A state appeals panel says Alameda’s public schools can impose a special property tax to pay teachers and fund operations, putting no stock in arguments that the tax measure effectively allows owners of larger properties to pay a lower tax rate.
Leland Traiman sued Alameda Unified School District, alleging that although a more than two-thirds of voters backed a 2020 public measure implementing the tax — of 26.5 cents per building square foot, up to $7,999 per parcel — the assessment nonetheless violated state law, because the cap yielded a lower effective rate for larger properties.
When the case landed in Alameda County Superior Court, Judge Julia Spain agreed with Traiman, invalidated the tax and ordered the district to pay him $374,960 in legal fees. In consolidated appeals before the California First District Court of Appeals, the school district said legal precedent barred Traiman’s lawsuit, argued the rate is applied uniformly and, to the extent any of the public measure implementing the tax was invalid, the remainder should be enforced. It also challenged the award of legal fees.
“Neither the language of the statute, case law, legislative history, nor public policy indicates that a school district cannot base a qualified special tax on building square footage with a maximum tax per parcel,” Chou wrote, noting the panel didn’t need to consider the district’s other arguments.
According to the panel, Alameda voters have approved school tax measures as far back as June 2008, with ballot measures in 2011 and 2016 also germane.
The 2008 measure called for a $120 annual tax for residential properties as well as commercial and industrial parcels smaller than 2,000 square feet. Larger parcels were assessed $120 per year plus 15 cents per square foot, up to $9,500. In 2011, while a legal challenge to the 2008 tax was pending before an appeals panel, voters approved another tax of $299 on unimproved parcels and, on every lot with a building, 32 cents per square foot up to $7,999.
A challenge to the 2011 law failed at the superior court level, with a judge finding plaintiffs didn’t show how the tax violated a state law uniformity requirement, although any building with more than 25,000 square feet was capped at $7,999, while all smaller buildings generated taxes at 32 cents per square foot.
In 2013 an appeals court ruled the 2008 tax violated the uniformity clause and nullified everything but the $120 flat tax. In 2016 voters renewed the 2011 tax before its 2018 expiration; that extension also survived a legal challenge as a superior court judge found the 2011 ruling precluded a new lawsuit.
Regarding the 2020 tax, the panel said the relevant portion of state law allows school districts to “impose qualified special taxes within the district” with clarification that unimproved properties may be taxed at lower rates than improved properties.
Although the law “applies the same tax formula to every improved parcel in the district, Traiman argues (and the trial court concluded) that the cap on the payable tax means the district has, in effect, created two classifications of properties that are taxed differently,” Cho wrote. “No cited case has embraced this theory.”
The panel said Traiman’s argument relies on an improper reading of the statutory language. The requirement is to impose the same tax on all payers or properties, not just a particular class of either.
“The statute does not further require that the application of the tax result in an identical effective tax rate for every taxpayer and every property,” Chou wrote. “Neither case law, legislative history, nor public policy supports the conclusion that a school district is powerless to impose a special tax merely because it caps the taxpayers’ liability.”
The prevailing challenge to the 2008 tax relied on a finding state law precluded schools from applying different tax rates to different types of property classifications, the panel said, without a determination as to the legality of a cap based on square footage.
Also relevant is a 2019 California Fifth Appellate District Court opinion, Dondlinger v. Los Angeles County Regional Park & Open Space District, which Chou said “approved a square footage tax and suggests that what taxpayers end up paying is not relevant to whether a tax is uniformly applied.” That case didn’t involve a cap, but still held a tax can be considered to apply uniformly even should “arithmetic functions render outcomes different for different taxpayers based on property size.”
Chou also said the outcome in the 2008 tax, in which every property was assessed $120, still resulted in a property owners paying a different rate per square foot. The panel further rejected Traiman’s argument regarding legislative history, saying its review made it clear “lawmakers and school districts urgently wanted the districts to have the power to impose special taxes with voter approval” along with the right to exempt senior citizens.
Traiman also failed to convince the panel public policy favors his position, as Chou wrote that “without flat taxes, square footage taxes, taxes with caps, regressive taxes, or progressive taxes, it is unclear how a school district could impose taxes for its schools at all.”
The school district has been represented by attorneys Sue Ann Salmon Evans, Luke L. Punnakanta and William Benjamin Tunick, of the firm of Dannis Woliver Kelley.
Tramain was represented by David Joseph Brillant and Cameren Neill Ripoli, of the Brillant Law Firm.