SAN BUENAVENTURA, CITY OF v. UNITED WATER CONSERVATION DISTRICTAmicus Curiae Brief of Great Oaks Water CompanyCal.November 23, 2015 QUODERED PALEY PADDY SUPREME COURT OUP LAL wail wur / veves FILED $226036 NOV 23 2015 Frank A. McGuire Clerk IN THE SUPREME COURT OF THE STATE OF CALIFORNIA Deputy CITY OF SANBUENAVENTURA, Plaintiff, Cross-Defendant, and Respondent/Cross-Appellant, VS. UNITED WATER CONSERVATIONDISTRICTAND BOARD OF DIRECTORS OF UNITED WATER CONSERVATIONDISTRICT, Defendants, Cross-Complainants, and Appellants/Cross Respondents. APPLICATION FOR LEAVETO FILE AMICUS CURIAE BRIEF AND BRIEF OFAMICUS CURIAE GREAT OAKS WATER COMPANYIN SUPPORT OF APPELLANTCITY OF SAN BUENAVENTURA After a Decision by the Second Appellate District, Division Six Case No. B251810 Reversing a Judgmentofthe Superior Court of Santa Barbara County Case Nos. VENCI-00401714 AND 1414739 Honorable Thomas P. Anderle, Judge Presiding JEFFREY §S. LAWSON ROBERTK.JOHNSON TIMOTHY S. GUSTER (SBN 99855) (SBN 61636) (SBN 250603) Silicon Valley Law OMAR F. JAMES Great Oaks Water Co. Group (SBN 69041) PO Box 23490 50 W. San Fernando St. Johnson & James, LLP San Jose, CA 95153 Suite 750 311 Bonita Drive Tel: (408) 227-9540 San Jose, CA 95113 PO Box 245 Fax: (408) 227-7126 Tel: (408) 573-5700 Aptos, CA 95001-0245 Fax: (408) 573-5701 Tel: (831) 688-8989 Fax: (831) 688-6232 COUNSEL FOR AMICUS CURIAE GREAT OAKS WATER COMPANY PECEIVED NOV 182015 ch ma ee “LCRK SUPRENTE a0) po | S226036 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA CITY OFSANBUENAVENTURA, Plaintiff, Cross-Defendant, and Respondent/Cross-Appellant, VS. UNITED WATER CONSERVATIONDISTRICTAND BOARD OF DIRECTORS OF UNITED WATER CONSERVATIONDISTRICT, Defendants, Cross-Complainants, and Appellants/Cross Respondents. APPLICATION FOR LEAVETO FILE AMICUS CURIAE BRIEF AND BRIEF OF AMICUS CURIAE GREAT OAKS WATER COMPANYIN SUPPORT OF APPELLANT CITY OF SAN BUENAVENTURA After a Decision by the Second Appellate District, Division Six Case No. B251810 Reversing a Judgment of the Superior Court of Santa Barbara County Case Nos. VENCI-00401714 AND 1414739 Honorable ThomasP. Anderle, Judge Presiding JEFFREY S. LAWSON ROBERTK.JOHNSON TIMOTHYS. GUSTER (SBN 99855) (SBN 61636) (SBN 250603) Silicon Valley Law OMAR F. JAMES Great Oaks Water Co. Group (SBN 69041) PO Box 23490 50 W. San Fernando St. Johnson & James, LLP San Jose, CA 95153 Suite 750 311 Bonita Drive Tel: (408) 227-9540 San Jose, CA 95113 PO Box 245 Fax: (408) 227-7126 Tel: (408) 573-5700 Aptos, CA 95001-0245 Fax: (408) 573-5701 Tel: (831) 688-8989 Fax: (831) 688-6232 COUNSEL FOR AMICUS CURIAE GREAT OAKS WATER COMPANY TABLE OF CONTENTS TABLE OF AUTHORITIES.............. cece cece sence ee nee ee eeeeaeees APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF OF AMICUS CURIAE GREAT OAKS WATER COMPANYIN SUPPORT OF APPELLANT CITY OF SAN BUENAVENTURA.........: cece ecens cece ee eee nent anne nee e eens eenes BRIEF OF AMICUS CURIAE GREAT OAKS WATER COMPANY IN SUPPORT OF APPELLANTCITY OF SAN BUENAVENTURA..........:cecccecee ee ee eee e ee nee nner ee tenet eee eenas I. THE GROUNDWATER CHARGEIS EITHER A FEE OR SPECIAL TAX IMPOSED AS AN INCIDENT OF PROPERTY OWNERSHIP..........:ceeceeeeee eee eet ee eee eee ene ennenneenneeeennnenenees A. THIS COURT SHOULD DETERMINE IF THE GROUNDWATERCHARGEIS AN EXCISE TAX ORFEE... B. THE GROUNDWATER CHARGEIS NOT A FEE WITHIN THE DEFINITION USED IN APARTMENT ASSOCIATION... .cccccccecceneene cece eee eee nnn nee e nee e ee enna nes C. THE GROUNDWATER CHARGE QUALIFIES AS A SPECIAL TAX WITHIN THE MEANINGOF ARTICLEXII D, § 3(a)(2) EVEN IF IT IS NOT AN EXCISE TAX............. D. THIS COURT SHOULD DETERMINE WHETHER THE GROUNDWATER CHARGEIS A SPECIAL TAX OR FEE WITHIN THE MEANINGOF ARTICLEXIII D.........-....... Il. BUENAVENTURA INCORRECTLY DETERMINES THAT THE GROUNDWATER CHARGEIS NOT IMPOSED AS AN INCIDENT OF PROPERTY OWNERSHIP........-.....65+ Ill. THE GROUNDWATER CHARGE CONSTITUTES A TAX UNDER PROPOSITION 26............cceseeeeee ene e recta eee eeeenees lili 13 18 19 22 25 A. THE CITY DOES NOT RECEIVE A SPECIFIC BENEFIT OR PRIVILEGE FROM RESPONDENTIN EXCHANGE FOR THE PAYMENT OF THE GROUNDWATER CHARGE.2.00... . ccc eceee eee cee teen eee ee ene ee ne nena ee ea eeeennes B. THE RESPONDENT’S GROUNDWATER CHARGE EXCEEDS THE REASONABLECOST OF THE SO- CALLED BENEFIT TO THE CITY.............. cece ee eneeees TV. CONCLUSION.......... 0c cece ees e cece eee ee renee eee n eee eee ee ennenias CERTIFICATION OF WORD COUNT.............:ccce cess eee en ee enes ii 25 29 31 32 TABLE OF AUTHORITIES Cases Apartment Ass'n ofLos Angeles County, Inc. v. City ofLos Angeles (2001) 24 Cal.4th 830 oo.ccscceseesscteeeessereneeecaeresecessaeecssevseeseersessaery 13 Buenaventura cites California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal.4th 421 oocesseetseteeeeereeees 29 City and County ofSan Francisco v Alameda County (1936) 5 Cal.2d 243 oo. cecscssceeesseceeesecessssseeesseesnseesseeeessensseesessers 17, 20 City and County ofSan Francisco v. Flying Dutchman Park, Inc. (2004) 122 Cal.App.4th 74 oo.cecececcessssessseesesesessesesesseeeeesesseseeseneeses 12 City ofBarstow v. Mojave Water Agency (2000) 23 Cal.4th 1224....... 16, 26 Edelstein v. City and County ofSan Francisco (2002) 29 Cal.4th 164... 20 Fisher v. City ofBerkeley, (1984) 37 Cal.3d 644 ....ccccccccssesesseereeseseeeees 19 Garden Water Corp. v. Fambrough (1966) 245 Cal.App.2d 324 ..........0.. 23 Great Oaks Water Company v. Santa Clara Valley Water District (2015) 235 Cal.App.4th 523; 185 Cal.Rptr.3d 621 ......ceeeeeeeseeees passim Greene v. Marin County Flood Control and Water Conservation Dist. (2010) 49 Cal4th 277 occ eccsesesseesesseeesessescsesnsseessseseseseaseeseseessesesseeeseneas 21 Howard Jarvis Taxpayers Ass'n v. City ofSalinas (2002) 98 Cal.App.4th 1351 oesecessesessesssscseenscesessssssesssseseseesseees 17 Howard Jarvis Taxpayers Ass'n v. City ofFresno (2005) 127 Cal.App.4th 914 ooocecccssessssseessseneesessesesseesseesessenesaees 14 Howard Jarvis Taxpayers Assn. v. City ofRoseville (2002) 97 CalApp.4th 637 .....cccccscsssesssseessesessseseseesesseenecsensesnseneteeees 29 Jolicoeur v. Mihaly (1971) 5 Cal.3d 565 oo... eeccsssscsssessessssessseenseesesseessees 20 Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496... 19 Nicoll v. Rudnick (2008) 160 Cal.App.4th 550.000... ccecseeseeseeesseteeees 16, 26 iii Orange County Water District v. Farnsworth (1956) 138 Cal.App.2d 518 occeeeicsseesseeseeseeeesteseeeseenes 10, 11, 12, 13 Pajaro Valley Water Mgmt. Agency v. Amrhein (2007) 150 Cal.App.4th 1364 occcseecssseseseeeeeneneeesecseneneseneenes 3, 10 Silicon Valley Taxpayers Ass’n, Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 444-445 ooeeenensens 1, 26, 29, 30 Sinclair Paint Co. v. State Bd. ofEqualization (1997) 15 Cal4th 866 occcccsscseseenenssesenesseseresnesesserecanes 10, 18, 21 Stanislaus Water Co. v. Bachman (1908) 152 Cal. 716 ....cceceeesseeseeeeees 16 Taye v. Coye (1994) 29 Cal.App.4th 1339... ccesssesescereeereneeeetsseeseeeees 20 Thomasv. City ofEast Palo Alto (1997) 53 Cal.-App.4th 1084........ 1, 12, 13 Trask v. Moore (1944) 24 Cal.2d 365, 370 ......cecccseessesseeereeeseteeeeteeeees 23, 24 Waterford Irr. Dist. v. Stanislaus County (1951) 102 Cal.App.2d 839 o...ccecsecccsssseeeeenecseeneesereseeetersseesees 16, 17, 26 Statutes California Rules of Court Rule 8.520(f) ..cccsscsccessececesseseseseeceesesesssssncseseessceesssessnsenseseseeesseressessnesesentes 1,8 Rule 8.520(£)(4), ..cccsccsceccsssesessessscsacsscseseressseeeeeaesessesserseesseessecssenesaseaseseeaees 8 California Water Code Appendix Chapter 60, § 26.7 (a)(3)(D).....:esseceee 5 Water Code § 75521] oo. ciceeecesssssssssesceessenesersnseessessseesesseersaceesesneennesey 18, 28 Water Code § 75522 o..cccccescescesscssssecsesenssesseeceeeseessaeseesseneeeneeranensesey 18, 27 Water Code § 75594 woeececeecsssesssssceesseseesensesseeeens beseeseenneneeenenanaeceeseeenas 5 Other Authorities Ballot Pamp., text of Prop. 218.0... ccesccsesesesecseeteeeetseeeasresnsteesenerseeanss 5, 20 Prop. 26, § 1, subds.(b),(c), (e), (f), reprinted at Historical Notes, 2B West's Ann. Cal. Codes (2013) foll. art. 13A, § 3, pp. 296—297............. 