Court of Appeal Makes It More Difficult for Local Agencies Other than Cities to Obtain Voter Approval of Parcel Taxes

With increasing frequency in the last several years, school districts around the state have been relatively successful in obtaining voter approval of parcel taxes.  The First District Court of Appeal’s recent decision in Borikas v. Alameda Unified School District (2013) 214 Cal.App.4th 135 is significant because absent legislative action it will constrain the ability of school districts, special districts, and counties—but not cities—to get parcels taxes approved by the voters.

Borikas involved a parcel tax imposed by the Alameda Unified School District.  The tax, which received the requisite two-thirds voter approval, was levied on property at differential rates: residential parcels and commercial parcels of less than 2000 square feet paid $120 per year and commercial parcels of greater than 2000 square feet paid $0.15 per square foot per year, capped at $9500.  The plaintiff commercial property owner argued that the District’s tax measure violated Government Code section 50079’s requirement that school district special taxes “apply uniformly to all taxpayers or all real property.”  The Court of Appeal agreed with the plaintiff and held that Government Code section 50079 does not authorize school districts to impose special taxes that differentially tax property within the district.

Borikas is significant for two reasons.  First, the reasoning of the decision applies to local agencies other than school districts.  The Borikas court identifies various statutes that authorize agencies to levy special taxes provided that they apply “uniformly to all taxpayers or all real property.”  The agencies include hospital districts, recreation and parks districts, community college districts, harbor districts, and community services districts, among others.  Counties also rely upon such a section, Government Code section 23027, to levy special taxes.  All of these agencies are affected by the Borikas decision.  Cities and certain other special districts are not subject to any such restriction.  Cities rely instead upon broader taxation authority contained in Government Code section 37100.5.  Fire protection districts, and perhaps others, are authorized to levy special taxes without the uniformity restriction.

Second, Borikas is significant because it makes it more difficult for jurisdictions reliant upon statutory special tax authority to raise the revenues they need.  A uniform per parcel tax will tax a 500,000 square foot office building at the same rate as a 1000 square foot condominium.  Thus, a uniform parcel tax will have to be imposed at a higher rate in order to generate the same amount of revenue that a differential rate would have imposed.  Such higher per-parcel rates are likely to have greater difficulty garnering the necessary votes.