San Diegans for Open Government challenges legality of assessment districts in a June 12 lawsuit
City must find legal justification for assessments or else might be on the hook for millions in refunds.
Some property and business owners say assessment districts are the perfect tool to revitalize and promote their neighborhoods. Others say they are often mismanaged and are an illegal way for municipalities to get more bang in regards to public services for less buck.
Soon, we will see how a San Diego Superior Court Judge views them.
In a new legal complaint, government advocacy group, San Diegans for Open Government questions the legality of another type of assessment district, the Business Improvement District. The first was filed last year and dealt specifically with property-based assessments.
Despite the separate lawsuits, San Diegans for Open Government wants one question answered: Is an "assessment" is just a convenient word for "tax"?
And, if so, then the districts, all 68 or so of them in the City are illegal.
"This lawsuit challenges Defendants' authorization of a variety of "tax" levies and collections —euphemistically labeled "assessments" by Defendants in order to avoid public scrutiny-without first obtaining the requisite approval ofthe voters of the City of San Diego. The illegal tax scheme received final approval on or about May 24, 2013, in order to generate revenues for what are commonly known as Business Improvement Districts ("BIDs") for Fiscal Year 2013-14, the proceeds of which are used to fund the activities of the BIDs under management agreements between Defendants and third-party contractors.
In the complaint, Cory Briggs, attorney for San Diegans for Open Government, writes that the districts violate Proposition 26, a 2010 amendment to the California Constitution that prohibits municipalities from enacting taxes without voter approval unless that money pays for "specific" benefits for property owners.
Briggs wants the court to consider council's recent approval of budgets for the assessment districts a violation to the California Constitution. He is also asking for "injunctive relief prohibiting Defendants from taking any action to levy, collect, or spend any ofthe taxes authorized by the BID Resolutions," and to refund property owners all assessments levied and collected by the City.
The complaint shouldn't come as a big surprise to elected officials or proponents of any type of assessment districts whether they be a maintenance assessment district, a Business Improvement District, or a PBID.
In 2007, a group of Golden Hill and South Park residents sued the City over their assessment district. After a long, protracted legal battle, the residents prevailed. The judge ruled that the vote was improperly weighted and that there was no real distinction between "specific" benefits for property owners and "general" benefits for non-paying members of the public.
Despite the ruling, elected officials, developers, and property owners continue to push for the formation of assessment districts.
In Barrio Logan, an assessment was levied with only 44 percent support (see my article from April 25 for more.) The proponents of the so-called "community benefit district were mostly landowners or developers such as Kevin McCook from Shea Properties or low-income housing developer, MAAC. In all, only 14 landowners were responsible for 70 percent of the weighted vote.
And there are more to come. On June 5, big-time developer Sudberry Properties asked members of the Public Safety and Neighborhood Services Committee to get the ball rolling on a new maintenance assessment district for their 4,780 unit mixed-use development, Civita, in Mission Valley. If approved, the assessment will help pay for upkeep on roads and streetlights.This, despite the developer having just got the ball rolling on the first phase of construction and despite the fact that there are only 21 property owners, Sudberry Properties, of course, being one.
But as city officials continue to discuss the formation of new assessment districts, the City Attorney's Office will be looking at ways to defend the legality of them.
If they are unable to do so, then the City might be on the hook for millions of dollars in refunds.
Click here to read the entire complaint:
story has been changed to include the complaint's focus on BIDs. I apologize for the error.
More like this:
- Pretty slick, City — Aug. 28, 2014
- City can’t drag its heels any longer — May 17, 2014
- Downtown San Diego Partnership threatened with lawsuit if it does not provide accounting of assessment district funds — July 24, 2013
- Downtown San Diego Partnership's new business model; paid for by residents and business owners — Oct. 10, 2012
- Watchdog group questions the legality of maintenance assessment districts in a new lawsuit against the City of San Diego — Sept. 27, 2012