California Court of Appeal Clarifies "Uniformity" Requirement for School Parcel Taxes
January 2024
Number 2
The California Court of Appeal recently upheld a parcel tax structure as approved by the voters in the Alameda Unified School District (District). In Traiman v. Alameda Unified School District (2023) 94 Cal.App.5th 89, the Appellate Court clarified the “uniformity” requirement for school district qualified special taxes.
Background
In March of 2020, the District’s voters approved, by the requisite two-thirds vote, a new parcel tax to fund increased salaries for teachers and staff (Measure A). Measure A authorized a tax on improved parcels within the District’s boundaries, at a rate of 26 cents per building square foot, capped at $7,999 per year on any given parcel.
California school district parcel taxes are subject to rather narrow statutory and constitutional frameworks under State law. One key legal requirement is that these taxes must “apply uniformly to all taxpayers or all real property within the school district.” Courts have previously interpreted this so-called uniformity requirement as a prohibition on “tiered rate” tax structures—those which tax different uses of property at different rates (residential vs. commercial, for example).
Soon after being approved by the voters, the District’s Measure A parcel tax was challenged in a “reverse validation action.” The plaintiff argued that Measure A violated the uniformity requirement by placing a cap of $7,999 annually per taxed parcel. The trial court agreed with the plaintiff that the cap had the effect of a tiered tax, because properties large enough to meet the cap enjoyed a lower rate outcome, while properties small enough to stay below the cap were therefor effectively taxed at a higher rate. The District appealed the decision of the trial court.
Court of Appeal Reversal
No facts regarding Measure A’s tax structure were in dispute. The parties’ arguments instead centered on the meaning of the uniformity requirement: whether the uniformity requirement is satisfied when, as here, the tax structure is uniformly applied but results in a different tax burden for properties depending on size.
The Court of Appeal pointed, by way of analogy, to the common and allowed flat, per-parcel tax structure. If one were to take a flat tax, and calculate it as a rate based on parcel size or improvement square footage, each parcel could then be said to be paying a different rate of tax. In this way, the court made clear that the appropriate question is uniformity in application, as opposed to uniformity in result. Ultimately, because all improved parcels were subject to the same formula (including the per-parcel cap), the court found Measure A did not violate the uniformity requirement.
Takeaways
This case is “win” not just for California school districts, but for a variety of other local agencies which have similar statutory restrictions on voter-approved special tax measures. The decision here confirms and protects a small corner of flexibility and local control left to school districts and their voters, in an area dense with restrictions and pitfalls. The ability to include a not-to-exceed amount in a local tax measure may help drive local support, because local taxes must be carefully crafted with both local funding needs and voter sentiment in mind.
If you have any questions about this case, other requirements around local tax measures, or any other public finance questions, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcasts, follow us on Facebook, Twitter and LinkedIn or download our mobile app.
Number 2
The California Court of Appeal recently upheld a parcel tax structure as approved by the voters in the Alameda Unified School District (District). In Traiman v. Alameda Unified School District (2023) 94 Cal.App.5th 89, the Appellate Court clarified the “uniformity” requirement for school district qualified special taxes.
Background
In March of 2020, the District’s voters approved, by the requisite two-thirds vote, a new parcel tax to fund increased salaries for teachers and staff (Measure A). Measure A authorized a tax on improved parcels within the District’s boundaries, at a rate of 26 cents per building square foot, capped at $7,999 per year on any given parcel.
California school district parcel taxes are subject to rather narrow statutory and constitutional frameworks under State law. One key legal requirement is that these taxes must “apply uniformly to all taxpayers or all real property within the school district.” Courts have previously interpreted this so-called uniformity requirement as a prohibition on “tiered rate” tax structures—those which tax different uses of property at different rates (residential vs. commercial, for example).
Soon after being approved by the voters, the District’s Measure A parcel tax was challenged in a “reverse validation action.” The plaintiff argued that Measure A violated the uniformity requirement by placing a cap of $7,999 annually per taxed parcel. The trial court agreed with the plaintiff that the cap had the effect of a tiered tax, because properties large enough to meet the cap enjoyed a lower rate outcome, while properties small enough to stay below the cap were therefor effectively taxed at a higher rate. The District appealed the decision of the trial court.
Court of Appeal Reversal
No facts regarding Measure A’s tax structure were in dispute. The parties’ arguments instead centered on the meaning of the uniformity requirement: whether the uniformity requirement is satisfied when, as here, the tax structure is uniformly applied but results in a different tax burden for properties depending on size.
The Court of Appeal pointed, by way of analogy, to the common and allowed flat, per-parcel tax structure. If one were to take a flat tax, and calculate it as a rate based on parcel size or improvement square footage, each parcel could then be said to be paying a different rate of tax. In this way, the court made clear that the appropriate question is uniformity in application, as opposed to uniformity in result. Ultimately, because all improved parcels were subject to the same formula (including the per-parcel cap), the court found Measure A did not violate the uniformity requirement.
Takeaways
This case is “win” not just for California school districts, but for a variety of other local agencies which have similar statutory restrictions on voter-approved special tax measures. The decision here confirms and protects a small corner of flexibility and local control left to school districts and their voters, in an area dense with restrictions and pitfalls. The ability to include a not-to-exceed amount in a local tax measure may help drive local support, because local taxes must be carefully crafted with both local funding needs and voter sentiment in mind.
If you have any questions about this case, other requirements around local tax measures, or any other public finance questions, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcasts, follow us on Facebook, Twitter and LinkedIn or download our mobile app.
As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.
