COACHELLA VALLEY WATER DISTRICT et al., Petitioners, v. THE SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent; RANDALL C. ROBERTS, Real Party in Interest.
E074010 (Super.Ct.No. RIC1825310)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO
Filed 3/9/21
CERTIFIED FOR PUBLICATION
OPINION
ORIGINAL PROCEEDINGS; petition for writ of mandate from an order of the Superior Court of Riverside County. Irma Poole Asberry, Judge. Petition granted.
Costell & Adelson Law Corporation, Jeffrey Lee Costell, Joshua S. Stambaugh, Sara M. McDuffie, and Timothy J. Burke, for Real Party in Interest.
Aleshire & Wynder, Anthony R. Taylor, Christine M. Carson, William G. Ash, as Amicus Curiae on behalf of State Water Contractors.
In this writ proceeding we must answer a single question: Do the validation statutes (
The tax at issue in this case relates to the State Water Project (or SWP)—California‘s vast system of storage and conveyance facilities designed to provide water to its millions of residents and farmers. (See San Diego County Water Authority v. Metropolitan Water Dist. of Southern California (2017) 12 Cal.App.5th 1124, 1132-1133 (San Diego).) In 2013, the Coachella Valley Water District (the water district) passed a resolution adopting a two-cent increase to the rate of its ad valorem
In 2018, Randall Roberts filed a lawsuit against the water district and the County of Riverside, seeking to invalidate the tax under the Burns-Porter Act of 1960 (
which it does annually by resolution. (
The water district now seeks a writ of mandate ordering the trial court to reverse its decision and sustain the demurrer. It argues the validation statutes apply to the SWP tax by operation of the County Water District Law (
I
FACTS
A. The Water District and the State Water Project
The water district is a public agency and local water district which was formed and operates under the County Water District Law and the Coachella District Merger Law. (
Department of Water Resources (2020) [“The SWP delivers water to 29 water contractors in the state“] at <https://water.ca.gov/What-We-Do/Water-Storage-And-Supply> [as of Mar. 8, 2021].)
The State
The SWP is financed in part by state bonds issued under the Burns-Porter Act (or the Act). (Goodman v. County of Riverside (1983) 140 Cal.App.3d 900, 903 (Goodman).) California voters approved the Burns-Porter Act in 1960 to establish a financing system for, and authorize DWR to construct and operate, the State Water Resources Development System (the System), which consists of various water facilities and includes the SWP. (
Water Project (thus creating the SWP contractors). (
As relevant here, the Burns-Porter Act directed DWR “to enter into contracts for the sale, delivery or use of water or power, or for other services and facilities made available by the State Water Resources Development System.” (Goodman, supra, 140 Cal.App.3d at p. 903, citing
Article 34 of the water supply contracts provides: “If in any year the District fails or is unable to raise sufficient funds by other means, the governing body of the District shall levy upon all property in the District not exempt from taxation, a tax or assessment sufficient to provide for all payments under this contract then due or to become due within that year.” (Goodman, supra, 140 Cal.App.3d at p. 905, italics added.) “Not all the
[districts] which actually receive water also pay amounts attributable to the water received.” (Ibid.)
In Goodman, the court upheld local water districts’ right to levy property taxes to fund their obligations under their water supply contracts. The court concluded such taxes were exempt from Proposition 13‘s one percent cap on property taxes imposed without first obtaining voter approval because, by approving the Burns-Porter Act in 1960, “the voters necessarily approved the use of local property taxes whenever the boards of directors of the agencies determined such use to be necessary to fund their water contract obligations.” (Goodman, supra, 140 Cal.App.3d at pp. 909-910; see also
The water district entered into its water supply contract with DWR in 1963. Its contract contains the language in Article 34 quoted above. However, because the SWP lacks the means to deliver water directly to the Coachella Valley, the water district (like at least one other similarly situated public agency) has entered into a separate exchange agreement with the Metropolitan Water District of Southern California (MWD) to exchange its entitlement to SWP water for Colorado River water because MWD‘s canals can carry Colorado River water to the Coachella Valley. (See San Diego, supra, 12 Cal.App.5th at p. 1136 [San Diego County Water Authority entered into an exchange agreement with MWD in 2003].) In other words, the water district is one of the districts that doesn‘t receive SWP water but makes payments to DWR under Article 34 of the water supply contract to secure its maximum annual water entitlement.
