Opinion
Review Granted Aug. 16, 1990.
Review Granted Previously published at: 228 Cal.App.3d 906, 235 Cal.App.3d 134
Opinions on pages 46-280 omitted.
REVIEWS GRANTED. [Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted] COUNSEL
[269 Cal.Rptr. 148] Marilyn L. Garcia, Brobeck, Phleger & Harrison, John J. Wasilczyk and Earle Miller, Los Angeles, for appellant.
Hill, Farrer & Burrill, William M. Bitting, Kevin H. Brogan and Dean E. Dennis, Los Angeles, for intervenors.
Bird, Marella, Boxer, Wolpert & Matz, Vincent J. Marella, Dorothy Wolpert and Mark T. Drooks, Los Angeles, for respondent.
OPINION
COMPTON, Associate Justice.
The Southern California Rapid Transit District (SCRTD) initiated this action to validate two special benefit assessment districts created to fund a portion of the cost of the first 4.4 mile segment of the Los Angeles Metro Rail rapid transit system. Revenue collected from these districts eventually will be used to repay bonds the SCRTD intends to sell pursuant to resolutions adopted by its Board of Directors (Board). Helen Bolen, the Secretary of the SCRTD, refused, however, to certify those resolutions on the ground that the statutory scheme (Pub.Util.Code, §§ 33000, et seq.) authorizing the creation of the districts was constitutionally infirm and that, in any event, the Board had not complied with the law in imposing the assessments. Several corporations and individuals who own or lease real property located within the assessment districts subsequently intervened in the action.
After finding that the districts had been validly created and that there was no other impediment to the issuance of the bonds, the trial court granted a writ of mandate directing Bolen to certify the Board's resolutions. This appeal follows. We reverse.
Named as appellants on this appeal are Bolen, in her capacity as Secretary of the SCRTD, and intervenors, The Atchison, Topeka and Santa Fe Railway Company, et al.
The facts giving rise to this litigation are not in dispute. The SCRTD is a rapid transit district created in 1964 by the California Legislature pursuant to Public Utilities Code sections 30100 and 30101. Connecting four counties and servicing some 80 cities in Los Angeles County alone, the SCRTD has virtual autonomy in self-governance, limited only by the regulations of the Public Utilities Commission. (Los Angeles Met. Transit Authority v. Public Util. Com. (1963) 59 Cal.2d 863, 868-869, 31 Cal.Rptr. 463, 382 P.2d 583; Rapid Transit Advocates, Inc. v. Southern Cal. Rapid Transit Dist. (1986) 185 Cal.App.3d 996, 1000, 230 Cal.Rptr. 225.) Formed both [269 Cal.Rptr. 149] as a public agency and a public corporation (§§ 30007 and 30101), it has its own board of directors, with powers to make contracts, employ a police force, acquire and construct rights of ways, rail lines, incur indebtedness, exercise eminent domain, and levy and collect taxes. (§§ 30005, 30200, 30502, 30503, 30504, 30530, and 30701.) The declared purpose of the SCRTD is to create " a comprehensive mass rapid transit system in the southern California area, and particularly in Los Angeles County" that will lessen traffic congestion and " foster the development of trade and the movement of people in and around the Los Angeles area for the benefit of the entire state." (§ 30001, sub. (a).)
All further statutory references are to the Public Utilities Code unless otherwise indicated.
In keeping with its statutory mandate, the SCRTD, in 1979, proposed the construction of Metro Rail, a 18.6-mile subway line between downtown Los Angeles and North Hollywood. To finance the project's multi-billion dollar cost, the transit district sought funding from a variety of sources, including the Urban Mass. Transit Administration (UMTA), an agency of the federal government. Initially, UMTA committed its financial support. A change in federal policy and a concomitant reduction in available funds, however, later forced it to withdraw from the project. In hopes of securing at least some federal funding the SCRTD proposed an alternative plan, designated MOS-1 for Minimum Operable Segment-1, consisting of the first 4.4 miles of the 18.6-mile system extending from Union Station in downtown Los Angeles to Wilshire and Alvarado Boulevards on the outskirts of the central business district . The SCRTD estimated the cost of that project at $1.25 billion. After determining that the plan would provide " a viable contribution to the greater Los Angeles urban transportation infrastructure," the UMTA signed a full funding contract with the SCRTD, agreeing to release an initial $225 million for the construction of MOS-1.
As planned, the complete trip from Union Station to Wilshire and Alvarado will take approximately seven minutes with stops at the Los Angeles Civic Center, 5th and Hill Streets, and 7th and Flower Streets. Today, that same trip takes one-half hour by automobile at peak hours of travel.
Although federal grants under the Urban Mass. Transportation Act of 1964 eventually will total in excess of $695 million, receipt of those funds is conditioned on the availability of non-federal financing from the state, other local governmental entities, and the private sector.
The State of California, through the California Transportation Commission, has committed $214 million over a period of seven years as its portion of the funding for MOS-1 and Los Angeles County, through its transportation commission, has pledged $177 million. The City of Los Angeles will contribute $34 million to the project, with the remainder of the cost, approximately $130 million, to be derived from the planned issuance of tax exempt bonds secured by special benefit assessments on certain real property located along the route of the system.
In 1983, the state Legislature enacted a series of amendments to the Public Utilities Code, commencing with section 33000, that authorized the SCRTD to form special benefit assessment districts in the vicinities of proposed rail stations. Under this legislation, the SCRTD Board may, after conducting public hearings, estimate the benefit to a district from the operations of the local stations, levy assessments in proportion to those benefits, and issue bonds repayable through the special assessments.
