Given the Severability Clause, the District Should Have Taken this to Court: On Thursday the school board quietly, before school started, made a huge change to the parcel tax in hopes of warding off a legal challenge.
Measure E was passed by voters on November 6, 2012, by a 69-31 margin and would have charged local single-family homes and multi-unit dwellings at different tax rates. Measure E was a parcel tax designed to offset the continued loss of state funding and maintain the educational programs at a level Davis citizens have come to expect.
Following the passage of Measure E, on March 6, 2013, the California Court of Appeals issued a published decision in the case of Borikas v. Alameda Unified School District, holding that parcel taxes had to be assessed at a uniform rate for all types of parcels. On June 12, 2013, the California Supreme Court denied review of Borikas, thereby making the Borikas decision final.
According to a statement from Superintendent Roberson on Friday, “The District desires to implement Measure E in accordance with the intent of the voters and consistent with current legal requirements. As a result, the District has decided to implement Measure E in a way that is consistent with Borikas by levying one uniform rate for all parcels of taxable real property.”
“The District is being proactive in implementing Measure E in accordance with the intent of the Davis school district voters and the recent legal requirements imposed by the Borikas decision,” board President Sheila Allen told the Vanguard on Friday.
Jose Granda, one of the plaintiffs in the lawsuit, was quick to cry foul. “Do you realize that by changing the ballot language after the election, you are attempting to tamper with the evidence in a case before a court of law in Yolo County? You have no authority to do this,” Mr. Granda argued in vain.
He believes that the board needs to call for a new election to make these changes.
In our view, he may be right, for reasons opposite to the ones he cites.
We believe that the board acted rashly and without proper justification in making these changes. Measure E contains a severability clause: “Should any part of the measure be found by a court of competent jurisdiction to be invalid for any reason, all remaining parts of the measure or taxing formula hereof shall remain in full force and effect to the fullest extent allowed by law.”
That severability clause means that Measure E was never in trouble. It was never in danger of being invalidated. That clause limited exposure for the district in this lawsuit. Worst scenario, Judge Maguire would have ruled that the school district violated the constitution in its differential assessment of multiunit housing versus single-family units, and ordered the district to go back and fix it as they have today.
But if that is the worst case scenario – why do it now, absent a court order? The similarities between Davis’s parcel tax and Alameda’s are not nearly as similar as one might think.
The 2008 Alameda parcel tax levied a four-year emergency tax at $120 per residential parcel and 15 cents per square foot for commercial/industrial parcels. That is a very different circumstance to what happened in Davis.
Think about this – you now have a single family home paying $204 and you have apartment complexes, some with over 100 units, rather than paying $20 per unit, paying the same flat $204 fee as the single family home.
In the case of Alameda, there was not a clear rationale for needing to distinguish between residential and commercial. In this case, you are attempting to create a relatively equitable situation, where you account for the large numbers of units.
Given the low risk, it is at least worth testing to see if the Borikas decision applies to Davis’ situation or if it was only a reflection of the unique character of the Alameda parcel tax.
Now the question is what the fiscal impact will be on this decision. With dozens of large apartment complexes in the city, we face losing substantial amounts of money, as every dwelling with more than 10 units ends up being a net loss now to the district.
The worst part is that, absent legislation, that at least now seems unlikely, we are now stuck. We did not test the Borikas decision to see if it applies to Davis’ parcel tax, so now we can never differentiate between single family dwellings and multifamily dwellings.
The district has screwed up here – they needed to test this decision in the courts to see if they could go forward with differential rates. They had very little – other than legal expenses – to lose by doing so. There was no overall risk to the overall parcel tax.
Should the district put the matter back on the ballot? It does not matter now. The public is going to support the parcel tax, however it is framed. 69% of the voters supported it last time, the district has had significant support, and we do not see that changing.
That said, the district has now made what we have seen as a string of bad decisions – this only being the latest one. We don’t know what would have happened had the case gone forward, but given the severability clause and the likely impact on the school district, we believe the district should have taken that chance.
—David M. Greenwald reporting
They were probably up against a deadline for tax bills to get sent out. They also had to weigh the legal costs against the loss of revenue plus the risk of dealing with whatever remedy the court decided. They had no good options so they took what to them looked like the best path forward. Its easy to be a pundit and second guess but governing means making tough decisions. In my mind it looks like they made what they thought was the best choice of the bad choices they had and they should get support for doing so not criticism.
Can somone smarter than I estimate the loss of revenue from this decision; from your article it would seem to be a very large chunk of cash as we have many apt complexes > 10 units…..
What’s next, this Board coming back to the community asking for more becasue the last time was changed to make it less net?
After watching the discussion Thursday on HOW to conduct the strategic planning process, I am not surprised they did not research this parcel tax decision more carefully. They’re way into the weeds of micromanaging. Think Thursday would have gone much better if Tim Taylor had been there….
mr. toad: ” Its easy to be a pundit and second guess “
isn’t that what you do. couldn’t we say the same thing about you second guessing everything david has ever written or so it seems?
bottom line it seems to me is that the district had little to lose by fighting this, probably had the law on their side, and inexplicably didn’t.
Almost DP. The difference is that if David didn’t pass judgement on so many things I wouldn’t respond. I have never written a piece for the Davis Vanguard. I believe everything I have ever written has been in response to something someone else has written unless I asked for clarification. I’m more of a counter force lancing the boils of the dominant paradigm, a rebuttal artist challenging the accepted dogma of a rather conservative local blog.
