In August the school board, in the wake of the Borikas v. Alameda Unified School District decision, decided to preemptively and unilaterally make major changes to the parcel tax.
According to a statement from Superintendent Roberson in August, “The District desires to implement Measure E in accordance with the intent of the voters and consistent with current legal requirements. As a result, the District has decided to implement Measure E in a way that is consistent with Borikas by levying one uniform rate for all parcels of taxable real property.”
“The District is being proactive in implementing Measure E in accordance with the intent of the Davis school district voters and the recent legal requirements imposed by the Borikas decision,” board President Sheila Allen told the Vanguard in August.
On Thursday night, Board President Sheila Allen read a press release indicating that the board had reach a settlement agreement with plaintiff Jose Granda, among others.
“The DJUSD Board voted unanimously to settle the Measure E parcel tax lawsuit. This settlement results in the validation of Measure E as previously modified by the board on August 15, 2013,” Ms. Allen read. “This settlement also ends the litigation and enables the district to move forward with implementing the programs to be funded by Measure E as approved by the voters in 2012.”
“Following the passage by the voters, on March 6, 2013, the California Court of Appeals issued a published decision in the case of Borikas v. Alameda Unified School District,” the district’s statement said. “Borikas interpreted the statute authorizing school district parcel taxes by among other things holding that parcel taxes had to be assessed at a uniform rate for all types of parcels. The Borikas decision became final on June 12, 2013 following the California Supreme Court’s denial of review.”
“As a result of the finalization of the Borikas decision, the Davis Board unilaterally took action to bring Measure E into compliance with its holdings. This settlement reflects the plaintiffs agreement that the measure is now in compliance with Borikas,” Sheila Allen read. “This settlement agreement terminates the litigation and will result in a judgment validating Measure E as modified by the board. The district is pleased this matter could be resolved and that Measure E can now be implemented according to the will of the voters to support the District’s Educational programs.”
In addition to agreeing to establish a uniform parcel tax rate of $204 for all types of parcels, the district has also agreed to pay $70,000 in attorney fees.
We believe that the board acted rashly and without proper justification in making these changes. Measure E contains a severability clause: “Should any part of the measure be found by a court of competent jurisdiction to be invalid for any reason, all remaining parts of the measure or taxing formula hereof shall remain in full force and effect to the fullest extent allowed by law.”
That severability clause means that Measure E was never in trouble. It was never in danger of being invalidated. That clause limited exposure for the district in this lawsuit. Worst scenario, Judge Maguire would have ruled that the school district violated the constitution in its differential assessment of multiunit housing versus single-family units, and would have ordered the district to go back and fix it as they have today.
But if that is the worst case scenario – why do it now, absent a court order? The similarities between Davis’s parcel tax and Alameda’s are not nearly as close as one might think.
The 2008 Alameda parcel tax levied a four-year emergency tax at $120 per residential parcel and 15 cents per square foot for commercial/industrial parcels. That is a very different circumstance to what happened in Davis.
Think about this – you now have a single family home paying $204 and you have apartment complexes, some with over 100 units, rather than paying $20 per unit, paying the same flat $204 fee as the single family home.
In the case of Alameda, there was not a clear rationale for needing to distinguish between residential and commercial. In this case, you are attempting to create a relatively equitable situation, where you account for the large numbers of units.
Given the low risk, it was at least worth testing to see if the Borikas decision applies to Davis’ situation or if it was only a reflection of the unique character of the Alameda parcel tax.
Now the question is what the fiscal impact will be on this decision. With dozens of large apartment complexes in the city, we face losing substantial amounts of money, as every dwelling with more than 10 units ends up being a net loss now to the district.
People, misunderstanding what a parcel tax is, have argued that renters in multi-unit properties should pay the same rate as others. This decision by the school board actually moves things in the opposite direction. Those who live in duplexes will pay more, but it means that owners of large apartment complexes will pay the same $204 rate as those who own their homes.
That is $204 total, not $204 per unit. That means instead of $204 dollars per unit, anyone in an apartment complex of 10 units or more will pay far less per year.
What is the fiscal impact of that on the district? We don’t know for sure.
The worst part is that, absent legislation that at least now seems unlikely, we are now stuck. We did not test the Borikas decision to see if it applies to Davis’ parcel tax, so now we can never differentiate between single family dwellings and multifamily dwellings.
The district has screwed up here – they needed to test this decision in the courts to see if they could go forward with differential rates. They had very little – other than legal expenses – to lose by doing so. There was no overall risk to the overall parcel tax.
Should the district put the matter back on the ballot? It does not matter now. The public is going to support the parcel tax, however it is framed. 69% of the voters supported it last time, the district has had significant support, and we do not see that changing.
That said, the district has now made what we have seen as a string of bad decisions – this only being the latest one. We don’t know what would have happened had the case gone forward, but given the severability clause and the likely impact on the school district, we believe the district should have taken that chance.
—David M. Greenwald reporting