29 iv Constitutional Provisions Article XT] Aw...cet eeseseesessscssseenteceseneesseesteaeeceseceeeteacessaeesstecassenseasnesees 20, 30 Article XTII C v.....cecccescssssssesscesscessececesseesseesseesseesesseessscuacsesaeeesreseneesegs passim Article XIII C, § Lo..cececccesesscsseeeseseeeeesesasesceseeseseeseeseseeesessseeesseenesns 16, 30 Article XII] C, § 1.19 occcecesesserssecseeseesseseesseceassseeseressenseseestensesssenseeses 30 Article XIII Du... cccccccssssceessecssnsceeeeseeeresesseeecceseeseeeessnseeeeenseesnenaeens passim Artticle XIII D, § 2(€) ....ccceccssssseesserecessersesseeesseeeeseeseeesereeeneenerees 11, 12,17 Article XIII D, § 3(a)(2).....ceceeeeseesneeceteceeeseeseeesatesneesseeeeesesensesestanentaes passim Article XIII Dy, § 6.0... cc cceesesesseecsesssseeseereseerseseeseseseneesesensens 9, 11, 12, 24, 25 Article XIII D, §§ (b)(1) to (5)... eeeeeescesseeseessesesessaeeeaeeseeesoreeeeeneeneetanens 7 Article XID] A.u....cecccssssscscessescesseeeetecereccesssesssnesensesrseeseesseeseessessarseesseees 20, 30 PrOPOSitiON 26 .....ccscsesseseeesseseeeseteeeesseesetenenereetaetsessseatsnesesrenesseneeneesenes 25, 30 Proposition 218 ......cesessssessessssseseessesseesecscsseesecenseeeeeeeesnesaevenesereseaeens passim $226036 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA CITY OFSANBUENAVENTURA, Plaintiff, Cross-Defendant, and Respondent/Cross-Appellant, VS. UNITED WATER CONSERVATIONDISTRICTAND BOARD OF DIRECTORS OF UNITED WATER CONSERVATIONDISTRICT, Defendants, Cross-Complainants, and Appellants/Cross Respondents. APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF OF AMICUS CURIAE GREAT OAKS WATER COMPANYIN SUPPORT OF APPELLANT CITY OF SAN BUENAVENTURA Pursuant to Rule 8.520(f) of the California Rules of Court, Great Oaks Water Company,a California Corporation [“Great Oaks”] respectfully requests permission to file the attached Amicus Curiae Briefin City ofSan Buenaventura v. United Water Conservation District, State of California Supreme Court Case No. $226036 [“Buenaventura”].! I. GREAT OAKSHASA SUBSTANTIAL INTEREST IN THE UNDERLYING APPEAL. Great Oaksis an investor-owned water company regulated by the California Public Utilities Commission. Great Oaks produces groundwater from wells located on parcels of land owned byit, and provides water service to more than 20,000 residential, commercial and industrial service 1 Jn this application and attached proposed amicus brief, appellant City of San Buenaventurawill be referred to as “the City”or “appellant,” and respondent United Water Conservation District will be referred to as “respondent.” connections. Thetotal population served in Santa Clara County is nearly 100,000. Great Oaks provides its customers with waterservice at the lowest possible rates for a regulated waterutility. Great Oaks’ water rates include a usage charge based upon the volumeofwater used byits customers. The Santa Clara Valley WaterDistrict [District] imposes a per acre-foot (p.a.f) volumetric charge upon all produced? groundwater [“groundwater charge”]. The groundwater charge imposedby the District is substantially similar to the groundwater charge imposed by respondent. Great Oaks passes through the District’s groundwater charge to its customers. The groundwater charge accounts for more than 50% of a customer’s waterbill. Great Oaks hasa direct interest in this case because its outcome affects the validity of the groundwater charge imposed by the District: In providing essential water service to approximately 100,000 customers, Great Oaksstrives to insure that its customer’s waterbills are not inflated by unnecessary or improper charges. Great Oakshasfiled a sequence of lawsuits against the District contesting the constitutionality ofthe groundwater charge. Thefirst such lawsuit is Great Oaks Water Company v. Santa Clara Valley Water District, Santa Clara Superior Court Case No. 1-05-CV053142[“Great Oaks’’|.3 Manyofthe contentions being made by theplaintiff in Great Oaks are the same as the contentions being made by the City in Buenaventura, including that the groundwater charge is imposed as an 2 Theterms “production” and “extraction” are synonymous. 3 It should be notedthat counsel for the Santa Clara Valley Water District has filed a request for an extension to file an application for leave to file an amicuscurie briefin this matter. (Docket 11/12/2015) Clearly, they also see that the issues in the instant case are substantially similar to the issues raised in the Great Oaks case. “incident ofproperty ownership,” as that term is used in Proposition 218.4 In Pajaro Valley Water Mgmt. Agency v. Amrhein (2007) 150 Cal. App.4th 1364, the Sixth District Court ofAppeal determinedthat a charge upon the extraction of groundwater by a local water management agency was imposed “as an incident ofproperty ownership” subject to the restrictions imposed upon such charges by Proposition 218 [Amrhein,p. 1393]. In Great Oaks,the trial court determined that a charge upon a commercial extractor of groundwater for off-site sale was imposed as an incident ofproperty ownership. Thetrial court’s Statement ofDecision relied upon Amrhein in making such determination. The District appealed thetrial court’s judgment to the Sixth District (Case No. H035260). The Sixth District filed its first published decision in Great Oaks on March 25, 2015 [Great Oaks Water Company v. Santa Clara Valley Water District (2015) 235 Cal.App.4th 523; 185 Cal.Rptr.3d 621]. Oneofthe holdingsin the published decision involved whetheror not charges on the extraction of groundwater by a commercial extractor for off-site sale are imposedas an incident ofproperty ownership.> Both Great Oaks andthe Districtfiled Petitions for Rehearing.® Both petitions for 4 Proposition 26 was enacted subsequentto the filing of Great Oaks, andis not at issue in the cases filed before enactment of Proposition 26. Even so, Great Oak hasgreatinterest in the proper application of Proposition 26 to groundwater charges. The District imposesits groundwater charge on an annual basis. Great Oaks has filed annual lawsuits against the District alleging that each year’s groundwaterchargeis violative of Proposition 26, as well as Proposition 218. The prosecution of such lawsuits has been stayed by the Santa Clara County Superior Court pending afinal judgment in Great Oaks. 5 The holding in Great Oaks cannotbe cited per California Rule of Court 8.1115. 6 Great Oaks’ petition for rehearing did not challenge the Sixth District’s determination regarding whether or not a groundwaterchargeis imposedas an incident of property ownership. rehearing were granted on April 24, 2015. Great Oaks was ordered resubmitted on May 22, 2015. The Sixth District filed its second published decision in Great Oaks on August 12, 2015 [Great Oaks Water Company v. Santa Clara Valley Water District (2015) 239 Cal.App.4th 456 191; Cal.Rptr.3d 352]. The Sixth District’s opinion in the second published decision was almost identical to its opinion in the first published decision. Once again, one of the holdings in the second published decision involved whetheror not charges on the extraction of groundwater by a commercialextractor for off- site sale are imposedas anincident ofproperty ownership. Great Oaks filed a second Petition for Rehearing on August 27, 2015.7. Great Oaks’ second Petition for Rehearing was granted on September 10, 2015.8 Great Oaks was ordered resubmitted on October 2, 2015. Because manyissues under consideration in Buenaventura are identical or substantially similar to issues under consideration in Great Oaks, Great Oaks had intended to seek review of the Sixth District’s opinion in Great Oaks at approximately the same timethat the City sought review in Buenaventura.’ However, seeking simultaneous review became impossible after the Sixth District granted two consecutive petitions for rehearing. Each rehearing delayed thefiling of a petition for review by approximatelyfive (5) months. !° 7 Great Oaks’ secondpetition for rehearing once again did not challenge the Sixth District’s determination regarding whether or not a groundwater charge is imposed as an incident ofproperty ownership. 8 The granting of the secondPetition for Rehearing clearly confirms the significant statewide importance of the Great Oaks case. 9 Great Oaks surmises that the District also intended to seek review simultaneously with Buenaventura. 