Alameda Unified School District parcel tax, Measure H (June 2008)

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An Alameda Unified School District parcel tax, Measure H ballot question was on the June 3, 2008 ballot for voters in the Alameda Unified School District in Alameda County, California, where it was very narrowly approved.

In December 2012, in the case Borikas v. Alameda Unified School District, a California court ruled that parts of Measure H are unconstitutional.[1] The board of the Alameda Unified School District subsequently announced that they intend to appeal that ruling to the California Supreme Court.[2]

Measure H imposed a $120 a year parcel tax in addition to a pre-existing $189/year parcel tax. Measure H was expected to raise about $4 million a year for four years.

Measure H led to a series of lawsuits because it imposed a different tax rate formula on residential and commercial properties. In December 2012, a California appeals court, in a 3-0 decision, agreed with the plaintiffs who filed the lawsuit seeking to invalidate parts of Measure H. Because of that loss in court for the Alameda Unified School District, they may be required to reimburse property owners who were overcharged as a result of the provisions in Measure H that the appeals court ruled are unconstitutional.[1] The AUSD may end up owing up to $2.5 million in reimbursements to some property owners for overcharging them under Measure H over a period of three years.[3]

According to Measure H, under its terms, commercial and industrial properties were subject to a tax of 15 cents per square foot of space, with a cap of $9,500.

See also: Alameda Unified School District parcel tax, Measure E (June 2010)
See also: Alameda Unified School District parcel tax, Measure A (March 2011)

Election results

Measure H
ResultVotesPercentage
Approveda Yes 11,445 66.9%
No5,66333.1%
These final, certified, election results are from the Alameda County elections office.

In a nail-biter of an election, it took over a week before voters learned that Measure H had passed by the tiniest of margins, with 66.87% in favor. To pass, it had to earn the approval of 66.67% of the voters. As of the end of the day on June 6, three days after the election, Measure H looked like it was losing by seven votes, but when provisional and absentee votes were counted, it squeaked through.[4][5][6]

Ballot question

The question on the ballot:

Measure P: "To offset severe state budget cuts to Alameda schools, minimize school closures, and protect the quality of education, student safety, class sizes, excellent teachers and staff and to restore prioritized cuts to music, athletics, advanced placement courses, shall Alameda Unified School District levy a temporary, 4-year emergency tax of $120 per residential parcel and 15 cents per square foot for commercial/industrial parcels (see the voter pamphlet), with exemptions for seniors, citizen oversight and all funds staying local?"[7]

Lawsuits filed against Measure H

Two "reverse validation" lawsuits were filed against the Alameda Unified School District (AUSD), asking the courts to invalidate Measure H and prohibit AUSD from collecting the parcel tax.

On June 3, Alameda County Superior Court Judge Kenneth Mark Burr, who had previously consolidated the two lawsuits, ruled in favor of Alameda Unified School District, saying that the tax structure of Measure H is acceptable.[8] "Alamedans for Fair Taxation" said they would appeal this decision.[9]

In August 2009, attorneys for AUSD and the plaintiffs in the lawsuits said they were in settlement talks.[10] One outcome of a possible settlement is that Measure H would be revoked, and a substitute measure would go on the June 2010 ballot.[11]

On September 8, the AUSD school board approved a framework under which it might settle the Beery lawsuit. This agreement, which had been discussed at length between AUSD and attorneys representing Beery, would result in a new parcel tax to replace Measures A and H. The new parcel tax would go on the June 8, 2010 ballot.[12] AUSD said it would appoint a 10-12 member committee by October 20 to work out what it as a district is willing to agree to in a proposed settlement.[13]

Attorneys for Borikas objected to the settlement terms that were offered.[14]

David Brillant, the attorney for the plaintiffs, filed his trial briefs in April 2010.[15] Brilliant's trial brief says that the Measure H tax is illegal because it is not "uniform taxation across different commercial property owners in keeping with the legislative interpretations of California Government Code section 50079."[15] To support this assertion, Brilliant writes in his brief, "a commercial property owner in Alameda with 100,000-square-foot parcel would pay only $9,500, or $0.11 per square foot; while a commercial property owner with a 1,900 square foot parcel would pay the minimum $120 per year, or $0.16 per square foot."

On June 3, 2010, Alameda County Superior Court Judge Kenneth Mark Burr ruled in favor of Alameda Unified School District in a lawsuit that had been brought against the district challenging Measure H, the parcel tax that voters narrowly approved on June 3, 2008.

The plaintiffs appealed Judge Burr's June 3, 2010 decision. The case is A129295 in the California Courts of Appeal:1st Appellate District. The plaintiff's initial brief was filed December 30th, 2010. The original trial case was Borikas et al. v. Alameda Unified School District, case number VG08405316 in Alameda County Superior Court.

