Building Industry Ass'n of the Bay Area v. City of San Ramon
4 Cal. App. 5th 62
| Cal. Ct. App. | 2016Background
- Acre developer sought approval to build 48 townhouses in City of San Ramon; fiscal analysis showed City costs to serve the project would exceed revenues.
- As condition of approval, developer initiated formation of a Mello-Roos community facilities district (CFD) and, as the sole landowner, approved a special tax in a landowner election.
- The Resolution/ordinance identified a range of services (police, parks, landscaping, street/lighting, flood/storm protection, stormwater treatment, and related costs) to be financed by the special tax.
- Ordinance included a provision (Section H) stating that if the special tax were later repealed by district property owners, the City would cease providing the authorized services and those obligations would shift to property owners or an owners’ association.
- Building Industry Association–Bay Area sued to invalidate the CFD and tax, arguing (1) the tax does not fund legally required “additional services” under Gov. Code § 53313; (2) the levy is an unconstitutional general tax under Prop 218; and (3) the ordinance’s Section H unlawfully retaliates against property owners.
- Trial court granted summary judgment for the City; the Court of Appeal affirmed in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether landowner-approved Mello-Roos tax funds only "additional services" under Gov. Code § 53313 | Association: "Additional" requires a qualitatively superior or different service to district property owners than non-district owners; simply funding increased quantity of existing services is not enough. | City: Tax finances "post-development additional levels of service" to meet increased demand; such services are "additional" and do not supplant preexisting services. | The court held § 53313 permits landowner-approved taxes to fund increased demand for existing services (they are "additional" and do not supplant preexisting services). |
| Whether the tax is a "general tax" barred for special-purpose districts under Prop 218 | Association: Broad multi-purpose list of eligible expenditures effectively makes the levy a general tax that supplements the general fund. | City: The Mello-Roos Act labels such levies "special taxes" and revenues will be held in a special fund for specified purposes. | The court held the levy is a special tax (earmarked for statutory specific purposes), not a general tax. |
| Whether ordinance provision (Section H) unlawfully retaliates against property owners who might repeal or challenge the tax | Association: Section H threatens loss of municipal services and financial ruin, deterring exercise of rights to litigate or pursue repeal — unconstitutional retaliation. | City: Section H merely explains consequences of repeal (loss of funding) and does not punish or penalize the exercise of rights. | The court held Section H is not facially retaliatory; it describes consequences of repeal and does not impose punishment or a penalty that would deter protected activity. |
Key Cases Cited
- City and County of San Francisco v. Farrell, 32 Cal.3d 47 (1982) (defines "special taxes" as levies for specific purposes rather than general funds)
- Friends of the Library of Monterey Park v. City of Monterey Park, 211 Cal.App.3d 358 (1989) (discusses Mello-Roos Act purpose after Prop 13)
- Rider v. County of San Diego, 1 Cal.4th 1 (1991) (legislative designation of tax character entitled to weight but not dispositive)
- Howard Jarvis Taxpayers Assn. v. City of Roseville, 106 Cal.App.4th 1178 (2003) (special tax under Prop 218 includes earmarked revenues for multiple specific purposes)
- Neilson v. City of California City, 133 Cal.App.4th 1296 (2005) (upholding multi-purpose special tax; rejects argument that stacking specific purposes necessarily becomes general tax)
- Weisblat v. City of San Diego, 176 Cal.App.4th 1022 (2009) (hybrid levy analysis; funds placed in general fund can indicate a general tax)
- Tichinin v. City of Morgan Hill, 177 Cal.App.4th 1049 (2009) (elements required to prove governmental retaliation)