Parcel Tax Faces Another Legal Challenge

schoolOpponents Jose Granda and Thomas Randall have filed a suit, this time in the Yolo County Superior Court, alleging once again problems with the Measure E parcel tax that was passed by 69% of the voters in November 2012.

At issue is the differential assessment rates for multi-dwelling unit parcels which is charged at the base rate of twenty dollars per dwelling unit, and all other parcels which are assessed at $204 per parcel.

Mr. Granda and Mr. Randall are represented in the lawsuit by David Brillant, an East Bay attorney who has also represented a group of commercial property owners in a successful suit against the Alameda Unified School District’s Measure H.

They challenged that parcel tax on the basis that the district exceeded their authority by charging homeowners and commercial property owners at different rates.

The 2008 Alameda Parcel Tax is by all accounts very unique.  They levied a four-year emergency tax at $120 per residential parcel and 15 cents per square foot for commercial/industrial parcels.

In December, the First Appellate District of California ruled that “Measure H‟s property classifications and differential tax burdens exceed the District‟s taxing authority under section 50079 and the judgment entered in favor of the District must, in part, be reversed.”

However, the appellate court has presently pulled back their decision in order for the California Supreme Court to potentially review the suit.

In the suit against DJUSD, the complainants note: “The District included two exceptions to the qualified special tax. First, the District created an exemption for a persons 65 years or age or older “who occupies parcel as a principal residence.” The second exemption is for those parcels owned by one or more persons receiving Supplemental Security Income for a disability, regardless of age, “who occupies said parcel or unit as a principal residence”.

They contend that Measure E “violates the uniformity requirement as set forth in section 50079. The creation of classifications of taxpayers is not proper pursuant to section 50079. The uniformity requirement in section 50079 is a limitation on the District’s taxing power and the District cannot create classifications of taxpayers.”

In particular, they challenge the notion of exemptions to seniors and disabled on the grounds that “as a result of the District’s creation of taxpayer classifications, Measure E is invalid because it exceeds the taxing power set forth in section 50079.”

Furthermore, they add, “Measure E is invalid because of the exemptions for senior citizens over 65 and those receiving Supplemental Security Income are narrower than the exemptions set forth in section 50079.”

They conclude, “As a result of these multiple flaws, Measure E is invalid in its entirety and the lien that is created against all real property within the District’s boundaries should be deemed invalid as to all taxpayers within the Authorities boundaries.”

In the meantime, Assemblymember Rob Bonta, who represents Alameda in addition to much of Oakland, has introduced legislation that would clarify the state law.

In AB 59, the section is amended to read: “(State law) requiring uniform application of taxes shall not be construed as limiting a school district from assessing taxes in accordance with rational classifications among taxpayers or types of property within the school district. This subdivision is declaratory of existing law, and shall apply to transactions predating its enactment.”

“While Proposition 30 has temporarily slowed our state’s financial bleeding, local school districts are still suffering from years of cuts, and we must ensure all opportunities are available to them. Our state and our school districts are not in a position to wait,” Assemblymember Bonta said in a press release. “AB 59 clarifies existing revenue options for local school districts so they can continue providing educational opportunities in the face of ongoing state budget difficulties.  This will have significant public policy and budget implications for school districts throughout the state.”

There is considerable difference between what DJUSD has done in terms of dealing with multi-family dwellings differently from single family units and what Alameda did in terms of establishing an entirely new basis for assessment.

It is also worth noting that even the court in the Alameda case did not necessarily strike down Measure H.

They write, “We also conclude these provisions can be severed from the measure and that Measure H‟s exemptions for senior and disabled taxpayers are permissible under the statute.”

While Mr. Brillant in the DJUSD suit calls for the entire parcel tax to be invalidated, that is not what the appellate court did in the precedent setting case.

The court noted, “We are well aware that we are being called on to interpret statutory language enacted in a different economic era and in the wake of two of the most far-reaching tax constraining measures ever passed by the state electorate (Propositions 13 and 62), that the state has since faced crippling economic conditions, and that school districts and other local governmental entities are more dependent than ever on the revenues from special taxes.”

