Letters to PCA Support Measure A on March Ballot – 

Dear Editor,

Court of Appeals agreed to Alameda School Board Petition for Rehearing

In an article by John Fensterwald of Ed Source Today, a website utilized by educators, Piedmont’s “jaw-dropping” proposed school parcel tax is mentioned in regard to school district tax alternatives and tax rates.  The article is made available here  to increase understanding of the dilemma faced by Piedmont School District policy makers in their effort to comply with the recent court ruling on the city of Alameda Unified School District’s parcel tax plan. 

On December 6, 2012, the state Court of Appeals found in favor of Alameda large commercial property owners and invalidated parts of Measure H (a school parcel tax approved by Alameda voters 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, leaving only the flat $120 rate paid by Alameda residential property and small commercial property owners valid.

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, in response, the Court of Appeals agreed to rehear the appeal of the trial court decision upholding Measure H, which the Appellate Court had overturned in part.

If the ruling stands after rehearing and any subsequent appeal, the Alameda School District “may have to reimburse businesses several  million dollars that Measure H raised illegally during the three years it was in effect”.  

See Ed Source Today article.

See First District Court of Appeals decision in Borikas vs Alameda Unified

Rational classification among taxpayers or types of property supported in new bill –

On Monday, January 7, 2013, Assembly member Rob Bonta of Oakland introduced AB 59, which clarifies that existing law authorizes school districts to assess parcel taxes in accordance with uniform property classifications.  If it ultimately passes, Piedmont and other cities could classify commercial and residential property separately for school taxes.  It also specifically allows rational classification among taxpayers or types of property.  Sections of particular interest to Piedmont include:

“The provisions in this section 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.”

Read Assembly Bill  number  AB 59

New Uniform Tax Structure of $2,406 Per Parcel Would Begin July 2013-

At its December 11 Special Meeting, the Board of Education voted unanimously to replace the District’s current tiered parcel tax with a flat uniform tax proposal for all Piedmont parcels.   If approved by a two-thirds majority of Piedmont voters in March 2013, a tax of $2,406 will be levied annually on all parcels, regardless of size or use, beginning  July 1, 2013.  This includes undeveloped parcels, parcels with multiple units, and commercial properties. The term of the new tax will be for 8 years, beginning in July 2013, with a potential 2% inflation increase by the School Board permitted each year.  The final year of the existing Measure B tiered tax would be rescinded.  The term of the tax is to be eight (8) years with the expiration date of June 30, 2021.

Mark Williams of Fagen Friedman & Fulfrost LLP, legal counsel to the Piedmont Unified School District (PUSD), explained that both the existing Measure B tax and the proposed measure should be brought into compliance with a recent court decision impacting the Alameda Unified School District. The court ruled that school parcel taxes must be levied equally on all parcels.  Taxing on the basis of tiers or “per square foot” of lot or structure would not comply with the court decision.

To generate Piedmont school parcel tax revenue of $9.5 million, the District proposed a flat rate of $2,406 per parcel for 2013-14.  This flat amount incorporates a 5% increase over current 2012-13 revenues.  The proposed measure will permit up to 2% annual increases each year thereafter by the School Board without further approval by voters.

Upon voter approval in the March election, the new parcel tax will increase $318 for smaller parcels, while decreasing up to $1,141 on the largest parcels and $2,899 on commercial parcels.  Board members noted their displeasure with making the decision to make the tax a flat rate for all sizes and uses of lots, establishing a “regressive tax,” but felt they had to comply with the court decision to avoid jeopardizing school revenue.

The appellate court decision upheld a senior exemption, following a lengthy examination of legislative history and intent which noted “the rationale for allowing that [senior] exemption is that senior citizens receive less direct benefit from schools than other citizens.”   However, the Piedmont Board did not pursue a PUSD senior exemption, asserting that most seniors already receive a significant tax break from Prop. 13.   Additionally, the Board emphasized District revenue needs and were reluctant to transfer tax burdens from some households to other households.   While a total senior exemption is legal, the PUSD counsel Mark Williams considered a partial or optional senior exemption riskier in terms of legal compliance.

Rather than delaying the vote on the tax measure until June, staff advised bringing District parcel taxation into compliance immediately, as of July 2013, by proceeding with a March ballot measure, as budget decisions must be made in the near future.

Board members received numerous emails in support of the flat tax and only a few opposed.  They noted that if there are changes in  financial circumstances or laws, the Board can reduce the level of the tax or place a new tax measure before voters.

Click here for more details on the tax in the Piedmont Patch.  Current school parcel tax rates can be found in this article.

Campaign efforts have begun on the passage of the March 5, 2013 school parcel tax measure.

I request that the Board get a hold of its senses and not try to impose, on 24 hours notice, a 9 year escalating extremely regressive new flat parcel tax on Piedmont taxpayers.  The proposal on your special meeting agenda tonight should be rejected.

Court Decision Spurs Change in School Tax Measure –

The Piedmont Unified School District Board is holding a Special Meeting on Tuesday, December 11,  to consider amending both its current and proposed School Parcel Tax measures to the uniform rate of $2,406 for all parcels in the city of Piedmont to comply with a recent court decision.

