SAN RAMON, CALIFORNIA — A decision by a state appeals court
that upheld a tax on new development within City of San Ramon may be heading to
the California Supreme Court.
Lawyers for the Building Industry Association (BIA),
who challenged the tax, said they were disappointed with the decision by the First Appellate District Court of Appeal for the State of California.
"We do believe that the court is wrong. In particular we
think that the court's decision interpreting the Mello-Roos Act essentially eliminates any protections
that the legislature afforded residents of Mello-Roos districts that are approved by landowner vote,” Damien
Schiff from the Pacific Legal Foundation told the Northern California Record.
Schiff said the decision was precedent-setting, “but we also
think it is a bad precedent.”
According to court documents, the tax applies
to townhouses built on two parcels of land, where the city felt the need to raise
money to cover the cost of providing services to the 48 homes.
Following the decision, the BIA sued the city and claimed the tax was not valid. However,
the trial court upheld the tax and the BIA appealed.
It said the tax does not cover the costs of
providing services to the homes but has instead been an “unconstitutional
In their claim, the BIA alleged that
the tax violated the statutory requirement that the tax cover only services
that were in addition to those available before the tax was issued. They also argued that the tax violated the
California Constitution's prohibition on general taxation.
The BIA also alleged the city enforces
the tax by threatening to take away the municipal services the tax was meant to
The court did not agree, writing: "We conclude that the tax will provide
'additional services' to meet increased demand for existing services resulting
from the townhouse development and therefore meets the requirement of the
Mello-Roos Act; the tax is a special (and not a general) tax because it is
imposed for specific purposes and not for general governmental purposes, and
therefore meets the requirements of the California Constitution."
Yet, Schiff said the decision does not uphold
the Mello-Roos Act, which came into effect in 1982 and provided a way for
government to get financing.
"Because the court's decision, in our view, essentially
renders the particular protections in the Mello-Roos Act meaningless. We think that is a really important reason
for the California Supreme Court to want to take up the case."
He said the BIA expected to file with the California Supreme Court in a few
weeks and hoped to have a decision about whether the court will take up the
case by early next year.
Yet, Schiff added that even if the court
refuses the case it would not prevent other citizens in a similar situation
from seeking legal action.
"If the supreme court says no to our petition then it will
be the end of the case for the San Ramon community facilities district but it
does not preclude similar lawsuits in other parts of the state."
The Pacific Legal Foundation was established in 1973 as a nonprofit