A Court of Appeal held that a resolution establishing a special assessment district for park and open space maintenance was invalid where a city improperly inflated its voting power by giving voting rights to the city’s open space and park land with the proposed district without proper justification, and where the engineer’s report used to support the assessments failed to adequately separate general benefits from special benefits as required by article XIII D of the California Constitution. (Golden Hill Neighborhood Association, Inc. v. City of San Diego (— Cal.Rptr.3d —-, Cal.App. 4 Dist., September 22, 2011).)
A survey conducted to gauge support for formation of a maintenance assessment district in the Golden Hill community showed 75 percent support for forming a district. The City of San Diego (“City”) hired an engineering firm to prepare a report, and approved a resolution of intent to form a special assessment district, the Greater Golden Hill Maintenance Assessment District (“District”). The City received 1,182 ballots; 635 in favor of forming a district and 547 opposed. The vote for each property was then weighted according to the amount of the proposed assessment for each property, which also resulted in more “yes” votes than “no” votes. The City passed a resolution (“Resolution”) which approved the engineer’s report, ordered the formation of the district, and confirmed the assessments against the District’s properties.
The engineer’s report listed services that would be provided through the assessment such as graffiti and trash removal, landscaping, tree maintenance and beautification. The report provided that the special benefit to each parcel was apportioned based on the linear square footage of the parcel. Additionally, each property was assigned a single family equivalent benefit factor (“SFE”) “based upon the relative intensity of use (trip factor) in relation to a single family home.” Publicly owned parcels were levied upon in the same manner as privately owned property, except for parks and designated open spaces. The report did not give an SFE for the City’s parks and open spaces.
The Golden Hill Neighborhood Association filed a lawsuit to challenge the legality of the District. The trial court found that the formation of the District and its assessments were invalid.
The Court of Appeal held that the Resolution forming the District must be vacated and the assessments imposed by the District invalidated. Article XIII D limits the ability of a local government to levy special assessments against real property. An assessment can be imposed only if a special benefit is conferred on a particular piece of property and the assessment must be in proportion to the special benefit conferred on the property. A vote on a proposed special assessment must be weighted according to the proportional financial obligation of an affected parcel of property.
The Court found that the City failed to meet its burden to show the assessments to the parcels in the District were proportional to the special benefits the parcels received. The Court was unable to determine how the assessments for public parks and open spaces were calculated or if the assessment amounts for these parcels were proportional to the special benefits conferred on the parks and open spaces. The Court held that the failure to publicly disclose the method of calculating the SFE and assessment amounts for the City’s parks and open spaces compromised not only the transparency, but the integrity of the election process. The Court found that the City overassessed its own properties without public scrutiny for the purposes of obtaining a majority vote on the special assessment. As a result, the District’s other property owners were deprived of the opportunity to review and challenge the weighting of the vote for the park and open space properties. Because the City failed to show that the assessment amounts charged against the park and open space parcels were proportional to the special benefits conferred on these parcels, the Court ruled that the votes cast by the City for these parcels must be eliminated from the election results. Without the City’s votes for parks and open spaces, there were not enough votes in favor of forming the District. The Court found that the Resolution forming the District must be vacated because the vote to establish the District was invalid.
Additionally, the Court held that the engineer’s report failed to adequately separate the general benefits from the special benefits. Only special benefits are assessable and Article XIII D requires an agency to separate the general benefits from the special benefits that will be conferred on a parcel. Separation and quantification of general and special benefits should be accomplished by apportioning the cost of a service or improvement and then assessing the owner of a parcel for only the portion of the cost representing a special benefit. Here, the engineer’s report did not separate and quantify the general benefits from the special benefits. This failure rendered “the assessment and the formation of the District constitutionally infirm.”
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