The Open Session portion of the agenda at 7:00 p.m. will consider the agenda item:

A. Approve Resolution 10-2012-13 “Modification and Amendment to Qualified Special Tax and Establishing Specifications of the Election”

A decision by the Court of Appeals governing Alameda County in the case Borikas v. Alameda Unified School District, was issued on Friday (12/7/2012) afternoon. The Court’s decision requires the Board to consider a change to the Piedmont Unified School District’s (PUSD) proposed school support tax measure, scheduled to appear on the March 5, 2013 special election ballot.

The proposed modification of the tax structure to a flat rate of $2,406 per parcel is a change from the current tiered method based on lot sizes and taxes all parcels at the same rate of  $2,406.  The result reduces the tax for larger parcels and increases the tax for smaller parcels.

The measure would also replace Measure B with the flat $2,406 per parcel rate starting in 2013, increasing taxation for smaller parcels by approximately $400 a year and reducing the tax on largest parcels by approximately $1,000.

The Special Board meeting will be held in the Council Chambers, City Hall at 120 Vista Avenue, Piedmont, at 7:00 p.m.  The meeting is open to the public. A closed session will precede the open meeting to confer with legal counsel Mark Williams, Fagen Friedman & Fulfrost LLP on anticipated litigation  (Based on significant exposure to litigation pursuant to subdivision (b) on Government Code Section 54956.9: 1 case).

See the Board Agenda | Packet.  

The California First Appellate District Court decision in Borikas vs Alameda Unified School District stated:

“…Measure H’s [ Alameda Unified School District ballot measure] 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.”

“School districts did not …seek language that would allow for the classification and differential tax treatment of parcels by size or use.”  (Footnote 24 in the opinion.)

“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.”

Email comments to members of the Piedmont Board of Education:

• Richard (Rick) Raushenbush
  President rraushenbush@piedmont.k12.ca.us
• Andrea Swenson
  Vice President aswenson@piedmont.k12.ca.us
• Sarah Pearson   spearson@piedmont.k12.ca.us,
• Ray Gadbois  rgadbois@piedmont.k12.ca.us
• Roy Tolles  rtolles@piedmont.k12.ca.us

The Piedmont Unified School District Citizens’ Advisory Committee (CAC) will meet to consider Parcel Tax Program for Measures B & E (Election of June 2, 2009) in the District Administration Office at 760 Magnolia Avenue, from 4:30 p.m. to 6:00 p.m. on Tuesday, December 11, 2012.  The meeting is open to the public.

AGENDA
A.   Call to Order  – Chair Ken Jensen
B.   Establish Quorum (at least 4 members) – Chair
C.   Introduction / Welcome  – Chair / All
D.   Approval of Minutes of Meeting of 10/11/2012  – Chair/ All
E.   Review Budget & Implications of Prop 30 – Superintendent Constance Hubbard
F.   Update on School Support Tax (if required) – Superintendent Constance Hubbard
G.   Participation on School Support Tax Subcommittee – Superintendent Constance Hubbard / Chair
H.   Discussion of 2013 CAC Report Content and Schedule  – Chair / All
I.    Schedule Future Meetings – Chair / All
J.   Adjournment  – Chair

 Draft Minutes for meeting of 10/11/2012 (to be handed out at meeting)

For additional information contact : Sandy Spiker Administrative Assistant to the Superintendent Piedmont Unified School District at <sspiker@piedmont.k12.ca.us> or 510-594-2614.

Election Campaign Begins November 30 –

The Board of Education members at their Special Meeting on Wednesday, November 28, voted unanimously to approve a resolution and place a new School Parcel Tax Measure on the March 5, 2012 ballot.  Concerns regarding tax deductibility were overridden by the need for school funding.  The current tiered-rate structure will be retained, allowing a lower tax for smaller parcels, rather than implementing a flat rate per parcel charge.  The ballot measure requires a 2/3rds vote to pass. 

The School Parcel Tax measure includes:

• A tiered parcel tax at an initial $2,000-$3,500 per year
• An 8 year term
• Up to a 2% increase per year allowed (if levied by the School Board) 
• SSI recipient exemption
• No senior or low income discounts or exemptions
• Tax oversight will be provided by a subcommittee of the Budget Advisory Committee rather than the current independent committee.  Any interested citizen or staff may attend as a member of the public.
• Oversight subcommittee members must be Piedmont homeowners and not a current member of PUSD staff; former staff will be permitted.
• Oversight subcommittee members will be limited to 3 to 5 members selected from the Budget Advisory Committee by the President and Vice President of the Board of Education.
• An oversight subcommittee charge will be approved by the Board at a future time.
  
• Oversight subcommittee meetings and Budget Advisory Committee meeting will be publicly noticed and open to the public.
  
• A tiered parcel tax based on current parcel size ranges will be retained, rather than changing to a per square footage charge for structures or lots or a flat rate per parcel.
  

Final refinements to the resolution and ballot measure will be made by the Superintendent prior to submitting them to the Alameda County Registrar of Voters and Alameda County Board of Supervisors.  The Board thanked the numerous individuals who communicated with the Board, the Advisory Committee and the Chairs of the Parcel Tax Campaign Committee.  The kick off for the campaign begins on Friday, November 30.