B. The SWP Tax
To satisfy its contractual obligation to DWR, the water district levies an ad valorem property tax on all properties in the district (“ad valorem” meaning the tax is imposed at a set percentage rate of each taxed property‘s assessed value). The tax is not part of, but imposed in addition to, the one percent tax the County of Riverside levies for all taxing local governments under Proposition 13. ( In 2013, the water district adopted Resolution No. 2013-34 to impose the SWP tax for that year at an increased rate (from $0.08 per $100 of assessed property value to $0.10). The water district has not increased the tax rate since then; each subsequent year the rate has been $0.10 per $100 of assessed property value. On November 30, 2018, Roberts filed this action—a petition for writ of mandate and complaint for injunctive relief, declaratory relief, and tax refund styled as a class action (“the complaint“).3 Roberts’ complaint alleges the SWP tax is invalid because it‘s not actually a tax to satisfy SWP obligations—rather, a portion of the revenues are earmarked and spent on groundwater replenishment. Specifically, Roberts’ complaint seeks “to stop [the water district‘s] continued practice of imposing and collecting improper charges under the guise of property taxes purportedly authorized by the 1960 Burns-Porter Act.” He alleges the water district‘s board of directors is “controlled by large agricultural interests” and is unlawfully funneling the proceeds of the SWP tax to “fund replenishment of the underground aquifer that has been depleted by large agricultural companies over the past century so that those same agricultural water users can avoid paying their fair share of the replenishment costs.” Roberts also alleges the SWP tax violates the Burns-Porter Act‘s mandate that a water district levy only those taxes which are necessary to pay for SWP costs. Roberts argues the Act does not give the water district “carte blanche taxing power, and it d[oes] not authorize the use of property tax dollars to fund replenishment of the Coachella Valley‘s underground aquifer or to subsidize agricultural water use.” He also alleges the SWP tax violates Proposition 13 because it is not being used to fund SWP expenses and has not been approved by the voters for the purposes for which it is being used (namely, aquifer replenishment). Finally, he alleges the tax violates the constitutional requirements that property-related fees and charges must be in proportion to the cost of the service provided ( The complaint asserts four causes of action. The first seeks a writ of mandate ( for money collected from the tax; and to comply with what Roberts alleges is the water district‘s “mandatory duty” to “perform an annual analysis and make a reasonable determination regarding whether sufficient funds may be raised to pay for [the water district‘s] contractual SWP obligations by other means . . . before imposing and/or increasing the SWP taxes. The second cause of action seeks an injunction prohibiting the water district from “enforcing, collecting, using or diverting [the tax]” in an illegal manner. The third seeks declaratory relief in the form of a judgment identifying the parties’ rights and duties with regard to the tax. And the fourth cause of action, a taxpayer claim of public waste ( The water district demurred to the complaint, arguing, among other things, that Roberts failed to follow the validation procedures in his complaint—the 2013 resolution to increase the SWP tax rate by two cents—that act was immunized by the validation statutes years ago. On June 25, 2019, before the hearing on the demurrer, the water district passed a resolution setting the SWP tax for the upcoming 2019-2020 fiscal year. On August 23, 2019, Roberts filed a timely reverse validation action challenging that tax. Following the hearing on the demurrer, the court rejected the validation argument. It concluded, without reference to or discussion of Under demurrer by writ of mandate.” (Fair Employment & Housing Com. v. Superior Court (2004) 115 Cal.App.4th 629, 633; Fogarty v. Superior Court (1981) 117 Cal.App.3d 316, 320-321; Babb v. Superior Court (1971) 3 Cal.3d 841.) This is because “there is no direct appeal from a trial court‘s adverse ruling, and the aggrieved party would be compelled to go through a trial and appeal from a final judgment.” (Fair Employment & Housing Com., at p. 633.) Additionally, “[d]iscretionary writ review of an order overruling a demurrer is