by Diane G. Kindermann and Robert T. Yamachika
In a recent Proposition 218 case, Howard Jarvis Taxpayers Association v. City of Salinas (2002) 98 Cal.App.4th 1351, the Court of Appeal for the Sixth Appellate District held that a “storm water drainage fee” was illegally imposed by the City of Salinas. The plaintiff, Howard Jarvis Taxpayers Association (“HJTA”) contended that the storm drainage fee imposed by the City of Salinas was a “property-related” fee requiring voter approval. HJTA’s arguments were based on Proposition 218, the “Right to Vote on Taxes Act,” which was passed by the California voters in 1996. Proposition 218 added article XIII D, section 6(c) to the California Constitution, requiring notice for a public hearing and a vote for a proposed property-related fee or charge. If a majority of the affected property owners or two-thirds of the electorate in the affected area do not approve the fee, it may not be imposed.
In an effort to comply with the Clean Water Act, the City of Salinas enacted two ordinances and a resolution to fund and maintain a program to reduce or eliminate pollutants contained in storm water. The City imposed a “Storm Water Management Utility Fee” on “users of the storm water drainage system” to finance the improvement of storm and surface water management facilities. The fee was to be paid annually to the City “by the owner or occupier of each and every developed parcel in the City who shall be presumed to be the primary utility rate payer. . . .” The amount of the fee was to be calculated by the degree to which the property contributed runoff to the City’s drainage facilities as measured against the amount of “impervious area” on the parcel. Developed parcels that maintained their own storm water management facilities or only partially contributed storm or surface water to the City’s storm drainage facilities were also required to pay a proportionate share. Undeveloped parcels were not subject to the storm drainage fee.
HJTA filed suit alleging that the fee was a property-related fee that violated Proposition 218 requirements because it had not been approved by a majority vote of the affected property owners or a two-thirds vote of the electorate in the affected area. The trial court found that Proposition 218 requirements did not apply for two reasons (1) the fee was not “property related” and (2) it was exempt from the voter approval requirement because it was “related to” sewer and water services not property.
The HJTA appealed and the issue at stake in this case was article XIII D, section 6(c) of the California Constitution, which states, in relevant part: “Except for fees or charges for sewer, water, and refuse collection services, no property related fee or charge shall be imposed or increased unless and until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area.”
The City of Salinas maintained that the storm drainage fee was not a property-related fee, but a “user fee” which the property owner could avoid simply by maintaining a storm water management facility on the property. Because it was possible to own property without being subject to the fee, the City argued that the fee was not imposed “as an incident of property ownership” or “for a property- related service.” The appellate court did not agree. Instead the court found that the management of storm water runoff from the “impervious” areas of each parcel in the City was plainly a property- related fee for a property- related service. “The resolution makes the fee applicable to ‘each and every developed parcel of land within the City.’ This is not a charge directly based on or measured by use, comparable to the metered use of water or the operation of a business, as the City suggests.” The court also found that the “opt-out” arrangement was misleading, because it incorrectly suggested that the property owner could avoid the fee by declining service. Furthermore, the reduction was not proportional to the amount of services used, but based on the physical properties of the parcel.
The court pointed out that the provisions of Proposition 218 are to be liberally construed to effectuate its purposes of limiting local government revenue collection without taxpayer consent. With this in mind the court held “[t]o interpret the storm drainage fee as a use-based charge would contravene one of the stated objectives of [sic] Proposition 218 by ‘frustrating the purposes of voter approval for tax increases. We must conclude, therefore, that the storm drainage fee ‘burdens landowners as landowners,’ and is therefore subject to the voter-approval requirements of article XIII D [section 6(c)] unless an exception applies.”
The court then addressed the question of whether the storm drainage fee was exempt from Proposition 218 requirements because of the exception for fees “for sewer, water, and refuse collection services.” The parties offered two differing views as to whether the exception in section 6(c) extends to a storm drainage system as well as a sanitary or industrial waste sewer system. The City urged that the court should apply the commonly accepted meaning of a sewer, noting the broad dictionary definition of the word. The City also pointed to the Public Utilities Code and the Salinas City Code, which described storm drains as a type of sewer.
HJTA agreed that storm water is carried off in storm sewers, but they argued that the court should look beyond “mere definitions.” Relying extensively on an Attorney General Opinion (81 Ops. Cal. Atty Gen. 104) which observed that several California statutes differentiate between the management of storm drainage and sewerage systems, HJTA urged the court to apply a different rule of statutory construction. HJTA invoked the maxim that “if a statute on a particular subject omits a particular provision, inclusion of that provision in another related statute indicates an intent [that] the provision is not applicable to the statute from which it was omitted.”
Ultimately, the court did not find either of the statutory construction principles offered by the parties to be useful. Instead, the court concluded that the term “sewer services” was ambiguous in the context of both article XIII D, section 6(c) and Proposition 218 as a whole. The court considered the voters’ intent that Proposition 218 was to be construed liberally to curb the rise in “excessive” taxes, assessments, and fees exacted by local governments without taxpayer consent. With this in mind the court applied the principle that exceptions to a general rule of an enactment must be strictly construed, thereby giving “sewer services” its narrower, more common meaning applicable to sanitary sewerage.
The court noted that the City itself treats storm drainage differently from its other sewer systems. According to the City’s public works department, the storm drainage fee was to be used not just to provide drainage service to property owners, but to monitor and control pollutants that might enter the storm water before it was discharged into natural bodies of water. The court did not agree with the City’s argument that the storm drainage fee was for “water services.” “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.” Therefore, the City was required to subject the proposed storm drainage fee to a vote by the property owners or voting residents of the affected area because it was property related.
As this case demonstrates, Proposition 218 creates significant procedural requirements for imposing new or increasing fees or charges. With the exception of sewer, water and refuse collection as provided in article XIII D, section 6(c) fees and charges for services that are property related or incident of property ownership require compliance with Proposition 218. Storm drainage fees are not subject to the exception for “water services” and must comply with the procedural requirements of Proposition 218.
Diane Kindermann is a partner and Rob Yamachika is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.