By William W. Abbott

Recent polls suggest that Proposition XIII remains as popular today as when it was enacted. Yet, at the same time, residents demand a high level of services which exceed the ability of local officials to fund absent innovation in developing new funding strategies. This innovation in turn has generated a series of voter enacted limitations designed to further restrict new revenue measures, absent voter approval. Part of this voter legacy is Proposition 218, enacted in 1996 (California Constitution Art XIIID).

The most recent 218 decision, Golden Hills Neighborhood Association, Inc. v. City of San Diego (September 22, 2011, D057004) ___Cal.App.4th___ involves an assessment levied by the City of San Diego, a charter city. The purpose of the assessment was to provide revenue for additional services provided by the city in the Golden Hill area, located in the City of San Diego. In 2006, the Greater Golden Hill Community Development Corporation undertook a survey of local property owners for the purpose of forming a maintenance assessment district. Based upon the survey results, the city retained an engineering company for purposes of preparing an engineer’s report. The report is required under the Streets and Highways code as well as Proposition 218. The engineer’s report allocated special benefits based upon a formula which was weighted 75% towards land use intensity (using single family use). In July 2007, the City Council conducted a public hearing on the formation of the district for the purposes of considering the weighted voting, conducted by ballot. Of the 1,182 ballots received, 635 were in favor and 547 were opposed. When factored for weighted voting, the votes were $123,266.56 in favor and $105,236.16 opposed. Based upon this tabulation, the City Council then ordered the district formed and confirmed the assessments (totaling $488,890 for 2007-2008). The services to be provided by the district included debris and litter removal, enhanced litter containers, sidewalk sweeping, sidewalk power washing, trash removal, landscaping services, graffiti removal and trail and canyon beautification.

A neighborhood association and an individual then filed suit to challenge both the district formation and the assessment levy. This suit was combined with a subsequent suit filed to challenge the assessments in the following year. The trial court granted relief for the opponents on one theory. On appeal, the appellate court addressed three issues of importance: 1) must the assessing agency disclose the basis by which public properties are assessed (in the event that assessments against public properties are potentially over assessed, materially influencing the tabulation of assessments); 2) is exclusion of the challenged public assessments appropriate; and 3) what is the burden of the agency to demonstrate segregation of general from special benefits. In this case, the city owned 95 parcels, and included assessments for all of these parcels. The majority of these parcels were open space. The engineers report did not provide any substantiation as to how assessments were spread to the public agency parcels, and how these parcels received special benefits. The court noted that paying the assessments was an insufficient justification as to the basis for the assessments. In circumstances in which the numbers of votes cast by the agency was critical to the formation of the district, such information had to be disclosed. The mathematics of the vote was such that the risk existed that the agency may be tempted to use non disclosure as an indirect means of influencing the assessment formation vote. Such practices would not comport with the recognized purposes behind Proposition 218. As the engineering study lacked sufficient justification, the appellate court concluded that it was appropriate to zero out the value of the agency votes. This resulted in an insufficient number of votes cast in favor of the assessment district formation, and as a remedy, dissolving the district was an appropriate remedy.

The court also went on to address the burden to establish the segregation of general from special benefits. On these facts, the appellate court found that there engineer’s report concluded that the general benefits were minimal, and were assigned a zero value. This as error in the opinion of the appellate court as 218 still required that minimal general benefits be valued and excluded. In addition, the appellate court concurred in the analysis found in Buetz v. County of Riverside (2010) 184 Cal.App 4th 1516 which sets forth a detailed critique of the disciplined steps to be followed in separating general and special benefits for parks. Such justification was also found lacking in the engineer’s study for Golden Hills.

William W. Abbott is a partner at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP 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.