They add, “The courts, however, cannot recalibrate the taxing power statutorily delegated to local entities; any adjustment in that regard must be made by the state Legislature.”

—David M. Greenwald reporting

Author

  • David Greenwald

    Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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Categories:

Budget/Taxes

75 comments

  1. Renters only being taxed at $20 per unit is totally unfair and as a result places a much higher burden on homeowners. I know of two story 4-plexes on huge lots where the landlord is only assessed $80 and right next door is a small private home where the owner is assessed $204.
    I hope Mr. Granda prevails because he’s correct that the current tax structure is inequitable.

  2. I believe that Mr. Granda is sincere in his desire to right what he sees as injustices. I only wish that as an educator himself, he would bring as much passon to the actual provision of education as he does to his anti tax obsession.

  3. rusty49 wrote:

    > Renters only being taxed at $20 per unit is
    > totally unfair and as a result places a much
    > higher burden on homeowners.

    I wish that we could make everything “fair” (so everyone pays the same school taxes, everyone with the same GPA and test scores gets in to UCD and everyone pays the same as Bob Dunning for water), but when you make things “fair” you don’t get as much political power (or as much money from the people that come out ahead when things are “unfair”).

    Here in Davis we can have a have young family with kids struggling to make ends meet living next door to a couple of retired UCD professors living on their pensions of over $200K+ (and other investments). The young family (that bought their home last year) will be paying over $6K a year in property tax while the older couple (thanks to Prop 13 will pay about $1K a year in property tax. The young couple will pay over $500 in school parcel taxes while the older couple (thanks to the senior exemption) will pay nothing…

    Sadly I expect things to get more “unfair” as we see more ballot measures like “vote to tax business”, or basically vote to make “other people” pay for stuff…

  4. rusty: [i]I hope Mr. Granda prevails because he’s correct that the current tax structure is inequitable.[/i]

    Finding a tax structure that everyone agrees is equitable is impossible. It is like getting everyone to agree on what God is. Or finding one human being without flaw or fault who deserves to go to Heaven.

    Given the constraints of state law, the tax structure is fairer than not adequately funding the public schools.

    Granda and Randall have been all over the map in their opposition to local school parcel taxes. At one point Randall specifically criticized Measure A because it did not have an allowable SSI exemption. Now their current lawsuit criticizes it because it does have an SSI exemption.

    Their current lawsuit calls for everyone to pay the same flat rate. In the past Granda has criticized that parcel taxes have charged the same flat residential rate to mansions and cottages.

  5. “Finding a tax structure that everyone agrees is equitable is impossible.”

    I’m sure a much fairer tax structure could’ve been implemented than one where renters only pay $20 and homeowners have to pay $204. Without having the actual numbers in front of me I’m sure one where renters maybe paid $60 would’ve reduced the homeowners tax to $120 (or so)and would’ve been much fairer system.

  6. “Renters don’t pay parcel taxes, the landlords pay $20 per dwelling.”

    That’s like saying that renters don’t pay the landlords mortgage. All of the owners costs are recouped and then some through his occupant’s rent.

  7. The key thing to me is that these parcel taxes never “sneak by” with a close vote of 51-49. To pass them, 2/3 of our community must vote for them. We have been passing some of them by close to 3/4. They would not pass if an overwhelming majority of homeowners did not agree with their value to the community, notwithstanding any concerns they may have about fairness. As adults we know the world is not fair–we even teach our children that. Lawsuits like this one (and a few others in town recently) are nothing more than adult temper tantrums.

  8. David wrote:

    > Renters don’t pay parcel taxes, the
    > landlords pay $20 per dwelling.

    Then rusty49 wrote:

    > That’s like saying that renters don’t pay the
    > landlords mortgage. All of the owners costs are
    > recouped and then some through his occupant’s rent.