Similar legislation, enacted in 1968 as the " Mills Act" (§§ 99000, et seq.), granted rapid transit districts throughout the state the authority to form special assessment districts in the vicinity of transit stations for the purpose of funding any bonded indebtedness. To our knowledge, however, these provisions never have been utilized.
Section 33000, subdivision (b) provides in pertinent part that the Board is " the conclusive judge of the proportion of special and general benefits produced by the facilities and of the distribution of the special benefits among parcels of property within the benefit assessment district." Moreover, [269 Cal.Rptr. 150] section 33002 declares in no uncertain terms that the special assessments imposed on real property within a district do not " constitute ad valorem taxes or any other form of general tax levy...."
The sole means to protest the formation of a special assessment district is by referendum election. Property owners are entitled to an election only if they file a petition, signed by owners of at least 25% of the assessed value of real property within the district, not later than 30 days after the conclusion of the SCRTD's public hearings on the issue. (§§ 33002.2, 33002.5.) The only voters who may participate in that election are the owners of real property subject to the assessment. (§ 33002.3.) Each voter may cast one vote for each $1,000 worth of land and improvements owned by the voter according to the most recent equalized assessment roll. (§ 33002.3.) The Board may levy the assessment only if the majority of votes cast in the election approves of the district. (§ 33002.8.)
Beginning in 1984, the SCRTD undertook to establish two special assessment districts in the central business area of Los Angeles to finance a portion of the cost of MOS-1. In July 1984, the Board appointed a Benefit Assessment Policy Task Force (BATF) to develop recommendations for structuring the district and implementing the assessment. The BATF, composed of community leaders and various representatives from the proposed districts, submitted its initial recommendations to the Board in December 1985. The study essentially found that the property within the recommended district boundaries would benefit from the operation of the planned MOS-1 stations through increased land values, lease rates, occupancy levels, retail sales, visitor access, reduced parking costs, and the ability to develop land more intensively. The BATF also found that all of these benefits were attributable to increased pedestrian traffic, and thus, principally confined to areas within walking distance of the transit stations.
In December 1984, the SCRTD Board adopted a resolution which, in accordance with the BATF's recommendations, proposed the creation of two special assessment districts, one covering real property within one-half mile of the four Metro Rail Stations to be located in the central business area, and one covering real property within one-third mile of the Wilshire/Alvarado station. The resolution further proposed to exempt residential uses, as well as certain classes of tax exempt property, and to impose initial assessment rates from $.28 per square foot graduating to $.40 as a maximum rate.
As required under section 33001.5, the Board conducted a public hearing on the proposal and, in February 1985, passed a resolution to proceed with the formation of the districts. The resolution also increased the initial rate of the assessment to $.30 per square foot of the greater of land or improvements, set the maximum rate at $.42 per square foot, and provided that the assessments would terminate in the year 2008 or earlier. Under this plan, all property subject to assessment within the districts would be assessed at the same rate, regardless of its current use, zoning classifications, value or distance from the Metro Rail stations.
The resolution provided that the assessment rates would be applicable to all " assessable" parcels and improvements in the districts. " Assessable improvements" were defined as improvements used for office, hotel, motel, commercial and retail purposes. All parcels are " assessable" unless specifically exempt. The resolution exempted three types of property from the assessment: property used for residential purposes (other than hotels and motels), property that is both publicly owned and used for a public purpose, and property that is both owned and used by specified non-profit organizations.
In accordance with the procedures set forth in section 33001.5, subdivision (b), the Board submitted the resolution to the Los Angeles City Council for approval, modification, or disapproval. After conducting a public hearing on the issue in May 1985, the Council approved the plan, subject to the condition that all residential property within the districts be exempt from the [269 Cal.Rptr. 151] assessment , and returned the matter to the SCRTD for final approval or rejection. (§ 33001.5, subd. (b).) In July 1985, the Board passed a resolution creating Special Assessment Districts A-1 (the Central Business District) and A-2 (Wilshire/Alvarado) and placing a limit on total assessments from the two districts of $130.3 million plus administrative expenses. One year later, in August 1986, the Board instructed the general manager of the SCRTD to levy the assessments at the uniform rate of $.30 per square foot. Assessment bills were sent to commercial property owners within the districts in October and November 1986. The Board, however, later elected to defer collection of the assessments until 1992.
This condition apparently was mandated by section 427 of the Los Angeles City Charter, which provides in pertinent part as follows:
Following a public hearing in May 1987, the Board adopted two resolutions authorizing the sale of revenue bonds in an amount up to $200 million. Bolen, in her capacity as Secretary of the SCRTD, refused to certify the vote on these resolutions as required by law, contending that the assessment scheme did not meet constitutional standards, that there was no special benefit to the properties within the districts, and that the SCRTD had failed to comply with various statutory requirements.
The issuance of District A-1 and District A-2 bonds was not to exceed $187 million and $13 million, respectively.
In response, the SCRTD sought a writ of mandate in superior court to compel Bolen to certify the resolutions and thus allow the sale of the bonds to proceed. By stipulation of the parties, intervenors subsequently joined the action also to contest the formation of the districts and the imposition of the assessments. After a lengthy hearing, the trial court rejected each of the arguments advanced by Bolen and intervenors and issued the writ.
