Mar 8 2013

Court of Appeal AUSD Decision Final after Rehearing

The Borikas vs Alameda Unified School District (AUSD) case that played a major role in the flat tax design of Piedmont’s recently approved school parcel tax has been concluded in the Court of Appeal.

Upon rehearing, the three-judge First Appellate District court panel ruled that state law didn’t allow AUSD to tax a few commercial property owners 15 cents per square foot up to a $9,500 cap while all residential properties and most commercial properties were taxed $120 per parcel. The court had vacated its December 11, 2012 decision at the school district’s request, after granting a rehearing. The Appellate Court found that state law requires school districts’ special taxes to be applied uniformly and that the only exception the law permits is an exemption for seniors and low-income disabled people. 

The appellate decision returned the case to the Alameda County Superior Court, which had originally upheld the AUSD tax. If there is no further appeal, the trial court will  hold hearings on the refund amount and, perhaps, interest due to George Borikas and other large commercial property owners.  None of the commercial properties were taxed more than the Measure H cap of $9,500, but plaintiff’s attorney has indicated he will also ask for interest.  Alternatively, the case could move to a higher court since the Alameda School Board voted in December to appeal the case to the California Supreme Court.

After rehearing, the judgment of the first District Court of Appeal on the Alameda School parcel tax was published on March 6, 2013.  The result affirmed the trial court decision in part, reversed it in part, and remanded the case to its trial court judge with direction. The March 6 opinion was written by Justice Kathleen M. Banke, Justice Robert L. Dondero concurring.

“The judgment in favor of the District is reversed in part and affirmed in part. The trial court is directed to enter judgment declaring the special tax imposed by Measure H invalid to the extent it imposes a tax other than $120 per parcel, unless the parcel is exempt from the special tax under the provisions of the measure, in which case, no tax may be imposed. The trial court shall also determine whether plaintiffs are entitled to any further remedies, as sought in their trial brief. Each party to bear its own costs on appeal.”

The third member of the panel, Justice P. J. Marchiano concurred with a separate opinion, expressing sympathy with the school district,

“Measure H has laudatory goals to provide critically needed additional school financing for the Alameda Unified School District; but we cannot rewrite an enabling statute, nor enlarge or contract it, where the words do not allow any other plain meaning.”

Marchiano concluded by clarifying the error of the structure of the Alameda parcel tax was the classification system.

 “Measure H attempts to impose classification-based taxes which section 50079 does not begin to hint at authorizing.  I would reverse because the language of the statute compels that result.”


Alameda’s 2008 school parcel tax was challenged by a large commercial property owner in Borikas vs Alameda Unified School District.

Borikas’ attorney, David Brillant argued that different taxes for commercial and industrial parcels violated a state law that said “qualified special taxes . . . apply uniformly to all taxpayers . . . (and) . . . do not include taxes imposed on a particular class of property or taxpayers.”  In June 2010, Alameda County Superior Court Judge Kenneth Mark Burr rejected plaintiff’s assertion and ruled that Alameda’s parcel tax was “uniform and legal.”

Borikas appealed that decision.

On December 6, 2012, the state Court of Appeals found in favor of Alameda large commercial property owners and invalidated parts of Measure H (the  school parcel tax approved by Alameda voters in June 2008) that taxed commercial parcels of more than 2,000 square feet 15 cents a square foot, capped at $9,500 annually. The Appeals Court struck down part of the measure’s rate structure and applied the $120 rate to all parcels.

“…Measure H’s property classifications and differential tax burdens exceed the District’s taxing authority under section 50079…Measure H’s exemptions for senior and disabled taxpayers are permissible under the statute.”

On December 12, 2012, the Alameda School Board voted to challenge the Appellate Court December 6, 2012 decision and filed a petition for a rehearing.  On Monday, January 7, 2013 the Court of Appeals agreed to rehear the appeal.

Possible Legislative Action

In January 2013, Assemblyman Rob Bonta introduced Bill 59 in the State Assembly to allow school districts, “to assess parcel taxes in accordance with rational classifications among taxpayers or types of property within a district, as long as the taxes are applied uniformly within those classifications.”  Bonta’s bill does even more for the schools, making the law retroactive.

“(State law) requiring uniform application of taxes shall not be construed as limiting a school district from assessing taxes in accordance with rational classifications among taxpayers or types of property within the school district. This subdivision is declaratory of existing law, and shall apply to transactions predating its enactment.”

Some are questioning whether taxes like Measure H could be retroactively protected by the state Legislature.  However, a few months ago the California Franchise Tax Board imposed a tax, retroactive to January 1, 2008.

Brillant, the attorney for Borikas, subsequently filed cases against new parcel taxes in Yolo, Alameda, Contra Costa and Los Angeles counties within 60 days of certification of the vote approving them.  Resolution of these cases may take years.

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