10 Great Oaks anticipates that the Sixth District will issueits third opinion aroundthe end ofcalendar year 2015, since the matter was ordered submitted on October 2, 2015. Great Oaks intends to seek review of the Proposition 218 is intended to “protect taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent,” and circumventthe ability of local governments to impose excessive fees, assessments, and taxes. Its provisionsare to be liberally construedto effectuate its dual purposesof “limiting local government revenue and enhancing taxpayer consent.” (Ballot Pamp., text of Prop. 218, § 2 & 5, p. 108-109; Historical Notes, p. 85.) Buenaventura turns Proposition 218 on its head by: (1) ignoring Proposition 218's limitations on the imposition of fees and charges; and(2) disregarding its mandate that taxpayer consent be obtained for any new or increased fee or charge. Since Great Oaksfiled its original complaint in 2005, the District has enacted yearly double-digit increases in the groundwater charge. Groundwater chargesfor residential water have increased from $260 p.a.f to $894 p.a.f. During the same 10-yearperiod, the groundwatercharge for agricultural water has decreased from $26 p.a.f to $21.36 p.a.f. [the groundwater charge for residential water is now more than 40 times higher than for agricultural water].!’ Even thoughthe - District’s “cost of service” is the same for both agricultural and residential water(i.e., all costs associated with the extraction of groundwaterare paid by the property owner), the District effectively causes non-agricultural water producers to pay more than the cost of service in order to fund the “discount” for agricultural producers. Buenaventura not only sanctions unrestrained future increases in the groundwatercharge,it also sanctions the ever-growing disparity between third Great Oaks opinionifit is substantially similar to the Sixth District’s prior two published opinions. 11 Similar to Water Code § 75594 whichis at issue in Buenaventura, Chapter 60, § 26.7 (a)(3)(D)ofthe California Water Code Appendix requires that the District’s groundwater charge for agricultural water not exceed one-fourth the rate for residential, commercial and industrial water. residential and agricultural groundwater charges. Buenaventura removes groundwater chargesfrom all constitutional restraints required by Proposition 218 and Proposition 26. No taxpayer consentofany type is required to increase a groundwater charge. Ifthe holding in Buenaventura remainsthe law,trial courts will be without any meansto control unlimited increases in groundwater charges. Buenaventura’s continuedvitality will make groundwater charges somewhat unique within the state of California, in that almost every other significant tax, assessment, fee, or charge imposedby a local governmental agency is subject to some form of — constitutional or other restraint. Buenaventura’s holding is detrimental to all water users within the Santa Clara Valley.’ Asset forth in the attached amicusbrief, the holding in Buenaventura: (1) ignoresthe voters’ stated purposesin enacting Proposition 218; (2) replaces voter intent with judicialfiat; (3) misapplies the proportionality requirements contained in Proposition 218; and (4) ignores established precedent by construing Proposition 21 8 in an incredibly restrictive and distorted manner. Buenaventura’s analysis of Proposition 26 is similarly flawed. Each ofthe following issues involved in Buenaventura greatly impact Great Oaks, andits 100,000 customers: (1) whether a groundwater chargeis imposed as an incident of property ownership;(2) the constitutionality of imposing a materially higher groundwater charge upon residential water users than the charge imposed uponagricultural water users; (3) the proper application of the proportionality and otherrestrictions 12. Groundwater charges imposed by the District which Great Oaks passes throughto its customers are expected to exceed $8,000,000 per year, beginning in 2016. Under Buenaventura,unlimited future increases can be imposed regardless of the objections by the property owners paying the charges. set forth in Art. 13D, §§ (b)(1) to (5); and (4) the proper application of Proposition 26 to groundwater charges. The proposed amicusbrief will assist this Court in deciding these importantissues because, to date, this Court has only received briefs from local governmental agencies[i.e., the City and the respondent]. Great Oaks, on the other hand,is a taxpayer and property owner. Proposition 218 and Proposition 26 are intended to protect taxpayers such as Great Oaks’ and its customers from excessive charges imposed by local governmental agencies suchasthe appellant and respondents. In several areas, Great Oaks’ proposedbriefwill offer this court a different perspective on the issues from that presentedby either the appellant or the respondent. Before this court issuesits final decision on these extremely importantissues,it shouldreceive input from at least one representative memberofthe class of personsintendedto be protected by Proposition 218 and Proposition 26 [i.e., a taxpayer]. II. CONCLUSION. For the foregoing reasons, Great Oaks respectfully requests permission to file the attached amicus curiaebrief. Dated: November 17, 2015 SILICON VALLEY LAW GROUP firey’S. Lawson, Attorneysfor Great Oaks Water Company CERTIFICATE OF AUTHORSHIP In accordance with Rule 8.520(f)(4), the undersigned herebystates that the proposed amicus brief herein was authored solely by counsel for Great Oaks Water Company,and nopersonorentity outside of Great Oaks Water Company made any monetary contribution to assist its preparation. Dated: November17, 2015 SILICON VALLEY LAW GROUP LEou. lzfréy S. Lawson, Attorneys for Great Oaks Water Company BRIEF OFAMICUS CURIAE GREAT OAKS WATER COMPANY IN SUPPORT OF APPELLANTCITY OF SAN BUENAVENTURA I. THE GROUNDWATERCHARGEIS EITHERA FEE OR SPECIAL TAX IMPOSED AS AN INCIDENT OF PROPERTY OWNERSHIP. A. THIS COURT SHOULD DETERMINEIF THE GROUNDWATERCHARGEIS AN EXCISE TAX OR FEE. In Buenaventura, the City contendedthat the groundwater chargeis a property related fee, and respondent disputed the City’s contention. Buenaventura agreed with the respondent, finding that groundwater charges are not fees imposed as an incident ofproperty ownership within the meaning ofarticle XIII D, § 6. Great Oaks agrees with the City that the groundwater charge is imposedas an incident ofproperty ownership, and that Buenaventura wasincorrectly decided. | However, neither the City, the respondent, nor the Buenaventura court considered whether the groundwater charge is a special tax as that term is usedin article XIII D, § 3(a)(2).! Great Oaks requests that this Court make a determination whether the groundwater chargeis a special tax or a fee, as those termsare used in article XIII D,as part of its review of Buenaventura.” Article XIII D, § 3(a)(2) provides,“ No tax, assessment, fee, or 1 Respondent and the City briefed, and Buenaventura decided [incorrectly], the issue of whether the groundwater charge is a tax within the meaning ofarticle XIII C (Proposition 26). The chiefdistinction between taxes subject to article XIII C, and those subject to article XIII D, is that article XIII C appliesto all taxes, subject to certain specified exceptions, while article XIII D only applies to those taxes which are imposed as an incident ofproperty ownership, but without any exceptions. 2 See section 1D, infra, for Great Oaks’ standingto raise this issue. chargeshall be assessed by any agency uponany parcel ofproperty or upon any person as an incident of property ownership...” Pajaro Valley Water Mgmt. Agency v. Amrhein (2007) 150 Cal.App.4th 1364 (“Amrhein”) considered whether a groundwater charge substantially similar to the one at issue in this case qualified as either a special tax, assessment, or a property related fee. The appellants in Amrhein contended that the groundwater charge was either a special tax undersection 3(a)(2), or a section 6 fee, imposedas an incident of property ownership. On the question of whether the groundwater charge was a special tax, appellantsrelied, in part, upon the decision in Orange County Water District v. Farnsworth (1956) 138 Cal.App.2d 518 (“Farnsworth”). The Farnsworth decision held that a charge imposed upon the operators of water producing facilities was in the nature ofan excise tax levied uponthe activity ofpumping groundwater [Farnsworth,p. 530] According to the court in Amrhein, the Farnsworth court characterized the pumpfee as an excise tax for convenience. Amrhein determined that Farnsworth used the term “excise tax” because the term “user fee” had not yet come into vogue when the case was decided in 1956 [Amrhein, p.1380]. Citing this Court’s decision in Sinclair Paint Co. v. State Bd. ofEqualization (1997) 15 Cal.4th 866 (“Sinclair”), Amrhein found the groundwatercharge to be a property related fee rather than a tax because: “Under modern law,the central distinction between a tax and a fee appearsto be that a tax is ‘imposed for revenue purposes, rather than in return for a specific benefit conferred or privilege granted.’”