California Appellate Court Strikes Down Tiburon Assessment District
In 1996, the California voters adopted Proposition 218, the Right to Vote on Taxes Act. Among other things, it requires that a special assessment may only be imposed for a “special benefit” conferred on a property – it cannot be imposed for “general benefits” received by the public at large. Furthermore, assessments must be formulated so that each parcel in the assessment district pays an amount that is in proportion to the benefit it receives.
Tiburon created a special assessment district to pay for the cost of undergrounding utility lines. Property owners in the district challenged the assessment as failing to meet the requirements of Proposition 218.
The court agreed for the following reasons:
1. Assessments must be based on relative benefit received by a parcel, not on the cost of providing the benefit to the parcel.
Tiburon divided the costs of the project unevenly between several zones within the district which resulted in some property owners paying a higher assessment for a similar benefit.
The court held that this method violates Proposition 218: “The critical inquiry . . . concerns the special benefits conferred on the property. Properties that receive the same proportionate special benefit pay the same assessment, without regard to variations in the cost of construction among the properties.”
2. No property that receives special benefit may be excluded from the assessment district.
Tiburon excluded certain parcels from the district even though they benefited from the project. The court held that this violates the requirement of proportional assessments for all the benefitted parcels (in effect, the parcels in the district are subsidizing those that are not).
While the court acknowledged that “Any attempt to classify special benefits conferred on particular properties and to assign relative weights to those benefits will necessarily involve some degree of imprecision.” However, the court felt that the problem with Tiburon’s district was not imprecision but inconsistent application.
For the entire text of the case, click here.
