Metropolitan News-Enterprise


Monday, August 4, 2014


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San Diego’s Special Hotel Tax Levy Held to Be Unconstitutional

Court of Appeal Says City Attempted to Circumvent Propositions 13, 218


By a MetNews Staff Writer


The Court of Appeal held on Friday that a 2012 election to authorize the levying of a special tax by the City of San Diego violated the California Constitution, as the city did not submit it for approval by two-thirds of the qualified electors in the district.

Div. One of the Fourth District determined that the city had attempted to circumvent the requirements imposed by Propositions 13 and 218, which require any special tax, or extension or increase of tax, to be submitted to the electorate and approved by a two-thirds vote.

The proposal was for special tax, based on a percentage of hotel room revenues, to fund bonds which would finance construction and rehabilitation of the San Diego Convention Center.

Rather than submitting the question to all of the city’s registered voters, the city passed an ordinance creating a Convention Center Facilities District, defining the electorate as consisting solely of the owners of real property in the city on which a hotel is located, and the lessees of real property owned by a governmental entity on which a hotel is located.

Proposition 13, enacted by voters in 1978, amends the state Constitution by providing: “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district.”

Proposition 218, enacted in 1996, added: “No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”

Trial Court Decision

San Diego Superior Court Judge Ronald S. Prager held that the special tax election met constitutional requirements, finding merit with city’s argument that the ordinance was consistent with state legislation defining qualified electors for purposes of “community facilities districts.” Enacted in 1986, the Mello-Roos Act provides:

 “[A] local government shall submit the question of whether to levy a special tax to fund a community facilities district to the qualified electors of the proposed community facilities district, and the local governments may utilize a landowner voting format if the special tax will not be apportioned on ‘residential property’.”

The Court of Appeal rejected that argument.

“Giving Landowners the unilateral right to determine how to apportion the benefits that would flow from a tax whose burdens may well fall on others would be contrary to both the Constitution and ordinary principles of taxation,” Justice Cynthia Aaron wrote.

Aaron said the election was invalid under the California Constitution because such landowners and lessees were not what was intended by the wording “qualified electors.”

She rejected the city’s argument that “the appropriate qualified electors to approve or reject the…special tax were those ‘landowners’ that will have to pay it.”

City’s View Rejected

Aaron wrote:

 “There are several problems with this contention. To begin with, regardless of any policy merits of having only Landowners vote on the special tax, our state Constitution mandates that qualified electors and the electorate approve the imposition of special taxes. If the voters who adopted Propositions 13 and 218 had desired that only qualified property owners be permitted to vote on the imposition of special taxes, they were clearly aware of the text to use to evince such intent.”

She went on to say:

“The voters who enacted Proposition 218 reasonably believed that the general electorate should be the body to decide how to apportion the benefits and burdens of taxes, both general and special … since the benefits of such taxation would accrue to the general public and the burdens could fall, at least in part, upon those who would not benefit.”

The case is City of San Diego v. Shapiro, D063997.


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