On this appeal, the parties advance numerous arguments in opposition to and in support of the constitutionality of the statutory scheme authorizing the creation of the assessment districts. Both Bolen and intervenors (appellants) maintain that they are not opposed to Metro Rail, but merely the manner in which the assessments have been formulated and levied solely on the commercial property owners within the districts. The SCRTD counters that the assessments have been fairly imposed on those who will benefit the most from the project and that every effort has been made to include both the property owners and the public at large in the decision making process.
The transit district asserts that the attack on the assessment districts is nothing more than a thinly disguised political assault on the legislative determination to construct Metro Rail in the first instance.
Despite these differences, the parties seem to agree on the importance of the issues raised by these proceedings, especially in terms of their impact on the future of the project as a whole. The SCRTD suggests, not too subtly, that without the monies made available by the imposition of the assessments the federal government will withdraw its participation, thus leading to the project's ultimate demise for lack of adequate funding.
In reviewing these issues, we think it important to emphasize at the outset that we do not consider or weigh the economic or social wisdom or general propriety of the statutory scheme enacted by the Legislature, or of the decision to construct Metro Rail in the first instance. Our sole function is to evaluate the legislation in light of established constitutional standards. [269 Cal.Rptr. 152] (Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, 816, 258 Cal.Rptr. 161, 771 P.2d 1247; Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 219, 149 Cal.Rptr. 239, 583 P.2d 1281.)
The first of the constitutional challenges raised here is directed at the petition and election procedures mandated by section 33002.2, et seq. Appellants contend that these procedures violate the equal protection clauses of both the state and federal Constitutions by invidiously discriminating against those who do not own property within the districts but are nonetheless affected by the construction of a large-scale mass transportation project such as Metro Rail.
In support of their argument, appellants point out that although such groups as commercial tenants will bear the brunt of the assessments because of standard " pass through" clauses in their lease agreements, they are given no voice in the decision making process. The same is said to be true of other residents, both within and without the districts, who will be impacted by the project but are denied the right to vote.
Section 33002.3, subdivision (a) defines " voter" as " an owner of real property which is assessed or proposed to be assessed under this chapter and which is within the boundaries of the benefit district."
Appellants further contend that there is a denial of equal protection because of the discriminatory manner in which the statutory scheme distinguishes between the allocation of votes and the amount of an assessment.
Section 33002.3, subdivision (b) allocates voting strength based upon the value of the property so that " each voter ... may cast one vote for each one thousand dollars ($1,000), or fraction thereof, worth of land or improvements owned by the voter ... as shown on the most recent equalized assessment roll." At the same time, however, assessments are calculated on the basis of parcel size or floor area. (§ 33002, subd. (a).)
Section 33002, subdivision (a) provides: " In determining the amount of a special benefit assessment, the board may measure the benefit to real property in the benefit district or zones therein by the parcel area of unimproved real property and by the parcel area and the floor area of real property and improvements thereto of improved real property, as deemed appropriate by a resolution adopted by a two-thirds vote of the members of the board."
Appellants insist that this classification scheme is flawed because property owners with the most votes do not necessarily pay the highest assessments. The absence of any relationship between votes awarded and the assessment paid is made more onerous, at least according to appellants, because under article XIII A of the California Constitution (i.e., Proposition 13) there is no longer any correlation between market value and assessed value. As a result, the statutory scheme purportedly awards more votes to many properties less valuable than others, but more recently reassessed.
In reviewing these claims, we start with the proposition that the federal Constitution grants the states " broad powers to determine the conditions under which the right of suffrage may be exercised." (Lassiter v. Northampton Election Bd. (1959) 360 U.S. 45, 50, 79 S.Ct. 985, 989, 3 L.Ed.2d 1072.) But " once the franchise is granted to the electorate, lines may not be drawn which are inconsistent with the Equal Protection Clause of the Fourteenth Amendment." (Harper v. Virginia Bd. of Elections (1966) 383 U.S. 663, 665, 86 S.Ct. 1079, 1081, 16 L.Ed.2d 169.)
When a state excludes citizens from the electorate, it generally must justify the exclusion under the harsh " compelling state interest" test. (Hadley v. Junior College District (1970) 397 U.S. 50, 59, 90 S.Ct. 791, 796, 25 L.Ed.2d 45; Choudhry v. Free (1976) 17 Cal.3d 660, 664, 131 Cal.Rptr. 654, 552 P.2d 438.) Under that standard, the state bears the burden of establishing not only that it has a compelling interest which justifies the law but that the distinctions drawn by the law are necessary to further its purpose. (Curtis v. Board of Supervisors (1972) 7 Cal.3d 942, 104 Cal.Rptr. 297, 501 P.2d 537; see also [269 Cal.Rptr. 153] Serrano v. Priest (1971) 5 Cal.3d 584, 597, 96 Cal.Rptr. 601, 487 P.2d 1241; Westbrook v. Mihaly (1970) 2 Cal.3d 765, 784-785, 87 Cal.Rptr. 839, 471 P.2d 487.)
Although not every legislative voting classification is subject to strict scrutiny, the compelling interest test must be applied if a classification has a " ‘ real and appreciable impact’ upon the equality, fairness and integrity of the electoral process." (Choudhry v. Free, supra, 17 Cal.3d at p. 664, 131 Cal.Rptr. 654, 552 P.2d 438, citing Bullock v. Carter (1972) 405 U.S. 134, 144, 92 S.Ct. 849, 856, 31 L.Ed.2d 92.)
