HUNTINGTON PARK REDEVELOPMENT AGENCY, Petitioner, v. MICHAEL A. MARTIN, as Secretary, etc., Respondent.
L.A. No. 31861
Supreme Court of California
Feb. 28, 1985.
38 Cal.3d 100
Michael B. Montgomery, James Warren Beebe, John G. Perenchio, Kindel & Anderson and Steven P. Rice for Petitioner.
Jones, Hall, Hill & White, Robert G. Auwbrey, Helm, Budinger & Lemieux, Wayne K. Lemieux, Steven H. Goldfarb, Lee C. Rosenthal, Goldfarb & Lipman, Joseph E. Coomes, Jr., T. Brent Hawkins, McDonough, Holland & Allen, Thomas P. Clark, Jr., David R. McEwen, Stradling, Yocca, Carlson & Rauth, Herbert M. Weiser, James Dexter Clark, Weiser, Kane, Ballmer & Berkman, Richards, Watson, Dreyfuss & Gershon, Steven L. Dorsey and Rochelle Browne as Amici Curiae on behalf of Petitioner.
Charles R. Martin for Respondent.
MOSK, J.—This is a petition for writ of mandate to compel respondent Martin, Secretary of the Huntington Park Redevelopment Agency (the
Redevelopment agencies are governed by the Community Redevelopment Law. (
In 1981 the Legislature enacted Senate Bill No. 152 (SB 152). (Stats. 1981, ch. 951, p. 3622.) By means of amendments and additions to the Revenue and Taxation Code and the Community Redevelopment Law, SB 152 provides redevelopment agencies with an additional mode of financing. A redevelopment agency may now impose a sales and use tax of 1 percent or less on retail sales and use of personal property, if the agency operates in a city that will give credit against its own sales and use tax for taxes paid to the agency. (
On August 24, 1982, the Agency adopted an ordinance (the Ordinance) imposing a sales and use tax of 1 percent in conformity with SB 152. On the same day, the City of Huntington Park (the City) amended its municipal code to provide a tax credit against its sales and use taxes for any taxes paid to the Agency under the Ordinance. The tax will not become operative until the Ordinance is published. (
The issues we confront are two: whether the Ordinance violates section 4 of article XIII A of the Constitution (requiring “special taxes” to be ap
I. The Challenge Under Article XIII A
Article XIII A of the Constitution is the product of Proposition 13, a 1978 initiative aimed at reducing property taxes. Section 4 of that article provides that “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district . . . .” Although this section appears to be a grant of power allowing local entities to enact special taxes, it actually has the effect of limiting their enactment (City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47, 53 [184 Cal.Rptr. 713, 648 P.2d 935]). While a majority of the voters may favor a proposal, they are likely to be thwarted by the requirement of attaining a two-thirds vote. The section is part of the “interlocking ‘package‘” of sections in article XIII A, “deemed necessary by the initiative‘s framers to assure effective real property tax relief.” (Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 231 [149 Cal.Rptr. 239, 583 P.2d 1281].) The purpose of section 4 is to prevent the government from recouping its losses from decreased property taxes by imposing or increasing other taxes. (Ibid.)
The Agency contends that the Ordinance does not violate section 4 even though it was not submitted to the voters for a two-thirds approval. First, the Agency contends it is not “imposing” a tax: because the taxpayers will have no additional tax burden, there is merely a transfer of tax revenues from one governmental entity to another. Second, the levy here is not a “special tax,” as it is to be used for general redevelopment purposes. (See City and County of San Francisco v. Farrell, supra, 32 Cal.3d at p. 57.) Third, the Agency is not a “special district,” as it does not have the power to levy a property tax. (See Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal.3d 197, 205 [182 Cal.Rptr. 324, 643 P.2d 941].) We need consider only the last of these contentions, for as respondent concedes, an adverse holding on any of these grounds is fatal to his reliance on article XIII A. (See 31 Cal.3d at pp. 201-202: “if that term [“special district“] does not encompass [petitioner], the two-thirds requirement is
Section 4 applies to special taxes levied by “Cities, Counties and special districts.” The Agency is not a city or county, and thus it will fall within section 4 only if it is a special district. We considered the meaning of the term “special district” in Richmond. Reasoning that section 4 was ambiguous, and “[i]n view of the fundamentally undemocratic nature of the requirement for an extraordinary majority,” we concluded that “the language of section 4 must be strictly construed and ambiguities resolved in favor of permitting voters of cities, counties and ‘special districts’ to enact ‘special taxes’ by a majority rather than a two-thirds vote.” (Id. at p. 205.) We therefore held that a special district for the purpose of section 4 is one “which may levy a tax on real property.” (Ibid.)
Redevelopment agencies are not empowered by law to levy property taxes; the tax collector of the county collects all such taxes. (
Respondent urges a different interpretation. While he acknowledges that a redevelopment agency does not have the power to levy taxes on real property, he contends that the agencies’ indirect participation in the taxing process makes them “special districts“: Although the agencies do not impose the taxes themselves, they receive a share of the taxes imposed—thus, they indirectly levy.