On December 6th, 2012, the appellate court issued a ruling partially reversing, and partially affirming the lower court's decision. The court effectively ruled that Measure H did not apply uniform tax rates.[16]

Impact of

David Brillant, the attorney for the plaintiffs in the lawsuit that led in December 2012 to a judicial rejection of Measure H, said that the case has implications for all school districts in the state: "From the outset of this case, we have approached this problem with a common-sense approach and we always believed that a tax to be 'applied uniformly' as the law requires, had to be just that – uniformly applied to all taxpayers, regardless of the type of property they owned. Districts, including the Alameda Unified School District, which have enacted or proposed taxes that classify taxpayers into categories with different rates are now on notice that those structures are illegal under California law."[16]

Kirsten Vital, who is the superintendent of the Alameda Unified School District, reacted to AUSD's loss in court, saying, "If the trial court orders refunds of tax revenues already collected and spent, this decision has the potential to be a significant blow to our budget with many negative consequences for our students, teachers and staff. The decision also has significant public policy and budget implications for school districts across the state. Accordingly, we are carefully evaluating all of our options in the courts and the legislature."[17]

Beery v. AUSD lawsuit

Beery v. AUSD, was filed by John C. Beery, Alameda Gateway, Ltd and Mariner Square & Associates and it names both AUSD and Alameda County as a defendant.

In his complaint, Beery alleged six causes of action against the defendants.

First Cause of Action

The parcel tax is illegal because it isn't "uniform."

What that means: Gov. Code ' 50079(b)(1) allows school districts to impose qualified special taxes that apply uniformly to all taxpayers or all real property within the school district. Beery alleges that Measure H violates this code because the commercial/industrial property owners pay a different rate than residential property owners and because the commercial/industrial owners are subject to a different rate even among themselves.

The implications: If successful, this first cause of action may invalidate Measure H in its entirety and subject AUSD to an increased likelihood of state takeover (because the district won't be able to remain solvent). This claim also may prohibit any future school parcel taxes that impose different rates based on the use of the property. As such, any future school parcel taxes would have to tax residential, commercial, industrial and institutional properties (including those belonging to churches and non-profits) at the same rate. This could make it very difficult to pass parcel taxes in other school districts.

This lawsuit also might serve as a precedent for invalidating taxes passed by other, non-school public agencies.

Second Cause of Action

The parcel tax is illegal because it imposes different taxes on different "classes" of property or taxpayers.

What it means: Although school districts are authorized to impose "qualified special taxes," districts aren't allowed to pass taxes imposed "on a particular class of property or taxpayers." Beery alleges that Measure H creates different "classes" based on the use and size of the parcel.

The implications: Same as for the First Cause of Action.

Third Cause of Action

Measure H is unconstitutional because it imposes taxes for general government purposes and is not a 'special tax."

What it means: The California Constitution only allows public entities to impose special taxes, not taxes for "general governmental purposes." Beery alleges that because the Measure H language is "vague" and "aspirational" (as opposed to saying exactly how the funds will be spent), it is unconstitutional.

The implications: Few parcel taxes can outline exactly how the funds will be spent, due to the ever-changing state budget revenues and ever-changing local conditions. As such, if this cause of action were successful, nearly every parcel tax in the state could be subject to attack and invalidated and it would become extremely difficult to pass new ones. Moreover, this cause of action would not be limited to school parcel taxes; every special tax imposed throughout the state would be open to attack so that future parcel taxes would become much more difficult to draft and pass.

Fourth Cause of Action

Because the parcel tax will be collected in conjunction with other property taxes, it is an "ad valorem tax," not a "special tax" and collection of the tax is unconstitutional. What it means: An "ad valorem" tax is one that is based on the value of a property or service. It is unconstitutional for a public agency (other than the state) to collect ad valorem taxes. Beery is saying that because Measure H parcel taxes will be collected at the same time and in the same manner that regular property taxes are collected, Measure H is an "ad valorem tax." The implications: Every parcel tax in California is collected this way. As with the Third Cause of Action, this cause of action could potentially invalidate every parcel tax currently in place in California and would make it extremely difficult to collect new parcel taxes. If successful, this cause of action could affect every current and future parcel tax in the State of California, which again, might trigger state takeover of many districts.

Fifth Cause of Action

Measure H violates the Equal Protection clauses of both the United States Constitution and the California Constitution.

What that means: Beery alleges that because the parcel tax is applied differently to different classes of property and contains upper and lower limits on commercial and industrial parcels without any rational basis, it is unconstitutional.

The implications: If successful, this cause of action could prohibit any public agency in the State of California from imposing taxes that are not completely uniform. This cause of action could invalidate existing parcel taxes that differentiate between classes of property or impose upper or lower limits on the amount of a tax.

Sixth Cause of Action

Measure H changed the statutory exemption of the law by limiting the exemption to residential owners over the age of 65 (or receiving Social Security Disability Income) who own and occupy single family residential properties.

