The First District Court of Appeal ruled December 31 that the town of
Tiburon violated the state constitution by enacting an assessment that
outweighed the benefits received by property owners who were forced to pay. The
assessment, enacted to fund a major project to move utility lines underground,
"violate the proportionality requirement of article XIII D," the
court found.
Property owners who appealed the assessment "are entitled to a writ
of mandate invalidating the assessments and vacating the Town's resolution
creating the Supplemental District," the court ruled in Town of Tiburon v. Jimmie D. Bonander (A11918).
The case involved a "supplemental assessment district"
approved by Tiburon property owners after projected costs of an undergrounding
effort increased so much that the original assessment district could not cover
the expenses. Once all expenses were accounted for, the project was determined
to be $3.18 million over the original budget of $4.72 million. The money was to
be paid by parcel owners based on the benefit received from the project. (The
legality of the original assessment district also has been challenged by Mr. Bonander, but that case has not yet been decided.)
To determine the amount to be paid by parcel owners, the town used three
"zones of benefit" in which construction costs were calculated
separately. As a result of the cost-based apportionment system, owners of
single-family residences with similar benefits for aesthetics, safety and
service reliability would pay drastically different amounts based on their
location. A parcel on West Hawthorne Drive was assessed $7,740, one in the Del
Mar Valley Area was assessed $14,812, and a similar parcel on Hacienda Drive
was assessed $20,331.
The court ruled that "the assessment scheme suffers from two
infirmities that result in assessments that are disproportionate to special
benefits." First, the apportionment method "is largely based on cost
considerations rather than proportional special benefits." Secondly,
properties within the supplemental district were required to pay for special
benefits conferred upon parcels that were excluded from the district.
"If a property receiving a special benefit is excluded from the
assessment district, then the assessments on properties included in the
district will necessarily exceed the proportional special benefit conferred on
those properties," the court ruled. In this case, two cul-de-sacs were
exempted from the district, but the court said they received the same special
benefits as parcel on similar streets within the district. Also, some of the
parcels included in the district already had underground utility lines, but
were assessed for the benefit of other nearby lines being moved underground.
The flaws "are simply too great to disregard as mere
'imperfections,'" the court stated.
Because the court found that the assessment violated the state constitution,
the justices concluded that "we need not reach the other arguments
appellants raise." Those arguments included claims that Tiburon officials
unfairly affect the vote by misleading property owners into believing that
assessments would be deductible from income taxes, and that the town agreed to
pay for a school district's proposed assessment in exchange for the district
abstaining from voting its 10 parcels against the supplemental district.
The ruling dealt only with the supplemental district. The First District
noted that its decision "may have a bearing" on the lawsuit over the
original assessment district "to the extent that litigation remains
pending and raises the proportionality issue that is dispositive in this
appeal."
Presiding Justice William McGuiness wrote the decision. Justices Peter Siggins and Martin Jenkins concurred.
Cal-Taxletter, January 8, 2010
© 2010 California Taxpayers' Association. All Rights
Reserved.