Applying the strict scrutiny standard, the United States Supreme Court has invalidated requirements of property ownership for voters in a school district election (Kramer v. Union School District (1969) 395 U.S. 621, 632, 89 S.Ct. 1886, 1892, 23 L.Ed.2d 583), as well as elections to approve the issuance of bonds for the construction of a city library (Hill v. Stone (1975) 421 U.S. 289, 297, 95 S.Ct. 1637, 1643, 44 L.Ed.2d 172), revenue bonds for the use of a municipal utility district (Cipriano v. City of Houma (1969) 395 U.S. 701, 705-706, 89 S.Ct. 1897, 1900-1901, 23 L.Ed.2d 647), and general obligation bonds to finance municipal improvements (Phoenix v. Kolodziejski (1970) 399 U.S. 204, 90 S.Ct. 1990, 26 L.Ed.2d 523). The California Supreme Court has applied a similar standard in striking down statutes which allowed only landowners to vote on local governmental measures. (See Fullerton Joint Union High School Dist v. State Bd. of Education (1982) 32 Cal.3d 779, 187 Cal.Rptr. 398, 654 P.2d 168; [269 Cal.Rptr. 154] Choudhry v. Free, supra, 17 Cal.3d 660, 131 Cal.Rptr. 654, 552 P.2d 438; Curtis v. Board of Supervisors, supra, 7 Cal.3d 942, 104 Cal.Rptr. 297, 501 P.2d 537; Burrey v. Embarcadero Mun. Improvement Dist. (1971) 5 Cal.3d 671, 97 Cal.Rptr. 203, 488 P.2d 395.)
In Kramer, the court considered a voter qualification statute that limited eligibility to vote in local school board elections to owners or lessees of taxable real property within the district, or their spouses, and to parents or guardians with children enrolled in a district school. The district argued that the state had a legitimate interest in limiting the district elections to those " primarily interested in such elections," and that it could " reasonably and permissibly" conclude that property taxpayers and parents of school children were those who were primarily interested. The court held that even if such a purpose was constitutionally legitimate, the statute's system of classification was not precisely tailored to accomplish it. The classification was over-inclusive in that it included many persons tangentially interested in school affairs and under-inclusive in that it excluded many persons with a substantial interest in decisions affecting education. In so concluding, the court made it clear that the fact that the district was financed by revenue derived from a property tax did not mean that the impact of the assessment ultimately affected only property owners or lessees.
In Cipriano, the court extended its Kramer analysis to a Louisiana statute which allowed only landowners to vote in a revenue bond election called to finance the operations of a city's utility system. As in Kramer, the city argued that property owners held a " ‘ special pecuniary interest’ in the election, because the efficiency of the utility system directly affect[ed] ‘ property and property values' and thus ‘ the basic security of their investment in [their] property [was] at stake.’ " (Id., 395 U.S. at p. 704, 89 S.Ct. at p. 1899.) Without deciding whether or not the franchise could be restricted to those " primarily interested," the court found that the statutory scheme did not fulfill the city's articulated goal since those excluded had as much interest in the outcome of the election as those the statute included. This conclusion was based on the fact that both property owners and nonproperty owners used the services of the utility, paid for its operations, and benefited by the projects financed by its revenues.
In Kolodziejski, the court invalidated an Arizona constitutional and statutory scheme which permitted only real property taxpayers to vote on the issuance of municipal general obligation bonds. Unlike Cipriano, where the bonds and the interest were to be paid wholly by the revenues of the facility being financed, in Kolodziejski property tax revenues were to be used to repay the bonded indebtedness and interest on such indebtedness. The city asserted that a special burden had been placed on property taxpayers for the benefit of the entire community, and that this burden was unsharable and unshiftable, resulting in the equivalent of a lien on all real property within the city. While acknowledging that the interests of property owners were somewhat different from the interests of nonproperty owners, the Supreme Court found that the interests of nonproperty owners were not substantially less than those included within the grant of the franchise. It pointed out that all residents of the city, property owners and nonproperty owners alike, had an interest in the services and facilities financed by the bonds and would be " substantially affected by the ultimate outcome of the bond election...." (Id., 399 U.S. at p. 209, 90 S.Ct. at p. 1994.) Based upon this analysis, the court held that " [p]lacing such power in property owners alone can be justified only by some overriding interest of those owners that the State is entitled to recognize." (Ibid. )
The fundamental principle expressed in these decisions is that where a governmental decision subject to a referendum will have a substantial impact on all citizens, any classification restricting the franchise on grounds other than residence, age, and citizenship cannot stand unless supported by a compelling state interest.
As the court observed in Phoenix v. Kolodziejski, supra, 399 U.S. at p. 209, 90 S.Ct. at p. 1994, " when all citizens are affected in important ways by a governmental decision subject to a referendum, the Constitution does not permit weighted voting or the exclusion of otherwise qualified citizens from the franchise." In applying this rule, the court has held " that all voters have an important interest in the benefits of adequate service and favorable rates of a utility district (Cipriano), that both property owners and those who do not own property are called upon either directly or indirectly to pay for the improvements acquired from the proceeds of bonds (Phoenix, Hill), and that those who do not own property may have as direct an interest in school affairs (Kramer) or in a library (Hill) as those who do." (Choudhry v. Free, supra, 17 Cal.3d 660, 666, 131 Cal.Rptr. 654, 552 P.2d 438.)
