24 Cal. App. 5th 343
Cal. Ct. App. 5th2018Background
- In 2012 the City of San Diego renewed a Tourism Marketing District (TMD) assessment (39.5 years) that levied a percentage of hotel room revenue; hotels generally passed the charge to guests. Plaintiffs are hotel guests who paid the assessment between Jan 1, 2013 and Aug 31, 2016.
- Plaintiffs sued the City and the TMD Corporation alleging the 2012 renewal assessment is an unconstitutional tax under Proposition 26 and sought declaratory relief, restitution/constructive trust, and a writ mandating return of collected funds.
- San Diegans for Open Government (SDOG) filed a prior challenge within 30 days of the 2012 resolution; while SDOG’s case was pending the City amended the TMD in Aug 2016 to exclude hotels with fewer than 70 rooms; the SDOG case was dismissed as moot in Sept 2016.
- Defendants demurred, arguing (inter alia) the claims are time-barred by municipal 30-day limits (and validation procedures), the Procedural Ordinance does not itself impose any tax, Plaintiffs lack standing, and SDOG’s judgment precludes the action.
- The trial court sustained the demurrer without leave to amend on statute-of-limitations and related grounds; this appeal followed. The appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims challenging the 2012 assessment are time‑barred | Reid/Wong: 30‑day municipal limits are invalid or tolled; equitable laches or continuous accrual should apply | City: Municipal Code §§61.2517/61.2526 (30 days) and validation rules bar late challenges | Held: First, fourth, fifth causes barred by 30‑day limits; tolling, continuous accrual, and laches do not save them |
| Whether municipal 30‑day limit violates due process (pay‑first, litigate‑later concern) | Plaintiffs: 30 days denies meaningful postpayment remedy because assessment effective Jan 1, 2013 | City: Municipal Code provides prepayment remedy (challenge within 30 days of levy); SDOG vindicated remedy | Held: No due process violation; City’s prepayment remedy is sufficient; SDOG filed timely challenge |
| Whether Procedural Ordinance itself is an unconstitutional tax under Prop 26 | Plaintiffs: Ordinance creates/"imposes" the tax and therefore must be submitted to voters | City: Ordinance is procedural framework only; the 2012 City Council resolution actually levied the assessment | Held: Demurrer sustained — the Ordinance does not itself impose the assessment; challenge should have targeted the resolution |
| Whether the voting scheme (only business owners vote) violates equal protection | Plaintiffs: Hotel guests (who bear the economic burden) should have vote; TMD exercises broad public power | City: TMD is a special‑purpose benefit district; persons who pay assessments may be limited to vote | Held: No strict scrutiny; under Salyer/Bolen line, special‑purpose district voting limited to payors is rationally related to objectives; equal protection claim fails |
Key Cases Cited
- Salyer Land Co. v. Tulare Lake Basin Water Storage Dist., 410 U.S. 719 (upheld limited‑elector voting for a special‑purpose water district)
- Ball v. James, 451 U.S. 355 (same principle for special‑purpose districts with weighted voting)
- McKesson Corp. v. Div. of Alcoholic Bevs. & Tobacco, 496 U.S. 18 (due process requires meaningful remedy in pay‑first contexts)
- Bolen, Southern Cal. Rapid Transit Dist. v. Bolen, 1 Cal.4th 654 (permitted limiting vote to those who bear assessments for special‑purpose districts)
- Howard Jarvis Taxpayers Assn. v. City of La Habra, 25 Cal.4th 809 (limitations accrual and applicability of certain statutes to tax challenges)
- Barratt American, Inc. v. City of San Diego, 117 Cal.App.4th 809 (date‑of‑levy statutory accrual for assessment challenges)
- Bonander v. Town of Tiburon, 46 Cal.4th 646 (statutory scheme may distinguish who may bring validation actions)
- Greene v. Marin County Flood Control & Water Conservation Dist., 49 Cal.4th 277 (one‑person‑one‑vote inapplicable to limited‑purpose fee/assessment elections)
- Kaatz v. City of Seaside, 143 Cal.App.4th 13 (validation procedure and time bar principles for public agency acts)
- Ponderosa Homes, Inc. v. City of San Ramon, 23 Cal.App.4th 1761 (relates to statutory challenges to local fees; not controlling here)