News from the Courts: Building Industry Defeats Special School Fees

On November 29, the California Court of Appeals for the Second District handed the building industry a major legal victory by ruling that school districts in the Santa Clarita Valley cannot use the initiative process to impose special school fees which exceed the $1.50 per square foot standard established in state legislation.

This dispute arose last year, when a number of local school districts placed measures on the June, 1987 ballot, which would impose taxes to pay for building school facilities. The Building Industry Association of Southern California (BIA/SC) filed suit to remove the measures from the ballot on the grounds that they would enact fees in violation of the school fee legislation passed with industry support in 1986. An appeal to the California Supreme Court was unsuccessful and the measures were approved by the voters. BIA/SC then went forward with a new suit challenging the constitutionality of the fee.

The school districts argued that the provision of Proposition 13 which allows for truces to be imposed by a 2/3's vote was self-executing; that is, the legislature did not have to specifically authorize the vote.

The court rejected this argument, citing the history of taxation in the state of California and the voters' intent as expressed in Propositions 13 and 62. The court further held that in spite of the characterization of the levy as a tax, it was actually a development fee enacted in violation of the Government Code 53080. The court specifically noted that submitting these types of fees to the voters "was a poorly disguised, ineffectual attempt to avoid the statutory limitation to which development fees are subject."

Most importantly, the court concluded that these exactions were imposed "not on an electorate which, unsurprisingly, voted overwhelmingly to approve them, but rather, solely on the developers of new residential, commercial and industrial projects."

Since these special truces were not imposed uniformly on all persons or real property "in the same district," they violated the equality of taxation provisions in article XIIIA of the California Constitution. This holding may have the most wide-ranging impact, since it provides a new basis for challenging other discriminatory impact fees imposed by local governments and special districts. The school districts, however, have decided to appeal the decision with the State Supreme Court.