In a line of cases beginning with Salyer Land Co. v. Tulare Water Dist. (1973) 410 U.S. 719, 93 S.Ct. 1224, 35 L.Ed.2d 659, however, the court carved out an exception to the strict scrutiny requirement and upheld property qualifications for voters in certain " special purpose" districts. (See also Ball v. James (1981) 451 U.S. 355, 101 S.Ct. 1811, 68 L.Ed.2d 150; Associated Enterprises, Inc. v. Toltec Watershed Improvement District (1973) 410 U.S. 743, 93 S.Ct. 1237, 35 L.Ed.2d 675.) Because these decisions are the only ones which permit this type of voter restriction, the arguments of the parties here focus largely on the applicability of Salyer and its progeny to the case before us.
The plaintiffs in Salyer challenged the voting scheme for the governing board of a California water storage district that extended the franchise only to landowners, with votes apportioned according to the assessed valuation of the land owned. The Supreme Court, after examining the nature of the services performed by the district, concluded that " by reason of its special limited purpose and of the disproportionate effect of its activities on landowners as a group" (Id., 410 U.S. at p. 728, 93 S.Ct. at p. 1229), the strict one person, one vote equal protection analysis advanced in Kramer and its progeny did not apply.
Critical to an understanding of Salyer is the factual setting of the case. The water district consisted of 193,000 acres, all of it agricultural land, 85% farmed by one or another of four corporations. It had a total population of 77 residents, 18 of whom were children. Assessments against landowners were the sole means of paying expenses of the district, so that landowners as a class bore the entire financial burden. Moreover, the reason for the district's existence and continued operation was to provide water for farming, and, as stressed by the court, the primary effect of its operations was upon agricultural lands. Although the district had the authority to undertake certain flood control activities, the court found these powers were incident to the exercise of its primary functions of water storage and distribution. The court specifically noted that the district provided " no other general public services such as schools, housing, transportation, utilities, roads, or anything else of the type ordinarily financed by a municipal body." (Salyer Land Co. v. Tulare Water Dist., supra, at pp. 729-730, 93 S.Ct. at pp. 1230-1231.)
Based on its " limited purpose" and the " disproportionate effect" of district operations on landowners, the Salyer court found it understandable that the " statutory framework for election of directors ... focuse[d] on the land benefited, rather than on people as such." (Ibid. )
[269 Cal.Rptr. 155] Tracing the development of equal protection analysis of apportionment and voter qualifications in local elections, the court observed that in cases invoking the rigid one person, one vote standard, the local entities there involved exercised " general governmental powers" or performed " important governmental functions." (Id. at p. 727, 93 S.Ct. at p. 1229.)
By distinguishing the water storage district from the governmental entities involved in Kramer and its progeny, the court explicitly denied the applicability of a strict standard of review and relied solely upon the less stringent rational relation test to uphold the voting scheme. In its search for a rational justification for the disenfranchisement of lessees and other residents, the court found several reasons, including the need to attract landowner support for the formation and operation of the district, the avoidance of possible ballot manipulation, and problems of voting administration.
The Supreme Court reaffirmed its position in Ball v. James, supra, 451 U.S. 355, 101 S.Ct. 1811, which upheld an Arizona state law permitting only landowners to vote for directors of a water storage and distribution district. As in Salyer, the court found that the district did not exercise crucial government powers. Moreover, the district's water functions, which constituted the primary and originating purpose of the district, were held to be narrow.
Unlike Salyer, the case before us involves a matter of substantial interest to property owners and nonproperty owners alike. It is beyond question that the development of a mass rapid transit system is crucial to the orderly and efficient growth of any metropolitan area. This is particularly true in Los Angeles where the dreams of elevated monorails and underground subways have eluded municipal planners for decades. Once described as " six suburbs in search of a city," Los Angeles today is a vast megalopolis encircled by a web of crowded city streets and congested freeways.
Given the dramatic growth of the area in recent years, it is no wonder that the establishment of an integrated mass transit system has taken on so much importance. In recognition of the need for expanded transportation services that can assume part of the load of the private automobile, existing bus lines, and proliferating freeways, the SCRTD proposed Metro Rail.
Whether that project will fulfill the promise of its promoters is a question open to considerable debate. Be that as it may, there can be little doubt but that its financing, construction and operation will impact all segments of the population.
As we see it, public transportation, like public education, is an issue affecting all citizens. (Cf. Kramer v. Union School District, supra, 395 U.S. 621, 89 S.Ct. 1886.) The Legislature itself recognized the statewide importance of the Metro Rail project, proclaiming that it is " in the best interest of the citizens of the state to authorize the Southern California Rapid Transit District to levy special benefit assessments for needed public rail rapid transit facilities and services." (§ 33000.) " There is an imperative need," the statute declares, " for a comprehensive mass rapid transit system in the Southern California area, and particularly Los Angeles County." (Ibid. )
Viewed in light of these legislative expressions of intent, we think it clear that the issues raised here involve the basic governmental function of providing mass transportation and affect all who live, work, and visit the area.
These concerns are substantially different from the ones which led the court in Salyer to uphold an election scheme which impacted only one segment of a " special" water storage district.
Nonlandowners share an equal interest with landowners in the creation of a mass transit system that, when completed, will stretch some 19 miles and link together such diverse areas as downtown Los Angeles [269 Cal.Rptr. 156] and the San Fernando Valley. The nonproperty owning residents of the MOS-1 districts are no less interested in the results of an election called to validate the assessments imposed by the SCRTD than were the voters whose exclusion from the franchise was invalidated in Kramer, Cipriano, and Kolodziejski.
