California Court of Appeals, Fourth District, First Division
APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2013-00045077- CU-WM-CTL, Ronald S. Prager, Judge.
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Krause Kalfayan Benink & Slavens and Eric J. Benink for Appellant.
Trevor A. Grimm, Jonathan M. Coupal, Timothy A. Bittle and J. Ryan Cogdill for Howard Jarvis Taxpayers Foundation as Amicus Curiae on behalf of Appellant.
Lounsbery Ferguson Altona & Peak, James P. Lough and Alena Shamos for Respondents.
In this case, a sanitation fee ratepayer, Jack Moore, appealed a judgment denying his petition for writ of mandate and equitable relief as against the City of Lemon Grove (the City) and the Lemon Grove Sanitation District (the District, together with the City, Respondents). Moore sought to stop Respondents from transferring funds collected as sewer service fees and charges to the City's general fund, claiming the transfers violated Proposition 218, the Right to Vote on Taxes Act. (Historical Notes, 2B West's Ann. Codes, Cal. Const. (2013 ed.) foll. art. 13C, § 1, p. 363.) The trial court concluded that the charges at issue were subject to Proposition 218, but that the transfers did not violate Proposition 218 as the District had used reasonable methods to determine the amounts to transfer. We agree and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The District manages and maintains about 67 miles of collection pipes that transport sewage to the City of San Diego treatment plants. The District possesses very little capital equipment and the City has three employees who exclusively perform District-related work. All District maintenance, facilities, administrative equipment, personnel, service, billing, regulatory and other overhead are provided by the City. The other functions required for the District to operate (accountants/finance, receptionists, analysts, engineers, inspectors, plan checkers, etc.) are provided by City employees who divide their time among various activities.
Moore is a resident of the City and a sanitation fee ratepayer. He filed a petition for writ of mandate and complaint for injunctive relief, claiming Respondents provide sewer services and impose fees and charges on users of the sewer services through semi-annual property tax bills. He alleged that Respondents engaged in a practice whereby they transferred funds collected as sewer service fees and charges to the City's general fund. Further, he claimed Respondents failed to earmark these funds for a specific purpose, such as for reimbursement of shared costs or sewer maintenance and operations, but instead used the funds for general governmental purposes. Moore claimed the yearly amount transferred by Respondents to the general fund was not based on the actual costs incurred to support sewer maintenance and operations, but was calculated as about 22 percent of the annual sewer service fees collected.
Moore sought a petition for writ of mandate directing that Respondents stop all transfers to the general fund and restore all previously transferred funds received by the general fund. He also sought a declaration of rights declaring that Respondents violated article XIII D (article XIII D) of the California Constitution and an injunction enjoining Respondents from transferring funds to the general fund and requiring them to repay all previously transferred funds received by the general fund.
After considering the parties' evidence, the trial court issued a tentative ruling concluding that the sanitation fees and charges at issue were subject to Proposition 218, but finding Respondents did not violate Proposition 218. The trial court later confirmed its tentative ruling. Thereafter, the court issued a judgment denying Moore's petition for writ of mandate. Moore timely appealed. We granted the application of the Howard Jarvis Taxpayers Association to file an amicus curiae brief on behalf of Moore.
I. General Legal Principles
"In 1978, California voters enacted Proposition 13, which amended the California Constitution by adding article XIII A (article XIII A). The amendment 'plac[ed] significant limits on the taxing power of local and state governments.' [Citation.] As pertinent here, article XIII A, section 4 provides, 'Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district....' " (City of San Diego v. Shapiro (2014) 228 Cal.App.4th 756, 760-761 [175 Cal.Rptr.3d 670] (Shapiro), italics omitted.)
"In 1996, California voters enacted Proposition 218, which added article XIII C (article XIII C) and article XIII D (article XIII D) to the California
Constitution in order to 'close government-devised loopholes in Proposition 13.' " (Shapiro, supra, 228 Cal.App.4th at p. 761.) "[T]he primary purpose of Proposition 218 was to reform the law governing local government's imposition of revenue generating devices other than special taxes...." (Id. at p. 779.) A "fee" or "charge" is defined as "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service." (Art. XIII D, § 2, subd. (e).)
Section 6 of article XIII D sets forth the procedures and requirements governing property-related fees and charges. As relevant here, section 6 provides: a fee cannot be charged in excess of the service provided; a fee can only be used for the purpose it was charged; and the fee may not be imposed for general governmental services. (Art. XIII D, § 6, subd. (b)(1), (2) & (5), hereinafter section 6(b)(1), (2) or (5).) "The theme of these sections is that fee or charge revenues may not exceed what it costs to provide fee or charge services. Of course, what it costs to provide such services includes all the required costs of providing service, short-term and long-term, including operation, maintenance, financial, and capital expenditures. The key is that the revenues derived from the fee or charge are required to provide the service, and may be used only for the service. In ...