appropriate where the issue is a matter of public importance and requires immediate resolution.” (See, e.g., San Bernardino Associated Governments v. Superior Court (2006) 135 Cal.App.4th 1106, 1113 (San Bernardino Associated Governments), italics added [exercising discretion to review overruling of a demurrer in a lawsuit challenging local agency‘s tax measure].) considerable and obvious benefit to the public.” (San Bernardino Associated Governments, supra, 135 Cal.App.4th at p. 1113.) In that case, revenues from the challenged tax measure were earmarked to improve roadways and access to public transportation. (Ibid.) The tax at issue here levies funds to satisfy the water district‘s financial obligations to DWR, thereby ensuring its maximum annual SWP water entitlement. And, as the State Water Contractors point out in their amicus brief, the payments SWP contractors make under Article 34 of their water supply contracts ensure DWR can continue to operate the SWP and pay its debt to the bondholders.5 That assurance, in turn, makes low-cost financing available to the SWP contractors. The SWP is a vital means of water supply, delivery, and conservation. (San Diego, supra, 12 Cal.App.5th at p. 1133.) Any litigation with the potential to impair its funding undoubtedly raises an issue of public importance. “When reviewing by writ petition a ruling sustaining a demurrer, ‘[w]here a pure question of law is at issue . . . the appellate court reviews the issue de novo.‘” (San Bernardino Associated Governments, supra, 135 Cal.App.4th at pp. 1113-1114.) Such is the case here. The issue we face—whether the validation statutes apply to the water district‘s SWP tax—requires us to interpret provisions in the Water Code and the Code of Civil Procedure and thus poses a pure question of law. (Santa Clarita Organization for Planning & the Environment v. Abercrombie (2015) 240 Cal.App.4th 300, 307 (Abercrombie) [appellate court independently reviews whether validation statutes apply to a particular agency act]; see also McLeod v. Vista Unified School Dist. (2008) 158 Cal.App.4th 1156, 1164 (McLeod) [“The determination of the statute of limitations applicable to a cause of action is a question of law we review independently“].) “The Code of Civil Procedure provides, in sections 860 to 870, a set of accelerated in rem procedures for determining the validity of certain bonds, assessments and other agreements entered into by public agencies.” (Planning & Conservation League v. Department of Water Resources (1998) 17 Cal.4th 264, 266 (Planning & Conservation League I) [validation action brought to challenge DWR‘s amendment of its water supply contracts with various local water agencies].) Commonly called the validation statutes, they allow a public agency to file an action to promptly determine the validity of any of the agency‘s acts that fall within the scope of their provisions. ( “If the validation statutes apply, the validation (or inverse validation) complaint must be filed within 60 days of the act to be challenged ( Importantly, if the agency does nothing, and no interested person brings a reverse validation action within 60 days, the action is deemed valid “raised within the statutory limitations period in section 860 et seq. or they are waived.” (Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 846-847 (Friedland), italics added.) “A validating proceeding differs from a traditional action challenging a public agency‘s decision because it is an in rem action whose effect is binding on the agency and on all other persons.” (McLeod, supra, 158 Cal.App.4th at p. 1166, italics added.) “Validation actions are ‘forever binding and conclusive.‘” (Ibid., quoting Although the statute of limitations for a validation action may seem “extremely short,” our courts have concluded the 60-day period is reasonable given the important purposes of the validation statutes, which include “the need to limit the extent to which delay due to litigation may impair a public agency‘s ability to operate financially.” (E.g., Commerce Casino, supra, 146 Cal.App.4th at pp. 1420-1421 [observing that “[w]hat constitutes a reasonable time is a question ordinarily left to the Legislature” and noting that a 60-day limitations period is not unique to the validation statutes]; Friedland, supra, 62 Cal.App.4th at p. 846 [same].) Determining whether the validation statutes apply to a particular agency action is an exercise in cross-referencing. This is because the validation statutes do