    This is a concept that most on the left don’t understand. Most on the left vote for higher taxes on business, but since most have never run a business they can’t understand that the business will be charging them more when the higher taxes kick in. Obama can get a crowd in a frenzy chanting “tax oil companies more” where not a single person in the crowd chanting knows that “taxing oil companies more” means “higher gas prices next time you fill up”…

  9. SOD, the parcel tax pushers always try to have it both ways. They try and say that renters don’t have to pay the tax and at the same time they’ll say that renters do have skin in the game because of the $20 tax.

  10. “As adults we know the world is not fair–we even teach our children that. Lawsuits like this one (and a few others in town recently) are nothing more than adult temper tantrums.”

    LOL…..so should adults just realize that the “world is not fair” when Obama and the Occupiers complain about the 1%….should a minority just realize that the “world is not fair” when someone is racist towards them….or should just those that don’t agree with your views just realize that the “world is not fair”?

  11. SOD: That’s actually not a true statement. Sometimes these rates can be passed through to the renters, but not always. For example from 2007 until 2012 when we moved from our apartment our rent was the same – even though the parcel taxes went up over that time for multi-family dwellings. To make the argument you are, is to ignore that there is a market of supply and demand that are at work as well.

  12. rusty49, you’re correct. And, renters don’t pay the landlord’s bills from plumbers, painters, gardeners, etc. (They do pay directly the landlord’s profit!) These all are legitimate contributors to rent levels. But, every multi-dwelling parcel is different than a house situation and different than other multi-dwelling situation in more ways than just number of occupants–how would you “fairly” charge all parcel owners?

  13. [i]” I know of two story 4-plexes on huge lots where the landlord is only assessed $80 and right next door is a small private home where the owner is assessed $204.”[/i]

    If you have lived in your house longer than your neighbor, your assessed valuation is lower than his. Is that fair? If Mr. Granda has lived in his house for more than a couple of decades, his property tax is far lower than most of his neighbors. Is that fair?
    I am surprised to learn that conservatives are so concerned about fairness.

    [i]”…where not a single person in the crowd chanting knows that “taxing oil companies more” means “higher gas prices next time you fill up”… [/i]
    Most liberals that I know are aware that increasing taxes on companies increases the cost of the products they sell.

  14. Parcel taxes are not fair, but we voted and the majority approved this unfair system. I don’t think any lawsuit can get around that. I don’t think it is fair that high-income seniors who can opt out and people living in property tax exempt situations (URC for example) can vote on tax initiatives that the rest of us have to pay. It is not fair that some people pay $5000 per year and others pay $1000 per year for the same size property. But that is the system in California, approved by the voters.

  15. David wrote:

    > SOD: That’s actually not a true statement.
    > Sometimes these rates can be passed through
    > to the renters, but not always.

    The increased costs cannot always be passed through “right away” but since less than 1% of tenants have a lease term of over a year it will not take long for just about every landlord to pass on the increased costs.

    > For example from 2007 until 2012 when we moved
    > from our apartment our rent was the same –
    > even though the parcel taxes went up over that
    > time for multi-family dwellings.

    I have no idea why your rent did not move from 2007-2012, but according to UCD the average 2 bedroom unfurnished apartment in the city went from $1,172 in 2007 to $1,307 in 2012.
    http://housing.ucdavis.edu/_pdownloads/2012_vacancy_report.pdf

    > To make the argument you are, is to ignore that there
    > is a market of supply and demand that are at work as well.

    There is a low supply of housing in Davis (thanks to left leaning people that don’t like development and the right leaning people that own property and like making so much money that they don’t want any development) and a high demand so while you may have not had a rent increase from 2007-2012 99% of the other renters in the city have had increases th help cover the parvel tax(s)…

    > I don’t really have time to do it, but it would be
    > interesting to see if rents went up corresponding to
    > the parcel tax going up, my guess is that our apartment
    > complex was fairly typical and rents were relatively
    > stable through that six year period.

    It does not take much time to find every recent UCD housing study on line (I spent a couple minutes doing it) and most rents did go up after the parcel taxes. You were not typical in having flat rent. What makes you think that your entire “complex” also had stable rent for six years?