Editor’s Note:  “Like-rate” generally refers to a flat charge,  for instance $100 per parcel.  Legal counsel to the Piedmont school district has advised that, to the extent the school levy is tiered or graduated (based on square footage or otherwise), the levy risks being considered an ad velorem tax, which is illegal and subject to challenge by any taxpayer as unconstitutional.  (See School Board discussion of the tax levy of October 10, 2012.)

Resident Urges School Board to Reconsider Tax Basis-

Dear School Board Members:

I strongly urge your reconsideration of the basis for the new parcel tax you are recommending for the March 2013 special election.  We are all working toward the goal of continued adequate, equitable and defensible school funding.

Equity and tax deductibility are of primary concerns to me, and, I believe, most of the Piedmont voters.  The November 18^th issue of the Piedmont Civic Association highlighted a matter of increasing concern:  that ongoing tax deductibility of parcel taxes that are NOT based on “a like rate on owners of all properties in the taxing authority’s jurisdiction,” as outlined in a recent IRS opinion letter is questionable. What you are proposing stands a good chance of failing the “like rate” test and could result in Piedmont residents receiving a “Notice of Additional Tax Due.”  Furthermore, the PCA article pointed out that “an aggressive stance by the FTB could not only impact the deductibility of Piedmont’s proposed 8-year school parcel tax of $2,000 to $3,500, but other city parcel taxes that are also based on parcel size.”

A like rate will ensure equity for all Piedmont homeowners, i.e., the same amount per square foot of property or habitable space.  It will stand a strong chance of passing future FTB or IRS tests.

A parcel tax is based on the characteristics of the parcel and, as such, permits differing rates for residential and commercial parcels.

A Local Classrooms Funding Authority parcel tax (Measure CL) was approved on the November 6^th  ballot for voters in Los Angeles County in the Lawndale, Hawthorne, Wiseburn, Lennox and Centinela Valley school districts.  Measure CL levied a parcel tax of 2¢/square foot for residential property, and 7.5¢/square foot for other types of property.

The West Contra Costa Unified School District has a parcel tax rate of 7.2 cents per square foot, which was extended until 2018 by the voters (Measure G) in the November 6^th election by a vote of 75% to 25%.

Both of these school funding sources have seen the wisdom and advantage of using a “like rate” per square foot form of parcel tax.  Piedmont needs to consider the same approach in order to ensure equity irrespective of property size, and ongoing tax deductibility of this and future parcel taxes.

Thank you,

Jim McCrea, Piedmont Resident

Editor’s Note:  “Like-rate” generally refers to a flat charge,  for instance $100 per parcel.  Legal counsel to the Piedmont school district has advised that, to the extent the school levy is tiered or graduated (based on square footage or otherwise), the levy risks being considered an ad velorem tax, which is illegal and subject to challenge by any taxpayer as unconstitutional.  (See School Board discussion of the tax levy of October 10, 2012.)

Resident concerned about seniors and tax deductions-

Re: Nov. 28 Board Meeting consideration of the  Mar. 6, 2013 School Tax Election

President Raushenbush and Honorable Board Members,

As the Piedmont school tax is already far more expensive than virtually all of the other 245 school support taxes in the 1,045 public school districts in the state, I am troubled that soon this tax will be even more expensive by a likely lack of tax deductibility. Fortunately, the Board can adopt a “like rate” tax. Doing so will allow sufficient funding as the Board deems appropriate, create a far more equitable tax system and most likely maintain the tax’s deductible status.

A “like rate” tax was approved in the recent November election for Measure CL in Los Angeles at 2 cents per square foot. Since 2004, West Contra Costa Unified has Measure G on the books, based on 7.2 cents per building square foot, renewed again this November. Alameda Unified School District Measure A, at 32 cents per building foot, passed March 2011. The “like rate” methodology, especially utilizing the building square foot approach, is far more equitable than our current tiered system which is sharply regressive to small home owners. Another advantage to the “like rate” tax structure is the apparently permanent deductibility.

All taxes mentioned above include a senior exemption, and all high ranking California districts have a senior exemption except for Piedmont, which is alone in denying compassion and equality to those who need it most, seniors on fixed incomes. I urge you to add a senior exemption to Measure A. The lack of a senior exemption is troubling and especially regressive as the Piedmont tax is so much higher than other school taxes. One example is the Piedmont tax being up to 2,493% more than the San Ramon Valley school tax with its accompanying senior exemption. That a person in the twilight of their life would be forced out of the community and home they love because of a lack of a senior exemption, when such an exemption is far more the rule than the exception, I find regrettable.

As to the low-income SSI exemption, quite literally no one can afford to live in Piedmont with the $2,000 SSI resource limit. Therefore the SSI exemption is a meaningless gesture, and the Board should seriously consider a senior exemption and dropping the pointless SSI exemption.

Just and equitable solutions have been presented that leave the Board with sufficient funding and, if enacted, will demonstrate that this Board can both provide Piedmont with a quality school system and equity for all residents.

Respectfully,
Rick Schiller, Piedmont Resident