[quote]The difference is that if David didn’t pass judgement on so many things I wouldn’t respond.[/quote]
What fun would that be? David “passing judgement” (I tend to think of it as expressing his opinion), and people like you responding (an in this case such an elegant way) is what makes this blog so entertaining, (and educational)
Only in a liberal town would this blog be considered conservative…..
“Only in a liberal town would this blog be considered conservative….. “
it’s not even that … toad is trying to be provocative and dismissiv.
I agree with Mr. T’s 7:21 comment. I don’t think it was clear that the district could prevail with this kind of challenge. In the Alameda case (Borikas) and the San Leandro case (I mentioned it in comment to yesterday’s Vanguard piece), both school districts also had a severability clause that was exercised to standardized the tax rates. I think school districts generally tend to be risk averse to litigation because it means, at some level, spending extra tax dollars on attorney fees that could be more desirably spent elsewhere — on teaching, for instance.
wdf: the severability clause meant that their entire rates were not thrown out either. i disagree with you. how much money does risk aversion cost the district, how many jobs might that mean?
wdf: not so much that but how much $$ is the district now going to give up??
SODA: See Jeff Hudson’s article, What are the impacts of parcel tax change? ([url]http://www.davisenterprise.com/local-news/what-are-the-impacts-of-parcel-tax-change/[/url]).
[quote]The switch to a uniform rate for Measure E will not have a dramatic impact on the Davis school district’s budget. The original Measure E language (charging $204 per year for single family homes, and $20 per year for apartments and other multi-unit dwellings) would have generated about $3.2 million annually, according to estimates in Fall 2012, when Measure E went before voters. An analysis in the agenda packet for Thursday night’s school board meeting suggests that under the new uniform rate, Measure E will generate about $3.085 million per year.[/quote]According to Hudson’s article, the district loses $115K with this action. I think the school board envisioned a worst case scenario in which it would have to give up that amount, plus additional legal costs (not inexpensive) and staff time potentially reimbursing any property owners for the overcharge, plus the additional staff time focusing on further aspects of the lawsuit. I see ways in which the administrative staff is overloaded with tasks and understaffed.
D.P.: [i]i disagree with you.[/i]
I suppose you must, but I don’t follow you. What’s the disagreement?
For more background information on the Borikas decision, go here ([url]http://ballotpedia.org/wiki/index.php/Borikas_v._Alameda_Unified_School_District[/url]).
[i]The public is going to support the parcel tax, however it is framed. [/i]
Well, for Measure E to have failed we needed only another 600 people to vote “No” or not vote.
I think there is a strong possibility that it would have failed had the measure included uniform rates.
Jose Granda is correct, the District did a misdeed here. It took a measure that was passed based on a taxation assessment, and changed that assessment unilaterally. The severability clause does not apply in this case because the assessment of the tax is fundamental to Article XIII of the California State Constitution.
“Here, we are going to tax you ‘X’, so vote for it. Now, after you voted for it, we are going to tax you ‘Y'” I don’t think so.
If Measure E is not legally challenged again as a result of this move by the District, then at least we have memorialized the elimination of this trick to establish different tax rate based on economic class (e.g. renter vs. home owner).
Frankly: [i]The severability clause does not apply in this case because the assessment of the tax is fundamental to Article XIII of the California State Constitution.[/i]
Yours and Granda’s legal opinion doesn’t appear to apply, here. The California courts agreed that severibility was a workable option in the precedent-setting Borikas vs. Alameda Unified School District (source ([url]http://www.caltax.org/homepage/030813_Parcel_Taxes_for_Schools.html[/url])):
[quote]The court said state law does not allow school districts to create property classifications and impose differential parcel tax burdens. However, the court did not strike down the entire tax, noting that the tax measure contained a severability clause. Thus, the school district may impose the tax, as long as it is applied at the $120-per-year rate on all parcels, regardless of size or use.[/quote]Likewise, DJUSD’s Measure E had a similar severibility clause, so I think California courts would directly apply recent precedence if Granda wanted to continue with his lawsuit. If there is something that I am missing, please advise.
i still think there is a sizable difference between charging a different rate on commercial property, and assessing multi-unit properties differently. it was worth testing, now they’ve seeded it completely.
WDF1: You going to apply to get on the Strategic Planning Comittee, you would make great addition!
http://www.davisenterprise.com/local-news/school-board-seeks-dedicated-volunteers-for-strategic-committee/
The video archive of the August 15, 2013 school board meeting is now posted ([url]http://djusd.davismedia.org/content/august-15th-2013-school-board-meeting[/url]). The agenda item on the severence of the apartment rates from Measure E starts at ~2:55:30.
Tom Elias’ recent column mentions DJUSD on this issue:
[quote]Parcel tax unfairness continues ([url]http://www.davisenterprise.com/forum/opinion-columns/parcel-tax-unfairness-continues/
[/url])
All this leaves a few other parcel tax plans aiming for more fairness in an uncertain state. In Davis, for example, voters last year approved a school parcel tax of $204 per year for single-family homes and $20 per unit yearly for multi-unit apartment buildings. The school board recently decided to scrap the multi-unit charge and go with a blanket $204 annual fee for all properties.
Some state legislators want to end the confusion, at least in the parcel tax realm. One bill introduced in January would let school districts assign different tax rates for various types of properties. But that proposal was shelved, at least for this year, when critics asserted it would conflict with Proposition 13, whose basic rules can be changed only via a statewide ballot proposition.
This proposal might come back next year, but if it does, there’s no reason to expect it to get any farther than it has so far. That’s because 2014 is an election year and few lawmakers will want to be accused of tampering with Proposition 13, as sacred a cow as there is in California politics.
All of which puts hopes for tax fairness in California on hold for quite a while.[/quote]