  16. Don Shor:
    “I am surprised to learn that conservatives are so concerned about fairness.”

    Just as I’m surprised to learn that liberals have the attitude:
    too bad, the world is not fair.

  17. Don wrote:

    > I am surprised to learn that conservatives
    > are so concerned about fairness.

    then rusty49 wrote:

    > Just as I’m surprised to learn that liberals
    > have the attitude: too bad, the world is not fair.

    Most people (conservative and liberal) want to keep the unfair things that benefit them and change the things that don’t benefit them.

    I don’t expect to see black liberals protesting the unfair admission practice that makes it easier for them to get in to UCD.

    I also don’t expect to see conservatives protesting to end the unfair prop 13 that lets then pay far less in property tax than their neighbors.

  18. rusty: [i]the parcel tax pushers always try to have it both ways. They try and say that renters don’t have to pay the tax and at the same time they’ll say that renters do have skin in the game because of the $20 tax.[/i]

    The parcel tax opponents always try to have it both ways. They try and say that everyone should pay the same rate in fairness, and at the same time they’ll say that the flat rate is unfair to those of more modest means.

  19. [i]I don’t expect to see black liberals protesting the unfair admission practice that makes it easier for them to get in to UCD. [/i]

    Not wanting to get too far off topic, but I’m pretty sure racial preferences ended at UC in the 1990’s.

  20. Don Shor: [i]If you have lived in your house longer than your neighbor, your assessed valuation is lower than his. Is that fair? If Mr. Granda has lived in his house for more than a couple of decades, his property tax is far lower than most of his neighbors. Is that fair?[/i]

    In addition, Granda will turn 65 within the year, if he hasn’t already. So he can apply for an exemption, just like Janet Zwahlen, apparently, if he’s personally vexed over paying the school parcel tax.

  21. [i]If you have lived in your house longer than your neighbor, your assessed valuation is lower than his. Is that fair?[/i]

    Certainly it is fair as much as inflation, appreciation and depreciation is fair.

    Also, this argument fails to consider the situation where someone purchased a house in 2006 at the peak of the housing bubbly, and then someone else across the street purchased the same model house in 2010. In this case, unless the assessed value of the house purchased in 2007 had decreased, the 2007 homeowner would be paying a higher property tax. Is that fair?

    I pay an auto registration tax/fee every year that is in part based on the cost-value of the car. Is it fair that I pay a lower registration fee on my older car?

    The appreciation or depreciation of any non-cash asset does not change the cash-wealth situation of the owner until that asset is liquidated. But, unlike paper investment, houses and cars are not liquid assets. They are life necessities and their book value gains or losses are passive and irrelevant to the budgets of the people that own them. Taxing passive gains of illiquid assets can absolutely damage people lacking the means to pay the higher taxes. They would have to liquidate (e.g., sell their house) in some cases. That would be very unfair. And it is the reason that Prop-13 passed, since this exact thing was happening to more and more people as California’s real estate values skyrocketed.

    In general, I think it is fine to reward longevity. Buy a house and stay in it and you are likely better connected to your neighborhood and community and deserving of a lower tax bill.

  22. “In addition, Granda will turn 65 within the year, if he hasn’t already. So he can apply for an exemption, just like Janet Zwahlen, apparently, if he’s personally vexed over paying the school parcel tax.”

    Have you ever thought that maybe for Granda it’s not about his personal finances but instead about what’s right?

  23. “rusty: the parcel tax pushers always try to have it both ways. They try and say that renters don’t have to pay the tax and at the same time they’ll say that renters do have skin in the game because of the $20 tax. “

    Rusty, you really are thinking about this backwards though. If they ended the differential, the owner of the parcel would pay the flat parcel tax rate. In most cases that would be far less than they are paying now by having the $20 per unit cost. In fact, any parcel with more than 30 units, will pay in some cases far less and any parcel with less than 30 would pay more. Is that really accomplishing what you intend?