not specify the matters to which they apply; rather, their procedures apply to “any matter which under any other law is authorized to be determined pursuant to this chapter.” ( There‘s no shortage of cases analyzing whether the validation statutes apply to particular agency actions. (See, e.g., Golden Gate Hill Development Co., Inc. v. County of Alameda (2015) 242 Cal.App.4th 760 (Golden Gate) [validation statutes apply to voter-approved resolutions authorizing local school districts to levy special parcel taxes such that any If a water district resolves to levy a property tax, the county auditor must provide the district with “a written statement showing the total value of all taxable property in the district,” which the district must “use[] . . . for taxation for that year.” ( provides: “These acts by the board are a valid assessment of the property and a valid levy of the taxes so fixed.” (Ibid., italics added.) Finally, By their plain terms, Having concluded the validation statutes apply to the SWP tax, we now consider whether Roberts’ claims “could have” been brought in validation. If that answer is yes, then he waived the claims because when validation is permitted, it‘s the exclusive means to seek judicial review of government action. (See Friedland, supra, 62 Cal.App.4th at pp. 846-847 [all claims that “could have been adjudicated in a validation action” must be “raised within the statutory limitations period in [ It‘s undisputed that many of Roberts’ allegations challenge the validity of the tax itself. The complaint seeks “to stop [the water district‘s] continued practice of imposing and collecting improper charges under the guise of property taxes purportedly authorized by the 1960 Burns-Porter Act.” (Italics added.) The complaint alleges the tax violates both statutory and constitutional law and seeks a refund and a writ of mandate vacating “all decisions, acts, ordinances and/or resolutions unlawfully imposing, authorizing, extending, increasing, diverting or transferring the SWP Taxes.” (Italics added.) These claims are undeniably aimed at the validity of the tax and the water district‘s ability to impose it, and as such they are governed by the validation statutes’ 60-day limitations period. However, Roberts argues that while those claims might be time-barred because they directly challenge the imposition of the tax, his taxpayer claim Dist. (2020) 57 Cal.App.5th 911 (Davis), where the plaintiff brought a hybrid or “dual nature” lawsuit containing both a reverse validation and a taxpayer claim, and the appellate court concluded the latter was unaffected by the fact the validation claim had become moot. (Id. at pp. 935, 937.) But Davis does not help Roberts. Unlike Roberts, the plaintiff in the Davis case filed his hybrid lawsuit within 60 days of the act he was challenging. (Id. at pp. 918, 921, 942.) Davis stands only for the proposition that a plaintiff may pursue a taxpayer action in addition to a reverse validation action, that the application of the validation statutes to a particular government act does not deprive a plaintiff of the in personam relief of disgorgement available under That issue was settled long before Davis. “A validation action under case, the crux of Roberts’ lawsuit—including his taxpayer claim—is a challenge to the validity of the SWP tax. Golden Gate is instructive. There, the plaintiff brought a suit seeking a refund of a school district‘s special parcel taxes under Similarly here, Roberts’ taxpayer claim is based on his allegation that the SWP tax (or at least the portion of the tax purportedly used to fund groundwater replenishment) is invalid. His complaint alleges that the same day the water district adopted the 2013 resolution imposing the tax, it also adopted a resolution earmarking “the new revenue generated from [the two-cent] increase to benefit the ‘Lower Whitewater Recharge Fund.