Court of Appeal Grants Re-Hearing for School District’s Parcel Tax Case

January 9, 2013 | Bulletin No. 1017699.2

Below is a summary of the court of appeal’s initial decision in Borikas v. Alameda Unified School District, which was filed on December 6, 2012.  However, please note that the appellate court has subsequently granted a petition of rehearing.  KMTG is following this case and will provide information as it becomes available.


Please see our updated Legal Alert for the most recent discussion on this case, "UPDATE: After Rehearing, Court Of Appeal Upholds Its Previous Parcel Tax Ruling", March 18, 2013.


School district voters approved a parcel tax that imposes different tax rates on residential parcels and commercial and industrial parcels based on their size.  The court of appeal held that the school district did not have the authority to impose a special tax that classifies and differentially taxes property within the district.  (Borikas v. Alameda Unified School District (--- Cal.Rptr.3d ----, Cal.App. 1 Dist., December 6, 2012); re-hearing granted January 7, 2013.)


Alameda Unified School District (“District”) voters approved Measure H in June 2008.  Measure H taxes non-exempt residential parcels and commercial and industrial parcels less than 2,000 square feet at $120 per year.  Commercial and industrial parcels greater than 2,000 square feet are taxed $0.15 per square foot but there is a maximum tax of $9,500 per year that may be imposed.  There are two exemptions from the Measure H tax:  Owners of single family residential units (1) who are 65 years of age or older and who live on the property as their principal residence, or (2) those who receive Supplemental Security Income for disability, regardless of age, who live on the property.  Measure H has a severability clause that provides if a portion of the measure “is, for any reason, held to be unconstitutional, illegal or invalid, such decision shall not affect or impair the validity of the remaining portions of this measure.”  

George J. Borikas (“Borikas”) filed a lawsuit in which he sought to have the special tax authorized by Measure H declared invalid.  The trial court found in favor of the District.  The court of appeal reversed the trial court in part and held that a tiered-rate parcel tax was invalid to the extent that it differentially taxed parcels.  The District filed a petition for rehearing, which was granted by the court of appeal on January 7, 2013.  We will keep you updated as the case progresses.

Decision of the Court of Appeal

The court of appeal on December 6, 2012 held “Measure H’s property classifications and differential tax burdens exceed the District’s taxing authority under [Government Code] section 50079” and reversed in part the trial court’s judgment in favor of the District.  Section 50079 authorizes school districts to levy “qualified special taxes,” which are defined by the statute as “taxes that apply uniformly to all taxpayers or all real property within the school district, except that ‘qualified special taxes’ may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age.”  (Gov. Code, § 50079, subd. (b)(1).)

Section 50079 was “enacted in the wake of Proposition 62, a statewide initiative approved by California voters in 1986 and aimed at closing perceived loopholes in Proposition 13.”  Proposition 13 dramatically changed local and state tax structures and mandated that any new or increased special tax proposed by a special district, city, or county, must be approved by a two-thirds vote of the local electorate.  Proposition 13 also prohibited a special district, city, or county from imposing a new special tax unless expressly authorized by the Legislature to do so.  Proposition 62, a constitutional initiative, added a new article to the Government Code, which provides there are two kinds of taxes, general and special.  Special taxes are defined as taxes that are imposed for a specific purpose.  “A general tax must be authorized by a two-thirds vote of the legislative body of the taxing entity, but can be approved by only a majority of the local voters.”  In contrast, a “[a] special tax may be authorized by a majority vote of the legislative body of the local taxing entity, but must be approved by a two-thirds majority of local voters.”   

Neither Proposition 62 nor Proposition 13 may be construed to authorize a local district or government from imposing a general or special tax that it is not otherwise authorized to impose.  Government Code section 50079 authorizes school districts to impose “qualified special taxes.”  The term “qualified special taxes” does not “include special taxes imposed on a particular class of property or taxpayers.”  Borikas argued that section 50079’s language that “qualified special taxes” are “taxes that apply uniformly to all taxpayers or all real property within the school district” means that “all taxpayers and all real property must be treated the same, and school districts are not empowered to treat different kinds of taxpayers, and different kinds of real property, differently.” 

Although section 50079 provides for an exemption for taxpayers 65 years of age or older or persons receiving Supplement Security Income for a disability, section 50079.1, which addresses community college districts, provides no such exemptions for seniors or disabled persons.  Also, section 50079.1 authorizes a “community college district to classify real property as ‘improved’ and ‘unimproved’ and to tax unimproved property at ‘a lower rate.’” 

Borikas asserts that section 50079.1’s express authorization “to classify and differentially tax real property makes clear that the common language in question—that a special tax must ‘apply uniformly to all taxpayers or all real property within the district’—is language of limitation and does not, itself, authorize local districts to classify and differentially tax taxpayers or property.”  The court found that if there were any doubt that the language of section 50079 does not authorize the classification and differential taxation of taxpayers and property by school districts, that doubt is dispelled by section 50079.1’s language.  Section 50079.1 does not include senior or disabled taxpayer exemptions but does include language that expressly allows community college districts to classify and differentially tax real property. 

The court concluded that when the Legislature included the definitional language in section 50079, it intended the language to be that of limitation to which it made certain, limited exceptions.  A qualified special tax imposed by a school district must “apply uniformly to all taxpayers or all real property within the school district” except in regard to certain senior and disabled taxpayers.  The court of appeal concluded that Measure H exceeded the bounds of taxing power delegated to school districts by the Legislature in section 50079 because it imposes different tax rates on commercial/industrial properties over 2,000 square feet. 

However, because Measure H contains a severability clause, the court concluded that the trial court’s judgment should only be reversed in part.  The court severed the higher tax on non-residential parcels from the rest of Measure H’s provisions.  The court found Measure H’s exemptions for some senior and disabled taxpayers, those who own and reside in single family units, do not exceed the statutory authority provided by section 50079.  The court of appeal directed the trial court to enter judgment declaring Measure H’s special tax invalid “to the extent it imposes a tax other than $120 per parcel, unless the parcel is exempt from the special tax under the provisions of the measure, in which case, no tax may be imposed.”

What This Means To You

The initial appellate decision held that a special tax is invalid where it imposes differential tax rates based on the taxpayer or parcel.  In this case, the court initially found that the District had violated Government Code section 50079 where the District’s Measure H taxed residential taxpayers at $120 per parcel per year and commercial and industrial parcels on a per square foot basis (not to exceed $9,500 per year).  According to the court, treating residential and commercial parcels differently when applying a qualified special tax violates the provision that taxes apply uniformly to all taxpayers or all real property within the school district, except where exempted. 

However, the court of appeal has granted the District’s petition for rehearing.  KMTG will follow this case and provide an update to our Legal Alerts as this case proceeds in the appellate process.


If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Brett L. Price | 661.864.3800

Christian M. Keiner or Meghan Covert Russell | 916.321.4500