Tuesday, October 9, 2012
Annexed Homeowners Must Pay Municipal Taxes, C.A. Rules
Justices Reject Claim That Initiative Bars Extending Levies to Voters Who Had No Say in Joining City
By KENNETH OFGANG, Staff Writer
A provision of the state Constitution requiring voter approval for local taxes does not bar a city from extending previously enacted taxes to residents of areas that it annexes, even if the annexation did not require voter approval, the Fourth District Court of Appeal ruled Friday.
Div. Three rejected arguments by the litigating arm of the Howard Jarvis Taxpayers Association, sponsor of Proposition 218, that the initiative bars the City of Huntington Beach from extending its utility tax and “retirement property tax”—used to pay pension costs incurred prior to the passage of Proposition 13—to residents of Sunset Beach.
Huntington Beach annexed the 133-acre neighboring community of about 1,200 residents last September. The Orange County Local Agency Formation Commission approved the annexation under a provision of the Government Code that allows a city to annex a neighboring “island” of unincorporated territory without a public vote.
OC LAFCO, Justice William Bedsworth explained in Friday’s opinion, had encouraged the annexation as part of the county’s effort to rid itself of responsibility for providing municipal-type services, such as police and fire protection, to unincorporated areas. Annexation to Huntington Beach was ultimately determined to be more viable than the alternatives, such as annexation to Seal Beach or incorporation of Sunset Beach as a city unto itself.
Before the annexation took effect, the Citizens Association of Sunset Beach sued to block it. Represented by attorneys from the Howard Jarvis Taxpayer’s Foundation, the association argued that the annexation should be blocked, or that Sunset Beach should be allowed to vote on the “special” taxes under Proposition 218.
The initiative, known as the Right to Vote on Taxes Act, was approved by statewide vote in 1996. It requires a majority vote of a locality in order to pass a “general” tax, or a two-thirds vote to impose a “special” tax, such as Huntington Beach’s utility and pension levies.
Orange Superior Court Judge Frederick P. Horn ruled that Proposition 218 did not supersede the right of a city to annex an unincorporated area of less than 150 acres without a vote. And because the Huntington Beach taxes were already in effect, and state law extends local taxes to unincorporated territory, Proposition 218 does not give Sunset Beach voters the right to vote on those levies.
Bedsworth, writing for the Court of Appeal, said Horn was correct.
“We conclude Proposition 218 was never intended to require votes incident to annexations of territory by local governments,” the justice wrote. “It was intended to prevent politicians from trying to circumvent Proposition 13 by inventing so-called assessment districts which supposedly could impose taxes without any vote of the electorate. Nor does the text of Proposition 218, even liberally construed, require an election on tax differentials in connection with an annexation.”
The justice noted that state law has allowed involuntary annexation of small communities by cities surrounding, or substantially surrounding, those communities since at least 1939, although Sunset Beach could not have been annexed in that manner prior to 2004, when the limit on the size of such a territory was increased from 75 to 150 acres.
He also noted that the statute expressly extending city taxes to annexed areas has been on the books since 1993, preceding the enactment of Proposition 218.
When a public vote is required for annexation, Bedsworth added, a simple majority vote is sufficient for approval, even when this results in extension to the annexed area of special taxes that required a two-thirds vote for the annexing city to adopt. The reason this seeming contradiction isn’t addressed by Proposition 218, the justice said, is that “[i]ts proponents simply never intended it to apply to annexations.”
The case is Citizens Association of Sunset Beach v. Orange County Local Agency Formation Commission, 12 S.O.S. 5025.
Copyright 2012, Metropolitan News Company