  24. No, I’m saying each dwelling unit should have to pay more, maybe something like $60 to $100. The current $20 per unit is meaningless. Renters have children too and they should have more skin in the game. By them having a bigger piece of the pie it would take some of the burden off the homeowners.

  25. [i]I believe that Mr. Granda is sincere in his desire to right what he sees as injustices. I only wish that as an educator himself, he would bring as much passon to the actual provision of education as he does to his anti tax obsession.[/i]

    medwoman – I think Mr. Granda brings plenty of passion to the subject of education. I think it is maybe just not your preferred passion.

  26. medwoman…..what is your evidence that Mr Granda doesn’t “bring as much passion to the actual provision of education as he does to his anti tax obsession”

  27. “So you think that the parcel owner of an apartment complex should have to pay three to five times more than they are already paying?”

    David, quit playing games, you know what I’m saying. I’m saying the cost of the $60 to $100 dwelling unit cost should and ‘WOULD’ be passed on to the renter.

  28. Frankly wrote:

    > this argument fails to consider the situation
    > where someone purchased a house in 2006 at the
    > peak of the housing bubbly, and then someone else
    > across the street purchased the same model house
    > in 2010. In this case, unless the assessed value
    > of the house purchased in 2007 had decreased, the
    > 2007 homeowner would be paying a higher property
    > tax. Is that fair?

    The assessed value of homes that drop in value are fairly reduced, while the assessed value of homes that increase in value are (other than the max of 2% per year allowed under Prop 13) are unfairly not increased.

    > I pay an auto registration tax/fee every year
    > that is in part based on the cost-value of the
    > car. Is it fair that I pay a lower registration
    > fee on my older car?

    California fairly taxes lower value older cars less but they also fairly tax higher value older cars more (ask someone who owns a $500K Mercedes Gullwing from the 1950’s or a $2 million + Ferrari from the 1960’s what they pay in California taxes)…

    > In general, I think it is fine to reward longevity.

    If it is good for property taxes should we do it for other things like make new residents of California pay $45 for a fishing license, but let my grandfather keep paying $2 since he has lived in the state for a long time, how about keeping sales tax at the same rate is was when people moved to California and that would mean keeping the corporate tax rate at 5% for any company that had been in the state since the 1960’s (if we want to “reward” longevity)…

    P.S. To Don not to go way off topic, but if you think everything is now “fair” about getting in to UCD today (and they ask race for no reason at all) and you thing that a black kid with a 3.75 High School GPA will not have a better chance of getting in to UCD than a Chinese kid with a 3.75 High School GPA then I have a bridge I want to sell you…
    P.P.S. Not to pick on the people that check a box other than white when applying to UCD, it is also not “fair” that a kid who’s Uncle is a UC regent or a big donor or has some other political connections will also have a better chance of getting in to UCD…

  29. Soda and Frankly

    My evidence for my statement lies in Mr. Granda’s position when he was running for the school board.
    And I probably should not have stated that he had less passion, but rather than his passion seems to me to have been misdirected to avenues that have been tried and found insufficient for many, many years.
    Mr. Granda stated that he felt that instead of increasing taxes, the way to fund schools was through various voluntary and private fundraising efforts. When confronted with the fact that these efforts have been in effect and ongoing for many years he chose not to address the apparent inadequacies of this approach at all, but rather remained silent on this point. I am aware that Mr. Granda himself is strongly supportive of his own efforts to teach and provide funding, however, he seems oblivious to the fact that the vast majority of people either cannot or will not support private funding for schools on the level needed but, will indirectly support the schools in the form of voting repeatedly for parcel taxes. Therefore it seems to me that Mr. Granda tends to divert his passions into ways to block what the majority have already approved.

    And to Frankly, I do not like the idea of directly or indirectly supporting our schools through our current means. As I have stated previously, I believe in rewarding people directly for actions that benefit our society.
    Given my own preference, I would not only use tax money to fully fund our educational system, I would go further and financially reward students who meet established educational criteria by paying them directly to stay in school. I feel as a society we would likely more than recoup our money in the long run by putting our educational money where our mouths are and rewarding educations directly.