If a voter who does not own property cannot constitutionally be excluded from voting on bonds to be used by a municipal utility district (Cipriano) or on city general obligation bonds (Kolodziejski) a fortiori, he may not be deprived of the right to petition for and vote in an election to authorize the formation of a special assessment district, the revenue of which will be used to partially finance the construction of a mass transit system.
This is especially true since the ultimate social and economic cost of the MOS-1 project falls on property owners and nonproperty owners alike. The funding of Metro Rail has substantial implications throughout the community, not just among the property owners of the assessment districts.
On this point, we agree with one commentator who has observed: " Because a special assessment will not finance the entire cost of a rapid transit system, part of the financing burden is likely to fall on nonlandowning persons inside the assessment district in the form of general property taxes, sales taxes and similar measures. In addition to this financing burden, nonlandowners within the district will have an interest in the proposed transit system's impact on their neighborhood from an economic and aesthetic perspective. In sum, excluding nonlandowner special district residents from voting on the rapid transit assessment proposal appears to exclude persons with a sufficient constitutional interest in the election to merit the franchise." (Rapid Transit Financing: Use of the Special Assessment (1977) 29 Stan.L.Rev. 795, 809-810.)
According to the SCRTD, however, the state is justified in recognizing the unique interests of real property owners in the districts because they alone bear the burden of the special assessments. This is true, we are told, because unlike the general obligation bonds in Kolodziejski or the revenue bonds in Cipriano, a failure to pay the special assessment creates a lien on the property within the districts (§ 33017). We must disagree.
In Kolodziejski, the Supreme Court set forth three reasons why nonproperty owners were as substantially interested as property owners in the city's issuance of general obligation bonds. The court first pointed out that, regardless of how the debt on the bonds was serviced, nonproperty owners were significantly affected. If the bonds were to be serviced out of the city's general revenues, all taxpayers would share the burdens. And, even if the debt were to be totally serviced by property tax revenues, the court found that " a significant part of the ultimate burden of each year's tax on rental property will very likely be borne by the tenant rather than the landlord since ... the landlord will treat the property tax as a business expense and normally will be able to pass all or a large part of this cost on to the tenants in the form of higher rent." (Phoenix v. Kolodziejski, supra, 399 U.S. 204, 210, 90 S.Ct. 1990, 1994.) Second, the court noted that any adverse effect caused by higher property taxes would be offset, at least in substantial part, by the increase in property values resulting from the improvements financed by the tax itself. On this point, the court further stressed that " the price of real estate appears to be more a function of the health of the local economy than a reflection of the level of property taxes imposed to finance municipal improvements." (Id. at p. 212, 90 S.Ct. at p. 1995.) Third, the court found that, short of a total collapse of the city's economy, there was no foreseeable way in which the bond obligation could become an unshiftable burden resulting in the forfeiture of property.
All three factors which influenced the court in Kolodziejski to require participation among property owners and nonproperty owners, are present in the special assessment election at issue here. The record in the instant case makes it clear [269 Cal.Rptr. 157] that the actual burden of paying the assessments imposed by the SCRTD will, to a great extent, be borne by commercial tenants by virtue of " pass-through" clauses in their leases.
Moreover, any adverse effects caused by the imposition of the assessment will be offset by a concomitant increase in property values caused by the construction of the MOS-1 project itself. Indeed, the very definition of the term " special assessment" presupposes that there will be some benefit accruing to property because of a public improvement project. Although a lien may be imposed for nonpayment of the assessment in the MOS-1 districts, the probability of property owners actually losing their property is too insubstantial to justify the statutory distinction between property and nonproperty owners. (See Gaines, The Right Of Non-Property Owners to Participate in a Special Assessment Majority Protest (1972-73) 20 UCLA L.Rev. 201, 230-232.)
A special assessment is commonly defined as " a charge imposed on particular real property for a local public improvement of direct benefit to that property." (Solvang Mun. Improvement Dist. v. Board of Supervisors (1980) 112 Cal.App.3d 545, 552, 169 Cal.Rptr. 391.)
Viewed in light of these considerations, we are convinced that the benefits and burdens of the SCRTD's assessment fall indiscriminately on property owner and nonproperty owner alike. As a result, there is no basis for concluding that nonproperty owners are substantially less interested in an election called to validate the assessment districts than are property owners.
Next, the SCRTD justifies the distinction drawn by the statutory scheme between votes awarded and assessment paid primarily on the basis of administrative convenience. It argues that had the Legislature not used a vote allocation scheme based on assessed value, it would have been forced to allocate a single vote to each property owner irrespective of the value or size of the property being assessed. This, it contends, would have been far more inequitable than the present system. We agree with appellants, however, that administrative difficulty is no excuse for fundamental unfairness. In fact, the argument advanced by the SCRTD rings somewhat hollow in light of the fact that in 1984, it sponsored legislation which would have allocated voting strength based on parcel area. Although the Legislature adopted this proposal, it subsequently was vetoed by the Governor on other grounds and never became law.
The legislation proposed by the SCRTD also contained an explicit exemption for residential property within the assessment districts which, according to our review of the legislative history of the measure, the Governor believed was unconstitutional.