What it means: Gov. Code ' 50079(b)(1) says that school parcel taxes can include an exemption for property owners over the age of 65 or receiving Social Security Disability Income. Measure H only allows owner occupied single family residential property owners who meet the qualifications to seek an exemption.

The implications: Same as for the First Cause of Action. If successful, this cause of action would not only directly impact school parcel taxes, but any other special taxes that limit exemptions to certain classes of property owners.

Borikas v. AUSD lawsuit

See also: Borikas v. Alameda Unified School District

Borikas is an individual who owns several properties in Alameda.

In the complaint filed in Borikas v. Alameda Unified School District, the plaintiffs alleged that Measure H violates Section 50079(b)(1) in that Measure H doesn't levy the taxes "uniformly." This claim is similar to that raised in the First Cause of Action in the Beery lawsuit.

Attorneys for Borikas objected to AUSD's settlement offers to Beery. The Borikas group wanted Measure H repealed and did not advocate the creation of a replacement tax.[14]

According to attorney David Brillant, "The law is clear that the repeal of a parcel tax requires a simple majority vote whereas the enactment of a parcel tax requires a two-thirds vote. To put both questions before the voters on one ballot measure and require a two-thirds vote where repeal only requires a simple majority is illegal."[14]

John Knox-White, an education blogger at the San Francisco Chronicle, objected to the Borikas lawsuit.[18] He wrote:

"This statement seems to put the lie to the idea that those fighting Measure H just want "fair" taxation, they want the tax repealed without replacement, regardless of whether or not the money lost to the School District (money approved by 2/3 of the voters) is accounted for in other places (and we know that schools are just rolling in dough!). Apparently, the Borikas complainants feel the School Board should override the voters, even while their case has received a very poor response from the judge hearing the case."
"And to that point, apparently Brilliant [sic] doesn't think that they will win the case. I'm hearing rumblings about biased judges who are swayed by emotional arguments like "schools need money" and "kids." Of course we're talking about a Republican-appointed judge who has said he has so far not seen any arguments on the law that make their case. And so the case rolls slowly toward the inevitable appeal, which apparently was the whole goal all along, because that way, there's a hope of taking down education spending throughout the entire state."

"Alamedans for Fair Taxation" appealed Judge Burr's June 3, 2010 decision in favor of AUSD. Their appeal was successful.[16]

After the appeals court partially reversed Measure H in December, 2012, the Alameda Unified School District asked the court to re-review the case. In March, 2013, the court re-affirmed the decision.[19]

After the ruling, UC Berkeley Law School professors opined that the decision would likely stick, and that the California Supreme Court would not likely review the case.[20]

Business owners hurt

A survey of merchants and business owners conducted by the City of Alameda in late summer 2009 found that "many of those who took part in the survey cited Measure H as a disadvantage toward doing business" in Alameda.[21]

See also

External links

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References

  1. 1.0 1.1 San Diego Rostra, "CA APPEALS COURT OVERTURNS “SOAK BUSINESSES” PARCEL TAX," December 9, 2012
  2. Mercury News, "Alameda: School officials to appeal court ruling on parcel tax," December 14, 2012
  3. The Alamedan, "BREAKING: School district could owe refunds on 2008 parcel tax," December 6, 2012
  4. The Island, Measure H on Razor's Edge (dead link)
  5. Alameda County Registrar of Voters
  6. Measure H tax measure passes, June 11, 2008
  7. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  8. San Francisco Chronicle, "Full text of AUSD press release on Measure H," June 3, 2010
  9. San Francisco Chronicle, "AUSD wins Measure H lawsuit," June 3, 2010
  10. The Island of Alameda, "Updated H Case Could Settle," August 13, 2009
  11. Mercury News, "Parcel tax lawsuits could settle, lawyers say," August 22, 2009
  12. San Francisco Chronicle, "AUSD unanimously approves settlement plan on Measure H lawsuit"
  13. Alameda Sun, "AUSD to Form H Committee," September 17, 2009
  14. 14.0 14.1 14.2 Inside Bay Area, "Attorney criticizes school district's bid to create new parcel tax," October 1, 2009
  15. 15.0 15.1 Alameda Sun, "AUSD Parcel Tax Heading to Court," April 8, 2010
  16. 16.0 16.1 16.2 Action Alameda News, "Appeals Court Partially Reverses Measure H Lawsuit Decision," December 6, 2012
  17. Contra Costa Times, "Alameda: Court ruling may be 'blow' to district," December 7, 2012
  18. San Francisco Chronicle, "Second schools lawsuit chugging forward. Dream of removing funding from schools statewide, still alive," September 30, 2009
  19. Alameda Journal, "Ruling upheld voiding schools parcel tax," March 7, 2013
  20. Action Alameda News, "Bonta Bill Unlikely to Succeed, Alameda Probably Stuck With Parcel Tax Ruling," accessed March 11, 2013
  21. Mercury News, "Alameda council gets sales tax report, feedback from merchants," September 17, 2009