‘” Roberts’ imposition and spending challenges are two sides of the same coin. He alleges the tax is invalid because it‘s being imposed to raise money for an improper (i.e., non-SWP) purpose, and he alleges the water district‘s spending is illegal because it is not diverting all of the revenues towards its SWP obligations. Under the relevant statutory framework, Roberts’ spending allegations are inseparable from his allegations that the tax is invalid: the water district is statutorily required to disclose the amount of money it needs to raise through property taxes, as well as the source of the debt or expense, months before it adopts a resolution to levy the tax. ( Next, relying on Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809 (Howard Jarvis), Roberts argues that applying the validation statutes to the SWP tax would immunize the water district from liability by validating ongoing illegality. According to Roberts, “[t]he consequences [of applying the validation statutes to the SWP tax] would be a system that sanctions a ‘catch me if you can’ scenario whereby governmental agencies can divert illegal tax funds, hide the true nature of their actions, and, if they can evade detection for sixty days, the illegal tax is beyond challenge.” He argues that, like the court in Howard Jarvis, we should apply a “continuous accrual” theory to the statute of limitations, allowing the validity of a tax to be challenged within the statutory period “after any collection of the tax, regardless of whether [60 days have elapsed] since the tax measure was adopted.” (Howard Jarvis, at pp. 824-825, italics added.) Roberts’ concern is misplaced. As we‘ve seen, the water district cannot hide how it intends to spend the revenue generated by the SWP tax; it‘s required to make that information publicly available. ( worded. (See McLeod, supra, 158 Cal.App.4th at p. 1168 [“the applicability of the 60-day limitations period of [ cent increase, it adopted a resolution publicly declaring its decision to use the additional revenue to fund groundwater replenishment. Nor is there any merit to Roberts’ argument that imposing the 60-day statute of limitations in this setting will immunize the water district‘s future tax rates from judicial scrutiny. The water district must fix the SWP tax rate anew each year ( In any event, Howard Jarvis has no application here. In that case, a taxpayer challenged a city‘s general tax on the ground the city had failed to obtain the required voter approval to adopt the tax measure. (Howard Jarvis, supra, 25 Cal.4th at p. 812.) The city argued the lawsuit was time-barred because the plaintiff had waited too long after its adoption of the tax measure to bring the challenge. The court disagreed and concluded the limitations period accrued anew each time the city collected the tax. (Id. at p. 825.) Significantly, the general tax at issue in Howard Jarvis was not subject to the validation statutes. It was imposed under The water district cannot evade judicial review, as Roberts worries. Although the claims in his 2018 complaint are time-barred, he may challenge (and indeed already has) future resolutions adopting the SWP tax by bringing a validation action within 60 days of the resolutions setting those taxes. (See Fontana Redevelopment Agency v. Torres (2007) 153 Cal.App.4th 902, 913 [the running of the 60-day limitations period bars a later challenge to the matter validated but does not preclude a challenge to subsequent conduct subject to the validation statutes].) Finally, we reject Roberts’ argument that even if the validation statutes do apply, we should follow Ontario and excuse his failure to comply with the statute of limitations. Ontario does not provide authority for excusing a late The validation statutes do not provide a similar “good cause” exception to the statute of limitations. And, even if they did, Ontario‘s reason for finding good cause is absent here. In Ontario, the question whether the validation statutes applied to the challenged public act was “‘complex and debatable,‘” and the court ultimately left it unanswered. (Ontario, supra, 2 Cal.3d at p. 345.) In this case, the relevant Water Code provisions are clear: a county water district makes an “assessment” when it fixes a property tax rate for any given year, and such assessments are subject to validation. ( In view of our conclusion that Roberts’ complaint is barred by the 60-day statute of limitations applicable to validation proceedings, it is unnecessary to address the water district‘s additional claims of trial court error. We also express no opinion as to the merits of the reverse validation actions presently before the trial court. We grant the petition and direct the trial court to sustain the demurrer and dismiss the complaint in its entirety. Roberts shall bear costs on appeal. CERTIFIED FOR PUBLICATION SLOUGH J. We concur: MCKINSTER Acting P. J. RAPHAEL J.C. Roberts’ Lawsuit
D. The Demurrer
II
ANALYSIS
A. Necessity of Writ Relief
B. The Validation Statutes Apply to the SWP Tax
1. Standard of review
2. The validation statutes
3. Application
III
DISPOSITION