Metropolitan News-Enterprise


Friday, May 26, 2017


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Charter City May Not Extend Parking Tax to UC Campus, Court of Appeal Rules


By a MetNews Staff Writer


Home rule principles do not permit a charter city to extend its parking tax to campuses of the University of California and the California State University, the First District Court of Appeal ruled yesterday.     

Div. One yesterday affirmed a San Francisco Superior Court judge’s denial of a writ of mandate sought by San Francisco authorities. The city sought to compel UC San Francisco, Hastings College of the Law, and San Francisco State University to collect the city’s 25 percent parking tax from users of their lots.

The state Constitution’s broad grant of taxing and other powers to charter cities does not create an exception “to the long-recognized doctrine that exempts state entities from local regulation when they are performing governmental functions,” Presiding Justice Jim Humes wrote for the court. Justice Sandra Margulies concurred.

Justice Kathryn Banke dissented, agreeing with the city that because the tax is imposed on motorists using the parking lots, and not on the universities, the city may compel those entities to collect, account for, and remit the taxes.

Humes explained that the tax has been on the books for four decades. The relevant ordinance acknowledges that the state and its subdivisions are “exempt,” but requires them to “collect, report, and remit” the tax, pay any taxes that they fail to collect, comply with various administrative obligations, and file returns.

The universities have never complied, but Humes noted that an effort to collect from UCSF was dropped in 1983. In 2011, however, the city directed the universities to collect the tax, and sued when they refused.

In denying the writ, the trial judge ruled that the state was immune from the burdens imposed by the ordinance, and had not waived the immunity. Operating parking facilities, the judge held, was in each instance critical to the educational mission.”

Humes agreed, citing Hall v. City of Taft (1956) 47 Cal.2d 177.

The case holds that when the state engages in “sovereign activities,” including building construction and maintenance, “it is not subject to local regulations unless the Constitution says it is or the Legislature has consented to such regulation.”

Humes rejected the city’s argument that the ordinance taxes parking, not education, and thus does not impair a sovereign function.

“We reject San Francisco’s cramped view that the universities’ governmental role is to provide education but nothing related to it,” he wrote. “To be sure, we agree with San Francisco that an activity is not necessarily governmental just because it generates revenue used to support a state entity’s purpose....But operating university parking lots is not simply a revenue-generating endeavor; it is an activity that directly supports the universities’ educational and clinical functions by enabling students, staff, and visitors to access university programs and facilities.”

Banke, dissenting, cited several cases holding that state instrumentalities may be required to collect and remit a tax or fee imposed on members of the public, including a utility users tax, and an occupancy tax imposed on users of a conference center in a state park. A city may also require employers, including the state, to collect a “local privilege tax” from all employees working within its boundaries, she noted.

“I do not see how, for example, water districts can continue to be required to collect local utility taxes on users of water and sewer services in the wake of the majority’s opinion, unless these districts agree to do so,” she wrote.

Humes, however, responded that there is a distinction between a proprietary activity, such as providing water and sewer services, and a sovereign one, such as providing education.

“Unlike the dissent, we do not consider the law in this area to be in a state of disarray, and we see no need to craft a judicial exception to the doctrine,” he wrote. “While there may be a value in having state entities collect and remit charter-city taxes, the doctrine incorporates readily available methods to implement any such value:  state entities can voluntarily collect and remit those taxes, or the Legislature can tell them they must.”

The case is City and County of San Francisco v. Regents of the University of California, A144500.


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