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'Magic Words' In Bonta Bill Worth $10 Million In Taxes To Local Schools

San Leandro and Alameda schools have a lot riding on a bill from Assemblyman Rob Bonta that seeks to tweak three words in state law.

 

Parents, voters, citizens.

Lend me your ear on a legal dispute that affects thousands of public school students -- and your property tax bill. 

This dispute, like many court cases, revolves around what I like to call the "magic words" -- the phrase or concept that is the crux of the matter.

This story involves three magic words: qualified special taxes.

Depending on how the courts and state legislators interpret those words, San Leandro and Alameda schools will be $10 million richer or poorer.

To understand why let's quickly review school financing.

Parcel schmarcel

School districts derive much of their revenue from taxes on property.

In legal terms a property is a parcel, be it a home, apartment complex, factory or mall.

To raise parcel taxes a district must persuade two-thirds of its voters to agree.

In Alameda, San Leandro and three other communities, voters have passed parcel taxes that assessed different costs on different types of property.

Alameda voters pioneered this strategy in 2008 when they passed Measure H.

It imposed a "$120 per year (tax) on each parcel of taxable land and 15 cents per square foot for commercial/industrial parcels," according to an impartial analysis.

After Measure H won approval by two-thirds of Alameda voters, attorney David Brillant sued the school district. 

He presented Alameda County Superior Court Judge Kenneth Mark Burr with a simple case based on the meaning of "qualified special taxes." 

Brillant argued that different taxes for commercial and industrial parcels violated a state law that said "qualified special taxes . . . apply uniformly to all taxpayers . . . (and) . . . do not include taxes imposed on a particular class of property or taxpayers.

But in June 2010, Burr rejected that definition and ruled that Alameda's parcel tax was "uniform and legal" according to the school district

San Leandro follows Alameda

After Burr's decision the San Leandro school district proposed Measure L.

It had different charges for homes, apartments and commercial properties and was designed to raise $2.4 million.

In November it got two thirds in a cliff hanger race.

But wait

The cheers of Measure L supporters in San Leandro proved to be short lived.

A few weeks after the election three California Appeals Court judges overturned Burr's ruling.

Their decision said that state law "does not authorize school districts to impose (qualified) special taxes that classify and differentially tax property within the district." 

That decision caused an uproar in San Leandro and beyond.

The West Contra Costa Unified School District, along with districts in Davis and Los Angeles County, had also taken Burr's decision as the green light to tax different types of property in different ways.

In January, the Appeals Court decided to review it's own decision and it could define "qualified special tax" some other way.

Bonta's Magic Formula

Assembly Rob Bonta, elected in November to represent Alameda, San Leandro and much of Oakland, has responded to this legal debate by proposing to "clarify" state law.

That is the word he used in AB 59, the new bill he has introduced before the state legislature.

The relevant section reads:

"(State law) requiring uniform application of taxes shall not be construed as limiting a school district from assessing taxes in accordance with rational classifications among taxpayers or types of property within the school district. This subdivision is declaratory of existing law, and shall apply to transactions predating its enactment." (emphasis added)

In short Bonta proposes to retroactively validate "qualified special taxes" that treat different properties differently as long as the treatment makes sense.

What's next?

Whether AB 59 will pass the Democratic-controlled legislature, get the Governor's signature and pass muster with the courts is conjectural.

In addition to the $2.4 million impact on San Leandro, AB 59 would have a $7.5 million impact on Alameda, which might have to refund $7.5 million in taxes already collected depending on how things shake out.

To that nearly $10 million must be added the impacts on Davis, LA County and West Contra Costa.

That's a lot of money.

But then these are magic words.

G. Cobre February 03, 2013 at 07:00 PM
California Government Code Section 50079 enables school districts to exempt seniors... (a) Subject to Section 4 of Article XIII A of the California Constitution, any school district may impose qualified special taxes within the district pursuant to the procedures established in Article 3.5 (commencing with Section 50075) and any other applicable procedures provided by law. (b) (1) As used in this section, "qualified special taxes" means special taxes that apply uniformly to all taxpayers or all real property within the school district, except that "qualified special taxes" may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age. (2) "Qualified special taxes" do not include special taxes imposed on a particular class of property or taxpayers. I agree with you, seniors should not be exempt, many living in large homes purchased decades ago and therefore pay a lower tax rate than many of their neighbors. But you also have keep in mind, that most retirees live on a fixed income and therefore would never vote for a tax that may cost them hundreds or even thousands of dollars. School districts know that they could not pass a tax without the senior vote.
G. Cobre February 03, 2013 at 07:05 PM
David, there is no provision in 50079 for improved or unimproved properties. Only Community Colleges are granted this exemption....... A community college district may impose a special tax pursuant to Article 3.5 (commencing with Section 50075). The special taxes shall be applied uniformly to all taxpayers or real property within the district, except that unimproved property may be taxed at a lower rate than improved property.
G. Cobre February 03, 2013 at 07:50 PM
When you look at Government code section 50079, you will not find a provision anywhere to allow school districts to tax commercial property different than residential property. School districts in most cases abide by the law and have passed taxes without being challenged. The Alameda law suit was the first of it's kind . Residential property was taxed at $120. , while some commercial was taxed as high as $9500. To make matters worse, big apartment complexes , that are clearly commercial , where classified as residential and paid $120. Now Bonta is trying to rewrite the law and even change the law retroactively.Sound to me, they are realizing they made a big mistake and he is counting on the Assembly to bail out Alameda Unified.
David February 03, 2013 at 08:09 PM
Must have missed the community college caveat. It's pretty clear from the decision that measures are illegal despite the judges' sympathies--they couldn't find a way to make plain English mean something else for once.
David Howard March 16, 2013 at 11:52 PM
Bonta's bill is unlikely to succeed, in that it violates the doctrine of separation of the judiciary and the legislature. And the courts have ruled that the legislature cannot change the law retroactively. AB59 is dead in the water - no committee meetings scheduled. http://www.action-alameda-news.com/2013/03/11/bonta-bill-unlikely-to-succeed-alameda-probably-stuck-with-parcel-tax-ruling/

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