Metropolitan News-Enterprise

 

Tuesday, December 21, 2021

 

Page 1

 

California Supreme Court:

City Council’s Public Hearing Was Not Mandated ‘Remedy’

Property Owners Are Not Barred From Suing to Establish Invalidity of Assessments Based on Failure

To Protest Proposed Ordinances to Continue Existence of Two Business Improvement Districts

 

Above is Angeles Plaza, a low-cost housing development for seniors two blocks south of the Stanley Mosk Courthouse in downtown Los Angeles. The owner is not foreclosed from contesting the legality of assessments by the Downtown Center Business Improvement District notwithstanding that it did not articulate opposition, orally or in writing, in connection with the Los Angeles City Council’s enactment of an ordinance continuing the existence of the district.

 

By a MetNews Staff Writer

 

The opportunity to protest the proposed reestablishment of business improvement districts, orally or in writing in connection with the Los Angeles City Council’s public hearing did not constitute a remedy that had to be exhausted as a prerequisite to mounting a court challenge to assessments by those districts, the California Supreme Court held yesterday.

“The purported remedy here is just too thin, and the policy justifications for demanding exhaustion too weak, to insist that petitioners have presented their objections as public comments in order to secure their evaluation in court,” Chief districts Justice Tani Cantil-Sakauye said in an opinion for a unanimous court.

Los Angeles Superior Court Judge Mitchell L. Beckloff in October 2018, rejected, on the merits, writ challenges to ordinances extending the existence of the downtown Los Angeles and the San Pedro business improvement districts (“BID”s). The challenges were based on purported violations of state constitutional requirements created by Proposition 218, approved by voters on Nov. 5, 1996, creating the “Right to Vote on Taxes Act.”

Div. One of the Court of Appeal for this district in June of last year affirmed the writ denials on the basis of the failure of Hill RHF Housing Partners, L.P., Hill Olive Housing Partners, L.P., and Mesa RHF Partners—which operate low-cost housing projects for seniors—to voice objections, orally or in writing, to the proposed ordinances at public hearings.

Chaney’s Opinion

Simply by voting “no” to the continued establishment of BIDs in districts where they had businesses, the petitioners maintained, they had exhausted their remedies. Applying traditional rules relating to the exhaustion requirement, Div. One’s Justice Victoria Chaney wrote:

“For just a ‘no’ vote in the context of the remedies the statute provides to constitute exhaustion would frustrate the purpose of the exhaustion doctrine….

“Exhaustion of administrative remedies is not a pro forma exercise….

“Exhaustion of administrative remedies in this context requires nothing more of a property owner than submitting a ballot opposing the assessment and presenting to the agency at the designated public hearing the specific reasons for its objection to the establishment of a BID in a manner the agency can consider and either incorporate into its decision or decline to act on. The administrative procedure outlined in the Constitution and the Government Code allows property owners to do that either orally or in writing at a public hearing….”

Cantil-Sakauye’s View

Rejecting that reasoning, the chief justice said:

“The opportunity to comment on a proposed BID does not involve the sort of ‘clearly defined machinery for the submission, evaluation and resolution of complaints by aggrieved parties’ that has allowed us to infer an exhaustion requirement in other contexts. Furthermore, the Court of Appeal’s exhaustion analysis does not find support in the policy rationales that inform the exhaustion doctrine nor in the intentions behind Proposition 218. These considerations lead us to hold that petitioners need not have raised their specific objections to the BIDs at the public hearings in order to subsequently advance these arguments in court.”

She went on to explain:

“[U]nless there is clear legislative direction to the contrary, a process proffered as an administrative remedy does not have to be exhausted when its dispute resolution procedures are so meager that it cannot fairly be regarded as a remedy at all….When the relevant extrajudicial procedures are so clearly wanting, the exhaustion rule does not come into play because it has been determined there is no genuine remedy to exhaust….

“A court may regard a given extrajudicial procedure as insufficient to justify application of the exhaustion rule in a particular case, or class of cases, without going further and determining whether the process can ever be regarded as an administrative remedy.”

Action Not Required

Noting that public comments must be received but need not be responded to, Cantil-Sakauye said there is no basis for inferring an intent on the part of voters or legislators in providing, under Proposition, for the right of commenting on proposed assessments to erect such as a remedy that had to be exhausted as a prerequire to suing.

“If anything, the limited nature of the procedures involved here points toward the opposite conclusion: that objections to a BID proposal such as those raised by petitioners need not be articulated at the appropriate public hearing as a prerequisite to their becoming the subjects of suit,” she wrote.

The matter was remanded to the Court of Appeal to address the merits of the challenges to assessments by the Downtown Center Business Improvement District and the San Pedro Historic Waterfront Property and Business Improvement District.

The case is Hill RHF Housing Partners, L.P. v. City of Los Angeles, 2021 S.O.S. 6661.

Attorneys on appeal were Timothy D. Reuben, Stephen L. Raucher and Michael T. Gluk of the West Los Angeles firm of Reuben Raucher & Blum for the petitioners and Deputy Los Angeles City Attorney Daniel M. Whitley for the city.

 

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