Schools look for legislative fix of ruling invalidating tiered parcel taxes

Advocates for public schools are looking for help from the Legislature to blunt the impact of a ruling earlier this month jeopardizing a number of parcel tax measures supporting districts statewide.

The First District Court of Appeal in San Francisco invalidated a 2008 parcel tax put before voters by Alameda Unified because it levied a higher rate on large business properties than it did on residential and small commercial enterprises.

In the ruling released Dec. 6, the three-judge panel said the authority that school districts have to propose a parcel tax requires that the tax rate be uniform for each parcel.

If the ruling is allowed to stand, said attorney Jeffrey Kuhn of the Lozano Smith law firm, it could jeopardize the standing of similar tiered parcel tax measures approved in other school districts - some of which go back more than a decade.

Alameda Unified has until the middle of next month to decide whether to appeal the ruling to the state Supreme Court - meanwhile, Kuhn said, his office along with the California School Boards Association and the California Association of School Business Officers are in conversations with legislators about adopting some clarifying language.

It was previously understood that these tiered-rate structures complied with state law requiring that such taxes typically must apply uniformly to all taxpayers or all property within the school districts, under the principles of tax law," Kuhn and law clerk Aria Link wrote in a recent client news brief.

"Since each type of parcel would pay the same tax, school districts have taken the position that there is adequate uniformity to comply with the statutory requirements."

But the ruling in the Alameda case put into question all tiered-rate parcel taxes because they do not apply uniformly.

The tax in question, Measure H, taxes residential or small commercial properties at $120 annually, but set a rate of 15 cents per square foot up to a maximum of $9,500 per year on commercial properties larger than 2,000 square feet.

The justices found for the plaintiff - a property owner within the district - saying that the language used in crafting the empowering state law used "plain language" that was careful to also be "of limitation."

They said schools were "not empowered to classify taxpayers and property and impose different tax rates."

As a result, the district faces a court order to return taxes collected that exceeded the $120 per parcel standards.

The concern that attorney Kuhn has raised is that a number of other districts might also be forced to return millions of dollars in taxes collected over the years.

As a result, school officials are looking for a legislative fix.

Laurie Weidner, spokeswoman for the CSBA said the organization is in support of tiered parcel tax measures and is engaged in talking to several legislative offices about the importance of this provision to school districts.

One option is State Constitutional Amendment 3, a measure authored by senators Mark Leno, D-San Francisco, Jerry Hill, D-South San Francisco, and Fran Pavley, D-Agora Hills. If approved by two-thirds of the legislature, the proposal would place on the statewide ballot in 2014 a constitutional amendment lowering the threshold for passage of parcel taxes for schools from two-thirds majority to 55 percent.

So far, the measure does not include language addressing the tiered tax issue. Another option being considered would be to run a separate bill that specifically legalizes the practice.