In contrast to Salyer, the voting scheme at issue in this case does not accord the most votes to the property owner who must pay the largest assessment. Here, votes are calculated based on assessed value, but the assessment is based on parcel or floor area. Even under the less stringent rational basis test, there simply is no relationship whatsoever between votes awarded and assessment paid. The distinction drawn by the statutory scheme is made more egregious because, under Proposition 13, the true economic status of the property bears little relationship to the burden of the assessment. Under the circumstances, we must conclude that the distinction drawn by the Legislature between votes awarded and assessment paid does not pass constitutional muster. We also reject the argument that the Legislature was free to restrict the franchise in any way that it desired because special assessment elections are not constitutionally mandated. Although the state can deny the right to an election in a special assessment proceeding (Hoffman v. City of Red Bluff (1965) 63 Cal.2d 584, 594, 47 Cal.Rptr. 553, 407 P.2d 857; County of Riverside v. Whitlock (1972) 22 Cal.App.3d 863, 872, 99 Cal.Rptr. 710), it can grant it only in strict compliance with equal protection requirements. (Kramer v. Union School District, supra, 395 U.S. 621, 628-629, 89 S.Ct. 1886, 1890-1891.)
Neither property owners nor nonproperty owners in the MOS-1 districts may claim [269 Cal.Rptr. 158] a constitutional right to vote on whether or not the assessment districts should be formed; similarly, the plaintiffs in Kramer, Cipriano, and Kolodziejski could assert no federal constitutional right to vote on the matters at issue in those cases.
Once the right to vote is conferred, however, the equal protection clause requires that, in matters of general interest to the community, restriction of the franchise on grounds other than age, citizenship, and residence can be tolerated only upon proof that it furthers a compelling state interest. (Hill v. Stone, supra, 421 U.S. 289, 297, 95 S.Ct. 1637, 1643.) As we have discussed, ante, no such interest exists here.
Without reaching the issue, we note here that the restriction on the franchise contained in sections 33002.2, et seq. is in apparent conflict with section 22, article I of the California Constitution. That section states: " The right to vote or hold office may not be conditioned by a property qualification."
This brings us to the question of severability. Having found that the Legislature's restriction on the franchise constitutes a denial of equal protection, we must now determine whether the remainder of the statutory scheme falls with the invalid portion of the legislation. If the election provisions are not severable, then " the void part taints the remainder and the whole becomes a nullity." (In re Blaney (1947) 30 Cal.2d 643, 655, 184 P.2d 892; accord Santa Barbara Sch. Dist. v. Superior Court (1975) 13 Cal.3d 315, 330, 118 Cal.Rptr. 637, 530 P.2d 605.)
In considering this issue, we first note that the special assessment law set forth in sections 33000, et seq. contains no severability clause of its own. Such a clause does appear, however, in section 31520. Although not conclusive, a severability clause normally calls for sustaining the valid part of the enactment, especially when the invalid part is mechanically (i.e., grammatically) severable. (McCafferty v. Board of Supervisors (1969) 3 Cal.App.3d 190, 193, 83 Cal.Rptr. 229.)
Section 31520 provides:
There is no dispute in this case that the invalid portion of the statutory scheme is mechanically severable from the remainder. Sections 33002.2, et seq. are grammatically complete and distinct from the other provisions of the special assessment law.
The final determination depends on whether the remainder of the statute " ‘ is complete in itself and would have been adopted by the legislative body had the latter foreseen the partial invalidation of the statute.’ " (Santa Barbara Sch. Dist. v. Superior Court, supra, 13 Cal.3d at p. 331, 118 Cal.Rptr. 637, 530 P.2d 605; see also Sonoma County Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296, 320, 152 Cal.Rptr. 903, 591 P.2d 1.)
Section 31520 notwithstanding, we are convinced that the Legislature would not have enacted the special assessment law in this case without including some provision for a referendum election or other protest scheme. We reach that conclusion for several reasons.
First, we attach little weight to the general severability provisions of section 31520. That statute was enacted in 1964, some twenty years before the enactment of the special assessment legislation at issue here, and it contains no language indicating its applicability to subsequently added chapters. (Cf. Shouse v. Pierce County (1977 9th Cir.) 559 F.2d 1142.)
Shouse, heavily relied upon by the SCRTD, is not to the contrary. The severability clause in that case was included within the terms of the challenged legislation itself. Moreover, the Ninth Circuit expressly determined that the protest provisions at issue there were not an integral part of the statute and that the Washington State Legislature would have enacted the measure in any event. As we explain, infra, we reach a contrary result in this case.
[269 Cal.Rptr. 159] The presumption of severability which would attach had the Legislature considered the issue in 1983, simply does not exist in this instance.
One treatise sets forth the applicable rule as follows: " Although there are no measurable differences in effect between general separability acts and separability clauses in individual statutes, it is reasonable to infer that because a general act cannot control subsequent legislative intent and therefore is questionable evidence of it, less weight may attach to a general rule of separability than to a clause in a separate act." (Sutherland, Statutory Construction (4th ed. 1986), § 44.11.)
Second, and more importantly, the legislative history of sections 33000, et seq. makes it clear that the election provisions were a key inducement to the passage of the law. Although the early versions of the legislation did not allow for a referendum on the formation of the assessment districts, state Senator Diane Watson, the author of the bill (SB 1238), proposed the voting scheme eventually enacted as a direct limitation on the Board's authority.
This amendment, among others, apparently was designed to overcome considerable opposition to the bill as originally proposed. Viewed in this light, there can be little question but that the election provisions were integral to the ultimate passage of the legislation.
In a statement delivered April 27, 1983, before a Senate committee, Senator Watson observed: " SB 1238 authorizes the SCRTD Board of Directors to establish benefit assessment districts around Metro Rail stations when the land would receive special benefit by virtue of being near the station. The measure also authorizes the Board to issue bonds to be paid by the assessment. The benefit districts could be formed and the bonds issued without the necessity of holding an election. " (Emphasis added.)