[Jd., 1381, citing Sinclair at p. 874}° Because Amrhein considered the charge in 3 Sinclair contains the admonition, “We are not here concerned with issues arising under constitutional amendments effected by a recent initiative measure (Proposition 218) adopted at the November5, 1996, General Election. That measure contains newrestrictions on local agencies' 10 Farnsworth to be a “user fee,” it did not consider whether an “excise tax” qualifies as a special tax within the meaningofarticle XHID, § 3(a)(2). If this Court agrees with Amrhein that the groundwater chargeis in the nature of a “user fee,” rather than an excise tax, such determination in and ofitselfmakes the groundwater charge subject to article XIII D,§ 6, since “<[flee’ or ‘charge’ means any levy... imposed by an agency upona parcel or upon a person as an incident ofproperty ownership, including a user fee or charge for a property related service.” [Art. 13D, § 2(e)].4 Buenaventura found exactly the opposite ofAmrhein, holding that ~ groundwater charges are not property related fees. In arriving at this conclusion, Buenaventura found groundwater charges to be similar tothe pump feeat issue in Farnsworth. Buenaventura agreed with Farnsworth that the activity ofproducing water by pumpingis in the nature of an excise tax. [Buenaventura,pp. 223]. Buenaventura concluded that excise taxes are levied on the activity ofproducing groundwater, rather than being imposed solely upon the | ownership ofproperty [Buenaventura, p. 223]. Following this reasoning, Buenaventura concluded that the groundwater charge, as an excise tax, could not be aproperty related fee because such fee is imposed upon the use ofproperty rather than solely upon its ownership [/d., p. 223]. Buenaventura failed to consider whetherexcise taxes are imposed as an incident of property ownership [versus imposedsolely upon its ownership], and therefore within the purview ofarticle XIII D. Amrhein and Buenaventura disagree upon whether the groundwater charge is an excise tax, or a user fee. However, both are powerto impose fees and assessments.” (Sinclair, p. 873, fn. 2) However, Amrhein is notalone in citing Sinclair when analyzing Proposition 218. 4 All emphasisin this brief is added. 11 imposedas an incidentofproperty ownership, and, therefore, subject to article XIII D. If this Court agrees with Buenaventura, Farnsworth, and the respondent that the groundwatercharge is an excise tax, then the groundwater charge is a special tax subjectto article XIII D, § 3(a)(2). On the other hand,if this Court agrees with Amrhein that the groundwater charge is more in the natureofa user fee, then the groundwater charge isa fee subject to article XIII D, § 6 [see Art. 13D, § 2(e), supra]. However,in either case, Buenaventura’s holding that the groundwater chargeis not imposedas an incident ofproperty ownershipis incorrect. Thomasv. City ofEast Palo Alto (1997) 53 Cal.App.4th 1084, 1088 (“Thomas”) succinctly explains the distinction between property taxes imposed upon the ownership of property, and excise taxes imposedas an incident of property ownership: “The City tax in issue hereis legally indistinguishable from the unconstitutional property tax weinvalidated in Digre.It is not a proper excise tax, because it simply taxes property owners for the mere ownership of property, andis not imposed as a valid excise tax would be on anyofthe incidents of ownership,suchassale, transfer, rental, special useof certain city services, and so on.... “Real property taxes are imposed on the ownership ofproperty as such....’ An excise tax, by contrast, is a tax whose imposition is triggered not by ownership but instead by someparticular use of the property or privilege associated with ownership...”.° 5 The complaint in Thomas wasfiled before the effective date of Proposition 218. 6 See also City and County ofSan Francisco v. Flying Dutchman Park, Inc. (2004) 122 Cal.App.4th 74, 88, “[A] tax on the separate use of 12 A tax imposed upon someparticular use of property, or a tax associated with the ownership ofproperty’, is usually considered an excise tax. Buenaventura acknowledgesthat the groundwater charge is imposed upona particular use of the City’s property [“The [pump] fee is not imposed solely because a person ownsproperty. Rather,it is imposed because the property is being [used to extract groundwater].” [Buenaventura, p. 223; brackets in original]. Under Buenaventura’s analysis, the groundwater charge wouldbe an excisetax, rather than a user fee as determined in Amrhein. Excise taxes are imposedasan incident of property ownership. [Thomas, p. 188]. All taxes, including excise taxes, imposedasan incidentofproperty ownership come within the mandatory voter requirementsset forth in article XIII D, § 3(a)(2). Therefore, whether the groundwater chargeis characterized as an excise tax, or a user fee, such charge is imposed as an incident of property ownership. B. THE GROUNDWATER CHARGEIS NOTA FEE WITHIN THE DEFINITION USED IN APARTMENTASSOCIATION. In addition to Farnsworth, Buenaventura places great reliance upon this Court’s decision in Apartment Ass'n ofLos Angeles County, Inc. v. City ofLos Angeles (2001) 24 Cal.4th 830 (ApartmentAssn.), finding Apartment Assn.’s facts to not be materially different from the instant action. Buenaventura concludes that under Apartment Assn., a groundwater charge must be imposed solely because a person ownsproperty in order for the chargeto be subjectto article XIII D. [Buenaventura, p. 223]*. the property, knownas anexcise tax, is permissible...” 7 See section B, infra, for discussion why the groundwater charge is both a tax on a particular use of property, as well as a tax on the ownership ofproperty. 8 Buenaventura never fully addresses why the express language of article XIII D only requires that taxes, assessments, fees, and charges be imposed upon a property or person as an incident of property ownership in orderto fall within article XIII D, but Buenaventura requires such taxes, 13 According to respondent, groundwater charges are imposed “on” an incident ofproperty ownership,rather than “as” an incident of property ownership. Respondentargues, “This one-worddistinction was and remains pivotal.” Like the court in Buenaventura, respondent sees no purpose in this Court considering voter intent or real property law, since any tax, assessmentor fee is outside the purview ofarticle XIII D,if such tax, assessmentor fee is not imposed solely upon the ownership of property. Accordingto the respondent, the groundwater charge has no connection to the ownershipofproperty.” The facts in Apartment Assn., which Buenaventurafinds to be substantially similar to the facts in the instant action, involve a challenge to a fee charged on rental housing to fund periodic inspections of such properties. Apartment Assn. found the inspection fee to be “more in the nature of a fee for a business license than a charge against property.” Buenaventura expands Apartment Assn.’s limited exclusion for regulatory license fees, to a blanket exclusionforall fees which are not “imposed solely because a person ownsproperty.” (/d., 223) In Howard Jarvis Taxpayers Ass'n v. City ofFresno (2005) 127 Cal.App.4th 914 (City ofFresno), the city madeessentially the same contention made by Buenaventura and the respondent; namely,that ApartmentAssn. requires all charges subjectto article XIII D be imposed solely because a person ownsproperty. The city’s reading ofApartment Assn. wasrejected by the City ofFresno court: In a broader sense of arguingthe in lieu fee is not an “incident of ownership”fee, Fresno cites to Apartment Assn. ofLos Angeles County, Inc. assessments and fees be imposed solely because a person owns property to fall within article XIII D. 9 Respondentarrives at this conclusion even thoughit did not make any analysis of real property law. 14 v. City