The argument is untenable. As explained in Richmond, we read section 4 narrowly because it impinges on the democratic process. (31 Cal.3d at p. 205.) To conclude that the “levying” of property taxes includes the passive receipt of revenues from such taxes is an expansion of that concept directly at odds with our mandated narrow reading of section 4. For purposes of section 4, the “levying” of a tax must mean just that: the imposition and collection of the tax.2
II. The Challenge Under Article XIII B
Article XIII B of the Constitution was the result of Proposition 4, a 1979 initiative. Section 1 of that article provides that “The total annual appropriations subject to limitation of the state and of each local government shall not exceed the appropriations limit of such entity of government for the prior year . . . .” Section 8, subdivision (b), defines “appropriations subject to limitation” of an entity of local government as “any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity . . . .” Subdivision (c) of the same section defines “proceeds of taxes” to include revenues from licence and user fees in excess of the costs of regulation, investment of tax revenues, and subventions received by the local government from the state. Thus, a governmental entity may not spend more in one year on a program funded with the proceeds of taxes than it did in the prior year.
Section 3, subdivision (a), of article XIII B provides that if “the financial responsibility of providing services is transferred . . . from one entity of government to another, then for the year in which such transfer becomes effective the appropriations limit of the transferee entity shall be increased by such reasonable amount as the said entities shall mutually agree and the appropriations limit of the transferor entity shall be decreased by the same amount.” The Agency urges us to hold that such a transfer has taken place in the present case. Respondent concedes that if such a transfer has taken place article XIII B will not be violated, but insists that nothing has been transferred here but the power to tax.
“Where the Legislature has enacted a law in light of a particular constitutional provision, a settled rule of construction is that the Legislature‘s interpretation of uncertain constitutional terms is entitled to great deference by the courts.” (Mills v. County of Trinity (1980) 108 Cal.App.3d 656, 662 [166 Cal.Rptr. 674].)
That this transfer is consistent with article XIII B, section 3, subdivision (a), is easily demonstrated. It is well recognized that elimination of urban blight is a governmental function. (Pacific Tel. & Tel. Co. v. Redevelopment Agency (1977) 75 Cal.App.3d 957, 969 [142 Cal.Rptr. 584];
Article XIII B, section 3, subdivision (a), allows a shifting of appropriations limits for the year in which the transfer becomes effective. It is true that the transfer here took place prior to the enactment of the Ordinance. However, the redevelopment scheme in California envisions not a static transfer of responsibility, but an ongoing balance of agency action and city oversight and participation. A city may create a redevelopment agency to perform the service of eradicating blight (
This conclusion is further supported by analysis of the Ordinance in light of the purposes of article XIII B. Proposition 4, which became article XIII B, was billed by its supporters as the “Spirit of 13” (referring to Prop. 13, which had been adopted a year earlier as art. XIII A). Its goals were the “protection for taxpayers from excessive taxation,” and the imposition of a “thoughtfully drafted spending limit” on government. (Ballot Pamp.,
But neither of these concerns is implicated here. A person will not pay increased sales and use taxes under an ordinance enacted pursuant to SB 152, as an agency may adopt such an ordinance only if the city in which it operates provides a dollar-for-dollar credit against its own sales and use tax. And government spending will not increase, as the city must adjust its appropriations limit downward in proportion to the agency‘s upward adjustment under article XIII B, section 3, subdivision (a).
Let the writ of mandate issue as prayed.
Bird, C. J., Kaus, J., Broussard, J., Reynoso, J., and Grodin, J., concurred.
LUCAS, J., Concurring and Dissenting.—I concur with part I of the majority opinion. I do so reluctantly under compulsion of our holding in Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal.3d 197 [182 Cal.Rptr. 324, 643 P.2d 941]. That case, in my view, was wrongly decided; I agree with Justice Richardson‘s dissent. (See Richmond at p. 209.)
I dissent from part II of the majority opinion and from the judgment. When one governmental entity shifts to another the financial responsibility for providing services, the California Constitution permits an apportionment of the transferor‘s appropriations limit. This apportionment attaches “for the year in which such transfer becomes effective.” (Cal. Const., art. XIII B, § 3, subd. (a).) The obvious triggering event for shifting the appropriations limit is the transfer of financial responsibility. It is just as obvious that where there has been no shift in financial responsibility, no apportionment of appropriations limit is allowed.
The majority finds that these strictures are satisfied because the financial responsibility for ending urban blight is constantly transferred to the agency. (Ante, p. 109.) I cannot agree. As the majority notes, the financial responsibility for eradicating blight was first transferred from the City of Huntington Park to the agency long ago. (Ante, p. 109.) Neither Senate Bill No. 152 (Stats. 1981, ch. 951) nor the city‘s ordinance shifts any new financial responsibility to the agency.
Accordingly, I would find that Senate Bill No. 152 and the ordinance improperly allow the agency to exceed its “total annual appropriations subject to limitation” under article XIII B, section 1, of the California Constitution and are thus unconstitutional.
I would deny the writ.
Notes
“(b) That portion of the levied taxes each year in excess of such amount shall be allocated to and when collected shall be paid into a special fund of the redevelopment agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by such redevelopment agency to finance or refinance, in whole or in part, such redevelopment project. Unless and until the total assessed valuation of the taxable property in a redevelopment project exceeds the total assessed value of the taxable property in such project as shown by the last equalized assessment roll referred to in subdivision (a), all of the taxes levied and collected upon the taxable property in such redevelopment project shall be paid to the respective taxing agencies. When such loans, advances, and indebtedness, if any, and interest thereon, have been paid, all moneys thereafter received from taxes upon the taxable property in such redevelopment project shall be paid to the respective taxing agencies as taxes on all other property are paid.” (Italics added.)