Third, and lastly, although a special assessment may be imposed without any election whatsoever (see discussion, ante), our review of assessment legislation in this state demonstrates that some form of referendum or other protest scheme nearly always has been provided by law. (See e.g., Sts. & Hy.Code, §§ 5000, et seq., 8500, et seq., 10000, et seq., 22500, et seq.; Gov.Code, §§ 53311, et seq., 54703, et seq.; Pub.Util.Code, §§ 99000, et seq.) Given this history of loyalty to the electoral process, we seriously doubt that the Legislature would have enacted the assessment statutes in this case without some provision for voting rights.
Based upon the foregoing, we can only conclude that the election provisions of the statute are not separable from the remaining portions of the enactment, and that, as a result, the statutory scheme in its entirety must fall as unconstitutional.
Even were we to find no constitutional defect in the voting scheme enacted by the Legislature, we would be forced to hold that the SCRTD was without the authority to create an exemption for residential property. As we have noted earlier, the statutory scheme itself exempts neither residential uses nor property owned by non-profit organizations. It also contains no language permitting an administrative exemption of such property. Although legislation sponsored by the SCRTD in 1984 would have specifically excluded residential property from the assessment, the Governor ultimately vetoed the measure. (See discussion, ante. )
Lacking express statutory authority, the SCRTD could not fashion an exemption from the special assessment law for any class of persons or property. Over a half-century ago, our Supreme Court observed that " [e]xemption from local assessment should, even more than exemption from general taxation, be based on express statutory authority, for every such exemption increases the burdens of other property owners...." [269 Cal.Rptr. 160] (Hollywood Cemetery Assn. v. Powell (1930) 210 Cal. 121, 135, 291 P. 397; emphasis added.)
Only the Legislature possesses the power to exempt property from special taxation or local assessment. (14 McQuillin, Municipal Corporations (3d ed. rev. 1987), § 38.80.) Here, the statutory scheme vests the SCRTD with the authority only to create the special assessment districts and to levy the assessment on property benefited by its proximity to the Metro Rail stations. Under the circumstances, the administrative creation of an exemption for residential property constituted nothing more than an " end run" around the statute and the legislative process. We think it clear that the SCRTD may not do by administrative fiat what the Legislature was prevented from doing by the Governor's veto.
This is true even though the City of Los Angeles may have coerced the SCRTD into creating the exemption by the passage of an ordinance conditioning the city's multi-million dollar contribution to the MOS-1 project on the exclusion of residential property from the assessment. While the city may have possessed the authority to fashion such an exemption if it had been granted the power under the statute to levy the assessments in this first instance, the SCRTD most certainly did not.
Based upon the foregoing, we find it unnecessary to reach the other issues raised on this appeal. Although we express no opinion as to the wisdom or utility of the legislation creating the special assessment districts, well established constitutional principles require that we invalidate the law as presently enacted.
We recognize the necessity of permitting legislative experimentation to meet the often novel problems confronting local communities. This is particularly true in the case of a regional mass transportation system costing billions of dollars and affecting millions of people.
As this case illustrates, it is often difficult to decide when such experimentation and political compromise have resulted in an impermissible and unduly burdensome statutory scheme. We have no doubt, however, that the legislation at issue here cannot stand when measured against the applicable constitutional standards. The judgment is reversed. Appellants to recover costs on appeal.
ROTH, P.J., and GATES, J., concur.
The Mills Act and the special assessment law at issue in this case appear to be the first transit funding mechanism of their kind in the United States.
" ....
" (b) Neither the City Council nor any City board, commission, officer or employee in the exercise of any power or authority it may have shall authorize or approve any grant of funds for a rail transit project unless the district, agency or entity proposing to initiate or implement the project has first entered into a contract with the City which binds the district, agency or entity (1) to not levy any assessments on any property in residential use or under construction prior to April 9, 1985, ... and (2) to pay or fully refund to the payers thereof any assessments required by law to be levied thereon."
California courts have applied a similar analysis to elections concerning a recreation and park district (Simi Valley Recreation & Park Dist. v. Local Agency Formation Com. (1975) 51 Cal.App.3d 648, 124 Cal.Rptr. 635), a reclamation district (Philippart v. Hotchkiss Tract Reclamation Dist. 799 (1976) 54 Cal.App.3d 797, 127 Cal.Rptr. 42), and a small irrigation district (Schindler v. Palo Verde Irrigation Dist. (1969) 1 Cal.App.3d 831, 82 Cal.Rptr. 61).
" If any section, subsection, sentence, clause, or phrase of this part, or the application thereof to any person or circumstance, is for any reason held invalid, the validity of the remainder of this part, or the application of such provision to other persons or circumstances, shall not be affected thereby. The Legislature hereby declares that it would have passed this part, and each section, subsection, sentence, clause, and phrase thereof, irrespective of the fact that one or more sections, subsections, sentences, clauses or phrases, or the application thereof to any person or circumstance, be held invalid."
In a subsequent statement proposing an amendment to the bill, Senator Watson commented: " Under SB 1238, SCRTD could establish Benefit Assessment Districts around the Metro Rail stations.... [¶ ] My bill would also allow SCRTD to issue bonds to be paid by these assessments.... [¶ ] I have amended this bill to address several concerns which arose during policy committee. One of the amendments allows for an election to be held if property owners protest the assessment formula. Another amendment distinguishes this assessment from a tax, since these assessments would be based on parcel size and/or floor area." (Emphasis added.)