Exactions, Impact Fees, Service Charges and Property Taxes

In this case, the water district imposed a rate structure whereby “irrigation only” users paid disproportionately higher rates for the same amount of water use. The water district asserted that this was permitted under Article X section 2 of the Constitution, which promoted water conservation and allowed, through statute, allocation-based water rates. The appellate court disagreed that Article X section 2 gave the district a “pass” from the requirement in Proposition 218 that fees shall not exceed the proportional cost of providing the service. Therefore, the court held that the disproportionate rate structure was invalid.
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By Cori Badgley

Under Proposition 218 (Cal. Const. art. XIII D), special assessments shall not “exceed the reasonable cost of the proportional special benefit conferred on a parcel.” The courts have divided this into two general inquiries: 1) is a special benefit conferred by the improvement to be built through the assessment?; and 2) is the assessment proportional? In Town of Tiburon v. Bonander (2009) ____ Cal.App.4th ____, the court answered yes to the first question, but found that the division of costs was not proportional under Proposition 218.
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By Cori Badgley

There are many different types of fees, taxes and assessments that a local agency may impose. For each type, there are specific procedures and requirements, and if the agency does not use the correct procedure and meet the correct requirements, a court may invalidate the fee. In California Building Industry Association v. San Joaquin Valley Air Pollution Control District (2009) 178 Cal.App.4th 120, the agency got it right, and the court held that the agency’s indirect source review fees were valid regulatory fees.
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By William W. Abbott

Well, Mark Twain got that right. Beginning with the voter approval in 1978 of Proposition 13, California voters and public agencies have been at odds with each other over local government revenue strategies. The dilemma for local government being of course, that residents demand high level of services but expect someone else to pay for it. Walking the fine line between service delivery and voter enacted limitations on revenue streams, local agencies continuously explore and implement new strategies to capture new revenue streams, and over time, the trend has been to link charges to services provided. In the most recent levy case, the City of San Diego attempted to forge new territory by charging a processing fee for the purpose of offsetting costs associated with sending tax bills. In other words, a processing fee imposed on top of, and for the purpose of, collecting a general tax collected from property owners.
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By Cori Badgley

In interpreting the provision of a development agreement imposing an in-lieu affordable housing fee, the court in Building Industry Association of Central California v. City of Patterson (2009) 171 Cal.App.4th 886 enunciated two important rulings: 1) development agreements are interpreted under contract law, and 2) an in-lieu affordable housing fee is not reasonably justified if the fee is simply based on the amount of housing allocated to the jurisdiction under the regional housing need assessment.
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By Cori Badgley

In Los Altos Golf and Country Club v. County of Santa Clara (June 30, 2008) 2008 Cal.App.Lexis 1149, plaintiffs brought a class action demanding a refund from the County of sewer service charges paid by plaintiffs on the grounds that the fees violated Article XIII D of the California Constitution and the Health and Safety Code. Instead of allowing plaintiffs to make any substantive arguments, the County claimed that the case should be dismissed because the plaintiffs had failed to pay the fees under protest, as required by the Health and Safety Code. The Court of Appeal, Sixth Appellate District agreed with the County and dismissed the case. Sewer service charges must first be paid under protest in order to later request a refund.
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By Cori Badgley

Generally, when a plaintiff challenges the action of a government agency, the plaintiff has the burden to overcome the presumption that the government agency acted lawfully. In regards to special assessments falling within the protections of Proposition 218, the burden shifts. When a plaintiff challenges a special assessment, the government agency has the burden to prove that it acted lawfully, and the court reviews the agency’s decision de novo.
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