ofLos Angeles (2001) 24 Cal.4th 830 (Apartment Assn.). Apartment Assn. involved a challenge to a fee charged to each unit of multifamily rental housing; the fee funded periodic inspections of such properties to prevent deterioration of the housing stock. (/d. at p. 835) The Supreme Court held that the fee wasnot subjectto article XIII D. (Apartment Assn. supra, at p. 840.) The court determined the fee was “morein the nature of a fee for a business license than a charge against property.” (Ibid.) In doing so, Justice Mosk used certain broad language upon which Fresno has focused:“The inspection fee is not imposed solely because a person ownsproperty.” (Ud. at p. 838) Fresno points out that the in lieu fee is not imposed on wateruserssolely because they own property but, instead, because they use water, whether they own property or not....the context in which Justice Mosk used the broad language upon which Fresnorelies wasentirely different from the present context; particularly in light ofRichmond, supra, 32 Cal.4th 409, 9 Cal.Rptr.3d 121, 83 P.3d 518, discussed above, we cannot conclude the Apartment Assn. court intended to exempt from article XIII D precisely the type offees to which Proposition 218 was directed. (See also Apartment Assn., supra, at p. 839) (Fresno, . p. 926,fn. 3) Buenaventura failed to consider real property law in arrivingatits determination that a groundwater chargeis substantially similar to the inspection fee in Apartment Assn. Respondent’s analysis ofApartment Assn.is similarly flawed. Had such a consideration been undertaken, it would have belied that the groundwater charge exhibits any of the characteristics of the businesslicense at issue in Apartment Assn. Under property law, groundwaterrights constitute an interest in real property, and are akin to the ownership ofland. 15 Amrhein held that the extraction of groundwater is “an activity in some ways more intimately connected with property ownership than is the mere receipt of delivered water...There appears to be no doubt, however, that an overlying owner possesses ‘special rights’ to the reasonable use of groundwater underhis land (City ofBarstow v. Mojave Water Agency, — (2000) 23 Cal.4th 1224, 1237, fn. 7) These rights are said to be ‘based on the ownership ofthe land and... appurtenantthereto.’ (citations) Thus, even if an overlying landownerdoesnotstrictly ‘own’ the water underhis land, his extraction ofthat water (or its extraction by his tenant) represents an exercise of rights derived from his ownership of land. In that respect a charge imposedonthatactivity is at least as closely connected to the ownership ofproperty as is a charge on delivered water.” (Amrhein, supra, pp. 1391-1392) “The concept of an appropriative waterrightis a real property interest incidental and appurtenantto land.’ (citations) The following quotation from Stanislaus Water Co.v. Bachman (1908) 152 Cal. 716, 726-727, leaves no room for doubt that such rights are appurtenant to and run with the land...” Nicoll y. Rudnick (2008) 160 Cal.App.4th 550, 558. Waterford Irr. Dist. v. Stanislaus County (1951) 102 Cal.App.2d 839 (Waterford), involved the proper characterization ofwater rights for taxation purposes underarticle XIII, § 1. In Waterford, the county sought to tax an irrigation district’s right to divert water from a river. Waterford, quoting from 1 Wiel, Water Rights in the Western States (3d ed.), states: ‘The right to the flow and use of water, being a right in a natural resource, is real estate. [Citation.] ... The statute of frauds, concerning conveyances of real estate, applies to it, and transfers must be by deed.[Citations.]....an 3 actionto settle rights is one to quiettitle to realty. [Citation.].... 16 (Waterford, supra, at pp. 844-845, 228 P.2d 341, quoting1 Wiel, supra, § 283, pp. 298-300.) Waterford also declares, “[a] water-right by appropriationis notonly realestate, but hasall the dignity of andis an estate of fee simple, or a freehold.” (Waterford, supra, at p. 845, 228 P.2d 341, quoting 1 Wiel, supra, § 285, p. 301.) See also City and County ofSan Francisco v Alameda County (1936) 5 Cal.2d 243. Underreal property law, at a minimum,thelegal right to extract groundwateris a species of property ownership. Therefore, even if Bueneventurais correct that a charge must be imposed solely because a person owns property to fall within article XIII D,the groundwater charge qualifies as such a charge.!° Paraphrasing Apartment Assn., respondent's groundwater charge is “more in the nature of a charge against property than a fee for a businesslicense.” - In summary, the right to extract groundwateris “an interest in real estate.” Therefore, the groundwater charge is either a tax or fee imposed upon the City “as” an incidentofproperty ownership. ~ Buenaventura not only failed to consider property law, butit also failed to consider voter intent.!! Had the Buenaventura court considered voter intent, it could not have arrived at its conclusion that the holding in Apartment Assn. excludes fromarticle XII D all fees imposed upon the use ofproperty. As previously noted,the definition of a fee or charge set forth in article XIII D, § 2(e), specifically includes “any levy... imposed by an agency upon a parcel or upon a person as an incident ofproperty 10 Tn other words, even under Buenaventura’s extremely narrow holding, the groundwater charge qualifies as a tax or fee underarticle XIII D. 1] “We are obligated to construe constitutional amendmentsin accordance with the natural and ordinary meaning of the language used by the framers—in this case, the voters of California—in a mannerthat effectuates their purpose in adoptingthe law.” (HowardJarvis Taxpayers Ass’n v. City ofSalinas (2002) 98 Cal.App.4th 1351, 1355) 17 ownership,including a user fee or charge for a property related service.” A “user fee,” by its very definition, cannot “be imposed solely because a person ownsproperty;” ratherit is imposed because of a person’s use ofhis or her property. Amrhein finds the groundwaterchargeto be in the nature of a user fee, and Buenaventura finds it to be in the nature an excise tax imposed upontheuse ofproperty. Underarticle XIII D, both are imposed as an incident of property, C. THE GROUNDWATER CHARGEQUALIFIES AS A SPECIAL TAX WITHIN THE MEANING OF ARTICLEXIII D, § 3(a)(2) EVEN IF IT IS NOT AN EXCISE TAX. Even if the groundwater chargeis not an excise tax, it may still be a special tax, rather than a fee, for purposes of article XIII] D. Sinclair defines the distinction between a tax and fee as: “Under modern law,the central distinction between a tax anda fee appearsto be thata tax is ‘imposed for revenue purposes, rather than in return for a specific benefit conferredorprivilege granted.”[Sinclair, p. 874; quoted with approvalin Amrhein, at p. 1381]. The Water Conservation District Law of 1931, defines the purposes for which respondent’s groundwater charge is imposed as follows: Water Code § 75521: “Ground water charges levied pursuantto this part are declared to be in furtheranceofdistrict activities in the protection and augmentation of the water supplies for users within the district or a zone or zones thereof which are necessary for the public health, welfare, and safety of the people ofthis state.” Water Code § 75522: “The ground water charges are authorized to be levied upon the production of ground water from all water-producing facilities, whether public or private, within the district or a zone or 18 zonesthereoffor the benefit of all who rely directly or indirectly upon the ground water supplies of the district or a zone or zones thereof and water imported into the district or a zone or zonesthereof.”! Thus, under respondent’s governingact, the statutory purposes of the groundwater charge are to: (1) protect and augmentthe water supplies for all water users’ health, welfare, and safety; and (2) benefit all who rely directly or indirectly upon ground water supplies. Therefore, the groundwater charge is imposed to generate revenue for the public’s benefit, rather than for any specific benefit conferred, or privilege granted, to those against whom the charge is imposed. Assuch, the groundwater chargeis in the nature ofa special tax imposedas an incident of property ownership. D. THIS COURT SHOULD DETERMINE WHETHER THE GROUNDWATER CHARGEIS A SPECIAL TAX OR FEE WITHIN THE MEANING OF ARTICLEXIII D. Neither respondentnor the City addresses that the groundwater charge maybespecialtax, rather than a fee. Great Oaksis mindful that appellate courts will not usually consider issues raised for the first time on appeal, and that amicus curiae mustacceptthe issues as framed bythe appealing parties. Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 502 (“Lavie”) “However,the rule is not absolute. An appellate court has discretion to consider new issues raised by an amicus. (See Fisherv. City ofBerkeley, supra, 37 Cal.3d 644, 654-645. The Supreme Court has justified consideration of a new issue on appealfor the first time “when the issue posed is purely a question of law based on undisputed facts, and 12 Buenaventura describes the services provided by the District as “manage, protect, conserve and enhance the water resources of the Santa Clara River.” [Buenaventura, p. 225 | 19 999 involves important questions ofpublic policy. [Citations.]’” Lavie, supra, p. 502. Although ‘appellate courts will not ordinarily consider matters raised for thefirst time on appeal... whether the rule shall be appliedis largely a questionofthe appellate court's discretion.’ Since the pointis but one aspect of the larger constitutional question, the matter will be addressed in this opinion.” Canaanv. Abdelnour (1985) 40 Cal.3d 703, 721.8 That discretion [to consider new issues] is more likely to be exercised in favor of considering the new argument whenpublic policy or the public interest is concerned.(citation). Taye v. Coye (1994) 29 Cal.App.4th 1339, 1344. The claimed deprivation ofthe right to vote unquestionably affects a strong public policy and hasgreat public interest. “Cases affecting the right to vote and the method of conducting elections are obviously of great public importance.” Jolicoeur v. Mihaly (1971) 5 Cal.3d 565, 570. Cases attempting to circumvent the voting rights established by Proposition 218 are especially important. Proponents of Proposition 218 argued that the initiative would “guarantee[ ] your right to vote on local tax increases— even whentheyare called something else, like ‘assessments’ or‘fees’....” (Ballot Pamphlet., Gen. Elec., argument in favor of Prop. 218,p. 76.) After describing how local politicians had used fees and assessmentsto create loopholesin Proposition 13's requirement ofvoter approvalfor taxes, the proponents argued, “TAXPAYERS HAVE NO RIGHT TO VOTE ON THESE TAX INCREASES AND OTHERS LIKE THEM UNLESS PROPOSITION 218 PASSES!” (Ballot Pamp., supra, at p. 76). See — 13 Overruled on other grounds in Edelstein v. City and County ofSan Francisco (2002) 29 Cal.4th 164, 183 20 Greene v. Marin County Flood Control and Water Conservation Dist. (2010) 49 Cal.4th 277, 296. The proper characterization of the groundwater chargeas a fee or tax is a de novo issuefor this Court. “[W]hether impositions are ‘taxes’ or ‘fees’ is a question of law for [this Court] to decide on independent review of the facts.” (Sinclair, supra, p. 873). The proper characteristic of a tax or fee as being imposedasan incident ofproperty ownership is also a question of law for this Court (Greene, supra, p. 287). Proposition 218 was intendedto limit the ability of local governmental agenciesto extract revenue from taxpayers by disguising property related taxes as fees. Proposition 218 and Proposition 26 became necessary because government agencies continuedto find new andcrafty waysto raise revenues without voter involvement or consent. For obvious reasons, local governmental agencies wantto deprive their constituents of their constitutional right to vote against the taxes and fees which fund the local agencies’ programs. Respondentis one such local governmental agency whichhasa vested interest in circumventing Proposition 218's right to vote. Because groundwater charges regularly account for over 50% of a customer’s waterbill, and, according to Buenaventura, can be increased withoutrestraint, millions of water users, as well as all private water companies, have a significant economic stake in ascertaining the proper characterization of the groundwater charge. “The distinction between taxes andfees is frequently ‘blurred,’ taking on different meaningsin different contexts.” [Sinclair, supra, p. 874] Great Oaks respectfully requests that this Court, as part ofits independent review, determineifthe groundwater chargeis a special tax, as that term is used in article XIII D, or if it is a fee. 21 Il. BUENAVENTURA INCORRECTLY DETERMINES THAT THE GROUNDWATER CHARGEIS NOT IMPOSED AS AN INCIDENT OF PROPERTY OWNERSHIP. As set forth in section I, above, Buenaventura incorrectly determined that the groundwater charge is not imposed as an incidentofproperty ownership. In addition to the authorities cited above, Great Oaks submits the following: Buenaventura found Amrhein to be distinguishable because it was based upon a “uniqueset of facts.” The unique facts, according to Buenaventura,are that the vast majority of property owners in Amrhein obtain their water from wells, while substantial numbersofresidential customers in Buenaventura receive delivered water from commercial | suppliers such as the City. [Buenaventura,p. 248]. In actuality, the facts in Amrhein cannot be meaningfully distinguished from thefacts in Buenaventura; nor can the holding in Amrhein bereconciled with Buenaventura. Buenaventura’s conclusion that the vast majority ofproperty owners in Amrhein obtain their water from wells in inaccurate. In Amrhein, approximately half of the agency’s 80,000 residents reside in the City of Watsonville. [Amrhein, 1370] The City of Watsonville extracts and sells groundwaterto its residents and commercialusers, exactly the sameas the City of San Buenaventura extracts and sells groundwater to its residents and commercial users. Under these competing decisions, two identically- posturedretail groundwater extractors are treated very differently; one is subject to Proposition 218's safeguards[i.e., City of Watsonville], and the other exempt[i.e., City of San Buenaventura]. - Amrhein determined that the groundwater charge did not servea regulatory purpose. However, Amrhein left open the possibility that a “clearly established” regulatory purpose couldplace the groundwater 22 charge outside of article XIII D (Amrhein, p. 1390). For example, according to Amrhein, a fee might not be subject to Proposition 218 if the fee is plainly not meant to generate revenue, andis structured in such a way as to regulate, through market forces, the consumption or use of a scarce or protected commodity orservice so as to deter waste and encourage efficiency (Id., p. 1390). Buenaventura foundthat respondent’s groundwatercharge fit within such “clearly established” exception, determiningthat the groundwater charge “serves the valid regulatory purpose of conserving water resources,” (Buenaventura, p. 222) But there were no facts in Buenaventura which compelled, or even permitted, a finding that respondent’s groundwater chargefell within the hypothetical regulatory exception posited in Amrhein. | Buenaventura also seeks to distinguish Amrhein on the basis of the end use of groundwateraseither residential or commercial: “[T]he fact that a large majority ofpumpers[in Amrhein] were using the water for residential or domestic uses was dispositive.” (Buenaventura, p. 247) First, as previously stated, the City of Watsonville is a commercial pumperin the exact sameposition as the City of San Buenaventura. Additionally, Amrhein rejected the very distinction relied upon by Buenaventura: “We doubt that [the distinction between a person who owns land or engagesin certain activity on his land] is satisfactorily captured by a distinction between business and domestic uses or purposes.” (Amrhein, p. 1391, fn. 18) When a landowneroperates a waterworks for commercial distribution of water to persons beyondhis or her property, both the works and any distribution system connectedto it are appurtenances to the owner’s property. (Trask v. Moore (1944) 24 Cal.2d 365, 370; see also © Garden Water Corp. v. Fambrough (1966) 245 Cal.App.2d 324,327 [trial court properly found water system for distribution to subdivision wasreal property.]) 