Special taxes a city uses to finance construction of city facilities will stand up in California appellate courts only when approved by two-thirds the city's registered voters. San Diego's city council officials, on Friday, August 1st, heard the 4th District Appellate Court did not allow the city to give the vote on the special tax financing the convention center expansion to only land owning hoteliers, instead of all the registered voters in the city.
The city officials represented in court by City Attorney Jan GOldsmith, during the City of San DIego v. Shapiro case, failed to convince the court the City of San Diego loses an opportunity to set its own policy for elections setting special taxes on hotel developer owned land. The landowners who will pay the tax vote for the tax.
Prop 13, passed by voters in 1978, guarantees all people who live in the city, and register to vote, have an opportunity to vote on a special tax. The Proposition 218 amendment to the California Constitution made clear general elections must be used to set special taxes, not just general taxes, assessments, and fees.
"Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district . . . ." Article XIII A, Section 4. (Prop 13).
The $575 million in bonds the city council approved in January, 2012 to pay for the construction start before the revenue from the special tax, approved by hotelier mail vote in April, 2012, came in can not be paid off. The council's October, 2012 decision to not move ahead onthe financing plan until after the court settled the case forestalled a city funding collections effort.
Appellate Court Justices decided the hotel landowner election held in April, 2012 is invalid under the California Constitution. Giving the landowners in the development areas predominantly uninhabited by San Diego residents one vote for each dollar they would pay in special taxes in a year did not decide how the city will fund the convention cengter expansion. Hoteliers will not pay the extra percentange on room revenues.
City council officials will make new plans for the convention center over the long run. They do not have an opportunity to decide tax funding set up by only the landowners who pay a tax, without two-thrids of San DIegans agreeing onthe financing plan. The appellate court rejected the city's tax policy. "Giving the decision-making to those directly affected by a tax—those who will pay it—is the policy goal underlying taxpayer protections such as Proposition 13 that are embedded in California law," the City had said. The appellate justices said landowners are not the "qualified electorate" Prop 13 voters decided will vote on special taxes.
Community facilities financing votes, like the convention center hotel tax vote, take a full two-thirds vote from the registered citizens in a district. A November 2011 amendment tothe City's Mello-Roos Act did not force San Diego citizens to give up an opportunity to vote on a special tax financing development on San Diego land. Prop 13 limited California cities to general election votes. Counting landowners who will pay a special tax as the "qualified electorate" in an election, as the Mello-Roos Act allows in predominantly uninhabited areas, no longer is a city option.
San Diego's legislative officials on the city council may not use their own definition of "qualified electorate" written in the Mello-Roos Act, instead of the full city electorate California voters plainly guaranteed the vote in 1978.
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