Measure H ruling could impact other schools' tax measures

Measure H ruling could impact other schools' tax measures

Michele Ellson

A state appeals court’s decision to strike down portions of a school parcel tax that Alameda voters approved in 2008 could have major implications for other California school districts seeking similar taxes – unless state lawmakers opt to change the rules granting school districts the right to levy them.

“This decision is certainly a major obstacle for any such taxes, but this can be changed by legislative action,” said Darien Shanske, associate professor of law at Hastings College of the Law.

Under Measure H, Alameda Unified collected $120 per parcel from homeowners and up to $9,500 per parcel from commercial property owners for each of the three years the tax was in effect. But state law requires school districts to charge everyone uniformly, a three-judge panel of the First District Court of Appeal decided in what appears to be a first-of-its kind ruling on Thursday that said the district could only collect $120 for each parcel.

Another school district, San Leandro Unified, won approval from voters in November for a parcel tax that charges homeowners a flat rate and commercial property owners per square foot – differences that the court just declared illegal. Piedmont’s school board voted last week to place an extension of its existing parcel tax, which charges property owners different amounts based on the size of their property, before voters in March 2013.

Twenty-five California school and community college districts had parcel tax measures on the November ballot, according to the California Local Government Finance Almanac. In addition to San Leandro, Davis Joint Unified and a group of Los Angeles County districts imposed differing rates on taxpayers, with Davis charging different rates for single family and multifamily homes and the Los Angeles districts charging two cents per square foot of residential property and 7.5 cents per square foot of other types of property.

Ten Alameda County school districts have gained voter approval of parcel taxes since 2008, when the state’s economy crashed and school districts saw their funding cut. Five of the 10, including Alameda, passed taxes that treat homeowners and commercial property owners differently (though Alameda voters replaced Measure H with Measure A, which charges nearly all property owners the same amount per square foot up to a cap and which has held up in court).

Albany, for example, has a pair of 2009 school taxes, Measure I and Measure J, that charge fixed amounts to homeowners and levy a per-square-foot charge on commercial property, similar to Alameda’s. Berkeley’s Measure H, approved in 2010, charges homeowners and commercial property owners different per-square-foot rates.

David Brillant, the attorney who represented the Alameda property owners who sued to nullify the tax, said earlier measures may be immune to a court challenge because state law requires invalidation claims like the one he filed to be lodged within 60 days of election results being certified.

Alameda County elections officials certified the results of the November 6 election on November 21, which leaves San Leandro Unified’s new Measure L tax open to a potential challenge. Piedmont’s tax – which was featured in a “friend of the court brief” filed in support of Alameda Unified’s case by the California School Boards Association – could also be subject to challenge if voters approve extending it in March.

“Anything that was on the November 6 ballot statewide – if it’s a school parcel tax and it is not a flat rate or flat fee amongst all the real property – these things are illegal,” said Brillant, who said he doesn’t have any additional cases brewing right now but that the ruling has attracted a number of inquiries.

Schools superintendents in San Leandro and Piedmont did not return calls seeking comment on Thursday’s ruling, though a staffer in Piedmont Superintendent Constance Hubbard’s office said she was aware of it. Some Piedmont residents reportedly spoke out against the tax proposal last week, with one resident referencing the Alameda court case.

The state statute that allows school districts to levy special taxes requires them to be applied uniformly, though it offers exemptions for seniors and disabled people. The school district’s attorneys argued that the rules allowed them to tax different classes of property owners differently as long as each group was taxed the same way, but the judges sided with plaintiffs in the case, saying the taxes had to be meted out equally across all groups.

“We are well aware that we are being called on to interpret statutory language enacted in a different economic era and in the wake of two of the most far-reaching tax constraining measures ever passed by the state electorate (Propositions 13 and 62), that the state has since faced crippling economic conditions, and that school districts and other local governmental entities are more dependent than ever on the revenues from special taxes,” Associate Justice Kathleen M. Banke wrote. “The courts, however, cannot recalibrate the taxing power statutorily delegated to local entities.”

Other special districts can fall under different taxing rules than school districts under state laws drafted after California voters adopted a ballot initiative intended to close perceived loopholes in Proposition 13, in 1986. Community college districts, for example, can tax unimproved property like parking lots at a lower rate than property with buildings and other “improvements,” while fire districts, cities and counties can charge differing rates for fire suppression services based on type of property and other factors.

The imposition of varying rates could in some instances be regarded as an effort to tax people more fairly. Alameda resident Leland Traiman – a critic of Alameda’s school parcel taxes who said he didn’t believe Measure H was legal – said he came up with the idea of square footage taxation while drafting Berkeley’s 1980 library tax because additional taxes based on property values are prohibited by Proposition 13 and parcel taxes where everyone pays the same amount are regressive, meaning they hit poorer people harder.

Both Shanske and Brillant said that lawmakers – whose deliberations over the existing state rules the judges relied on in making their ruling – have the power to change state law to allow school and other special districts the right to charge different classes of property owners different tax rates or to use other taxing structures to supplement their funding.

“Certainly, trying to assess the value of a property by means of its size and use, is clumsy, but, realistically, this might be the only way post-Prop 13 and, if done well, could achieve reasonable results,” Shanske said. “This is a big reason, of course, why the Legislature might want to consider this decision.”

Related: School district could owe refunds on 2008 parcel tax