23 There is no meaningful distinction betweenthe right to use water on the parcel from which it is drawn (overlying waterright) and the right to distribute it (appropriative water right); both are appurtenantto the land on whichthe well is sited. (Trask, supra, p. 370.) Thus, a charge that burdens appropriative waterrights is necessarily incidental to property ownership. Article XIII D itself allows no distinction or exception between fees and charges for residential and commercial use. Quite the contrary. “Notwithstanding any other provision oflaw, the provisionsofthis article shall apply to all assessments, fees and charges, whether imposed pursuantto state statute or local governmentcharter authority...” [Art. 13D, § 1] “...An agency shall follow the procedurespursuantto this section in imposing or increasing any fee or charge as defined pursuant to this article.” [Art. 13D, § 6 — emphasis added] Proposition 218 does not permit a chargeto be unlawfulasto the public water companyandits residential customers, but lawful as to rural, residential groundwater users paying the same charge. Further, Propositions 218 and due process require similar rates be chargedto similarly situated ratepayers. Respondent may not penalize commercial pumpersoverresidential pumpers. Great Oaks is unaware of any other published opinionthat sanctions an agency charging different rates to similarly situated persons. . Lastly, Buenaventura is extremelycritical ofAmrhein’s holding that the Pajaro Water Management Agencyprovidesa property related service to those paying the groundwater charge. Buenaventura finds no correlation between the service provided in Amrhein,andthe services provided in other reported cases, such as Bighorn [Buenaventura,p. 252]. Buenaventura does not consider “securing the water supply for everyone in the basin”to qualify as a property related service because, by securing the water supply for everyone, the agency could notsatisfy the substantive requirements of 24 Art. 13D, § 6(b) [Buenaventura, p. 251-252] Buenaventura putsthecart in front of the horse by holding that an agencyis not providing a property related service unless that service satisfies the substantive requirements of section 6(b). In so holding, Buenaventura reverses the usual sequence for determining if a charge is property related. In other Proposition 218 cases, the court first determines the nature of the service being provided, and then determinesif such service is property related. Only then canthe court determineifthe chargesatisfies the substantive requirements of Section 6(b). A property related service remainsproperty related irrespective of whetherornotthe property related servicesatisfies the requirements of section 6(b). Failure to satisfy section 6(b) does not transform a property related service into a non-property related service; rather, the property related fee or charge cannot be imposed, or increased becauseofits failure to comply with section 6(b). Ill. THE GROUNDWATER CHARGE CONSTITUTES A TAX UNDER PROPOSITION26. A. THE CITY DOES NOT RECEIVE A SPECIFIC BENEFIT OR PRIVILEGE FROM RESPONDENTIN EXCHANGEFOR THE PAYMENT OF THE GROUNDWATER CHARGE. Buenaventura holds that Proposition 26 does not apply to the groundwater charge becauseit falls within the exception set forth in article XIII C, § 1(e)(1).!4 Buenaventura finds that “[District] pumpers receive an obvious benefit—they may extract groundwater from a managedbasin.” 14 «(e) As usedin this article, “tax” means anylevy, charge, or exaction of any kind imposedbya local government, except the following: (1) A charge imposedfor a specific benefit conferred orprivilege granted directly to the payor that is not provided to those not charged, and which doesnot exceed the reasonablecosts to the local government ofconferring the benefit or granting the privilege.” 25 (Buenaventura, p. 253]. As such, Buenaventura finds the groundwater charge to be essentially the same as an “entrancefee to a state or local park.” [Buenaventura, p. 254] Asset forth in section 1 B, supra, groundwaterrights constitute an interest in real property, and are akin to the ownership of land [see City of Barstow, supra, Nicoll, supra, and Waterford, supra|.’° The right to extract groundwater is not a benefit conferred by respondent. Rather,it is a property right based upon the ownership of land, and “hasall the dignity of ownership in fee simple.” (Waterford, supra,p. 845) The respondentdid not, and does not, confer any benefit uponthe City, or grant any privilege to the City, that the City did not and doesnot already have. Buenaventura acknowledgesin an earlier part of its decision that the court’s “paramounttask is to ascertain the intent of those who enacted [Proposition 26],” and that it must look first to the proposition’s language as the best indicator or the voters’ intent.” [Buenaventura, p. 243] [see Silicon Valley Taxpayers Ass'n, Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448 (Silicon Valley)| Despite such concession, Buenaventura never considersthe intent of the voters who enacted Proposition 26.!° Had the voter’s intent been considered, no voter would consider a charge upon pumping groundwaterfrom the voter’s own well, on his or her 15 “There appears to be no doubt, however,that an overlying owner possesses ‘special rights’ to the reasonable use of groundwater underhis land. (citation)” (Amrhein, supra, 1391). 16 As when Buenaventura construed Proposition 26, the court made no attempt to ascertain the intent of the voters when it determined the groundwater charge is not imposed as an incident ofproperty ownership within the meaningofarticle XIII D. Any time a court construing Proposition 218 or Proposition 26 fails to ascertain and apply the intent of the voters, the court fails to apply to correctlegal analysis. 26 own property, to be the same as the payment of an entrancefee to a state ‘park. No voter would consider the respondentto be conferring a specific benefit or privilege upon a ratepayer by allowing the ratepayerto extract groundwater from his or her own well. No voter would considerthat by managing, protecting, conserving and enhancing the water resources of the Santa Clara River basin!’, the respondent was bestowing a specific benefit upon the ratepayer not provided to those not paying the charge. No voter could possibly consider the groundwater chargeto fall within the exception set forth in article XIII C, § 1(e)(1). Buenaventura’s determination that the groundwater chargefits. within article XIII C, § 1(e)(1)’s exception, conflicts with an earlier part of its own decision. In oneportion of the opinion, Buenaventura chides Amrhein for finding the service providedto ratepayers is “the benefit of ongoing groundwaterextraction and...securing the water supply for everyonein the basin.” [Buenaventura, p. 247]. Buenaventura findsthat the Pajaro Valley Water Management Agencyis not providing any Proposition 218 service to ratepayers by securing the water supply for everyonein the basin because any suchserviceis “available to the public at large in substantially the same mannerasit is to property owners.” [Buenaventura, p. 252]. The services provided by the respondent in Buenaventura [“manage, protect, conserve and enhancethe water resources of the Santa Clara River’] are essentially the same as the services provided in Amrhein [“the benefit of ongoing groundwater extraction”!®]. “The [respondent’s] ground water charges are....for the benefit of all who rely directly or indirectly upon the ground watersupplies ofthe district....” [Water Code § 75522], 17 Buenaventura,p. 225. 