was valid if the agency went through the appropriate procedural steps in passing it. Now, said the Supreme Court, courts must “independently review” the assessment to ensure that taxpayers’ rights under Proposition 218 are not being violated.

As to this particular assessment, the Court ruled that the agency had not established a special benefit to the properties assessed because it did not know at the time of the assessment exactly where it would acquire open space land.

City of Los Angeles v. All Persons — Slam Dunk in the Trial Court
As background, we sued the City of Los Angeles in 1999 over its water rates because the City historically set rates at an amount significantly above its cost to provide water. The overcharges resulted in a surplus of over $20 million each year, which the City transferred to its General Fund for the City Council to spend at its discretion.

Our 1999 lawsuit alleged that the overcharges violated Proposition 218. Unfortunately, the Court of Appeal sided with the City, ruling that metered water rates are not fees for a property-related service and therefore are not subject to Proposition 218. That was the state of affairs for six years. Then, in 2006, the California Supreme Court decided Bighorn-Desert View Water Agency v. Verjil which overruled the decision six years earlier in HJTA v. City of Los Angeles.

Now that the law is clear under Bighorn that water rates are subject to Proposition 218, it is also clear (at least to us) that the City of Los Angeles must adjust its water rates to comply with the law. Unfortunately, the City – feigning “confusion” as to the current state of the law – recently filed suit against all of its water customers, asking the court to “validate” the continuation of its historic practice of padding water rates, accumulating a surplus, then transferring the surplus to its General Fund.

We alone filed an Answer to the City’s lawsuit and defended the case on behalf of the City’s water customers. After a trial on stipulated facts, the court ruled in our favor. The court’s decision states, “Proposition 218 prohibits the City and its Department of Water and Power from transferring surplus revenue derived from water service fees to the City’s…General Fund, or any other fund for expenditure on non-water related purposes.”

Greene v. Marin County Flood Control District — A Win for Voters May Be Upset by Supreme Court
A county flood control district held a mailed ballot election in 2007 on whether to impose a new storm drainage fee. The ballots required each voter to print his name and sign his signature on the face of the ballot where he cast his vote.

The fee passed by about 60 votes after some 1,500 votes were invalidated by county officials who opened and examined them prior to the tabulation. Most of the rejected ballots were invalidated because the voter did not write his name and signature on the ballot. Had the rejected ballots been counted, the fee proposal would have failed.

Ford Greene, a property owner subject to the fee, who voted in the election, challenged the fee on the grounds that the election violated the constitution because the ballot was not secret as required by article II, section 7, of the California Constitution.

The Court of Appeal agreed, and prohibited the county from any further collection of the fee. The Court’s decision said, “The right to a secret ballot is the very foundation of our election system. It is the right to vote one’s conscience without fear of retaliation.”

The flood control district petitioned the California Supreme Court to review the case. HJTA filed a letter with the Supreme Court opposing the petition for review and asking the Court not to disturb this important victory for taxpayers and voters. However, the Supreme Court has granted review, which for now automatically rescinds the favorable decision of the Court of Appeal. HJTA will be filing a brief on the merits.