18 Buenaventura, p. 247 27 and “the protection and augmentation of the water supplies for users within the district...which are necessary for the public health, welfare, and safety of the people....” [Water Code § 75521]. IfAmrhein’s service is “available to the public at large in substantially the same mannerasit is to property owners,” then respondent’s service is similarly available to the public atlarge. Respondentconfers no specific benefit upon the City by using the funds generated by the groundwater charge to manage, protect, conserve and enhance district wide water resourcesforall water users. Using the groundwater charge for the benefit of all water users makesit impossible for the respondentto satisfy its burden of proofby establishing that the cost ofits activity “bears a fair or reasonablerelationship to the [City’s] burdens on, or benefits received from, the governmental activity.” In making its determination, Buenaventuradirectly conflicts with Proposition 26's declaration ofpurpose: “Since the enactment of Proposition 218 in 1996, the Constitution ofthe State of California has required that increasesin local taxes be approved by the voters. [{] (c) Despite these limitations, California taxes have continuedto escalate. [{] (e) This escalation in taxation does not accountfor the recent phenomenon whereby the Legislature and local governments have disguised new taxes as ‘fees' in order to exact even more revenue from California taxpayers _ without having to abideby these constitutional voting requirements. Fees couchedas ‘regulatory’ but which exceed the reasonablecosts ofactual regulation or are simply imposedto raise revenue for a new program and are not part of any licensing or permitting program are actually taxes and should be subject to the limitations applicable to the imposition of taxes. [W] (f) In order to ensure the effectiveness ofthese constitutional limitations, this measure ... defines a ‘tax’ for state and local purposessothat neither the Legislature nor local governments can circumvent these restrictions on 28 increasing taxes by simply defining new or expandedtaxesas ‘fees.’ ” (Prop. 26, § 1, subds. (b), (c), (e), (f), reprinted at Historical Notes, 2B West's Ann. Cal. Codes (2013) foll. art. 13A, § 3, pp. 296-297; see also Howard Jarvis Taxpayers Assn. v. City ofRoseville (2002) 97 Cal.App.4th 637, 645, fn. 17 [noting courts may use ballot summary, arguments, and analysis to construe voter-approved initiatives].) B. THE RESPONDENT’S GROUNDWATER CHARGE EXCEEDS THE REASONABLECOST OF THE SO-CALLED BENEFIT TO THECITY. Buenaventuracites California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal.4th 421 (Farm Bureau), for the proposition that under Proposition 26, fees are not measured on an individual basis, but collectively. According to Buenaventura, Farm Bureau commandsthatthe precise benefit each ratepayers derives from the groundwater charge be ignored under Proposition 26; rather the court need only inquire into whether the fee exceeds the reasonable cost of regulation. Farm Bureau was not decided undereither article XIII C, or article XIII D. The portion ofFarm Bureaucited by Buenaventura,discusses the “somewhatflexible proportionality” requirements for regulatory fees. Buenaventura fails to explain whyit applies Farm Bureau’s “flexible” regulatory fee standardto an article XIII C tax case. UnderArticle XIII C, the burdenis uponthe respondentto prove the specific benefit it provided to the City; the so-called “collective” benefits it providesto all ratepayers are irrelevant.!? Buenaventura does not cite any evidence establishing that 19 The analysis applied by this Court in Silicon Valley is much more applicable to the instant action that Farm Bureau. In rejecting the pre- Proposition 218 deferential standard, Silicon Valley states, in regard to assessments: “[A] special benefit mustaffect the assessed property in a way that is particular and distinct from its effect on otherparcels and that real 29 respondent met its burden underarticle XIII C, § 1.19. Instead, Buenaventura allowsthe respondentto circumventarticle XIII C by merely showingthat the total district-wide funds collected from the groundwater charge were used to fund the management, protection, conservation and enhancementofthe water resources of the Santa Clara River. In focusing on thetotal costs of the so-called regulatory activity, Buenaventura once again ignores Proposition 26's mandate that: (1) the charge must be “imposed for a specific benefit conferred orprivilege granted directly to the payor that is not provided to those not charged;” and (2) the amountofthe charge “is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payorbeara fair or reasonable relationship to the payor's burdenson,or benefits received from, the governmental activity.” [Art. 13 C, § 1, (last para.)] Proposition 218 was enacted to close legislative and judicially. created loopholes in Proposition 13. Proposition 26 wasenacted to close legislative and judicially created loopholes in Proposition 21 8. Proposition 26's declaration of purpose requires that neither the Legislature norlocal governments circumvent constitutionalrestrictions on tax increases by simply defining new or expanded taxesas “fees.” Silicon Valleyrequires that courts enforce “the provisions of our Constitution and ‘maynotlightly disregard orblink at ... a clear constitutional mandate” and “must construe constitutional amendments in a mannerthat effectuates the voters' purpose in adopting the law.” (Silicon Valley, p. 448) By reversing article XIII C’s burden ofproof and ignoring voterintent, Buenaventura, in one fell swoop, property in general and the public at large do notshare.” [Silicon Valley, p. 452] 30 emasculates Proposition 26 by creating an exception which swallowsthe rule. In summary, the groundwater chargeis exactly the type of tax » disguised as a fee which Proposition 26 sought to eliminate. Buenaventura’s determination that groundwater charges escapeall constitutionalrestraint totally frustrates the voters’ intent in enacting Propositions 26. IV. CONCLUSION. Great Oaks respectfully requests that this Court reverse the Court of Appeal, and affirm that the groundwater charge violates both Proposition 218, and Proposition 26. Great Oaksalso respectfully requests that this Court determine whether the groundwater chargeis a tax orfee, as those terms are used in Proposition 218. Dated: November 17, 2015 SILICON VALLEY LAW GROUP fll y S. Lawson, Attorneys for Gat Oaks Water Company 31 CERTIFICATION OF WORD COUNT The text of the brief consists of 6,820 words as counted by Word version 2013 used to generate this brief. Dated: November 17, 2015 SILICON VALLEY LAW GROUP oieS. Lawson, Attorneys for Great Oaks Water Company 32 PROOF OF SERVICE I am employedin the City of San Jose, County of Santa Clara, California. I am over the age of 18 years and not a party to the within action. My business address is 50 W. San FernandoStreet, Suite 750, San Jose, California 95113. On the date indicated below I served the following documents with all exhibits,if any: APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND BRIEF OFAMICUS CURIAE GREAT OAKS WATER COMPANYIN SUPPORT OF APPELLANT CITY OF SAN BUENAVENTURA [x] MAIL: By following ordinary business practices at my place of business and placing for collection and mailing with the United States Postal Service, the above listed documents enclosed in a sealed envelope; with postage thereon fully prepaid. [ ]OVERNIGHT DELIVERY:I enclosed said documents(s) in an envelope or package addressedto the personsat the addresseslisted below. I placed the envelope or package for collection and overnight delivery at a regularly utilized drop box ofthe overnight server carrier or delivered such documents(s) to a courier or driver authorized by the overnight service carrier to receive documents. on the following parties: PARTY ATTORNEY City of San Buenaventura Michael G. Colantuono Colantuono, Highsmith & Whatley, PC 300 S. Grand Avenue, Suite 2700 Los Angeles, CA United Water Conservation Anthony Hubert Trembley District 33 Board of Directors of United Water Conservation District Pleasant Valley County Water District Musick Peeler & Garrett LLP 2801 Townsgate Road, Suite 200 Westlake Village CA Jane Ellison Usher Musick Peeler & Garrett LLP One Wilshire Boulevard, Suite 2000 Los Angeles, CA Cheryl A. Orr Musick Peeler & Garrett LLP 2801 Townsgate Road, Suite 200 Westlake Village, CA Anthony Hubert Trembley Musick Peeler & Garrett LLP 2801 Townsgate Road, Suite 200 Westlake Village CA Jane Ellison Usher Musick Peeler & Garrett LLP One Wilshire Boulevard, Suite 2000 Los Angeles, CA Cheryl A. Orr Musick Peeler & Garrett LLP 2801 Townsgate Road, Suite 200 Westlake Village, CA Dennis Larochelle Arnold Bleuel LaRochelle Mathews 300 Esplanade Drive, Suite 2100 Oxnard, CA 34 Appellate Court: Trial Court: Second Appellate District Clerk ofthe Superior Court Division 6 Santa Barbara County Court Place 1100 AnacapaSt. 200 East Santa Clara Street Santa Barbara, CA 93121-1107 Ventura, CA 93001 Courtesy copyto: Tim Guster Robert K. Johnson Great Oaks Water Co. Johnson & James LLP P.O. Box 23490 311 Bonita Dr. San Jose, CA 95153 Aptos, CA 95003 I declare under penalty of perjury that the foregoing is true and correct, and this declaration was executed on November 18, 2015, at San Liz Noa Jose, California. 35