Builders Sue to Overturn Santa Clarita School Tax

Two organizations representing developers filed suit Tuesday seeking to overturn a June 2 election in which Santa Clarita Valley voters approved steep taxes on new housing to pay for schools.

The civil suit, brought by the California Building Industry Assn. and the Building Industry Assn. of Southern California, asks the court to invalidate the election results and to allow Los Angeles County to issue building permits without payment of the taxes while the matter is in litigation.

In the election, the William S. Hart, Newhall, Saugus, Castaic and Sulphur Springs school districts were authorized to begin immediately to collect taxes of up to $6,300 a home at the time building permits are issued. The funds are earmarked for new schools for students whose families move into the fast-growing Santa Clarita Valley.

The suit filed in Los Angeles Superior Court came as no surprise to school officials. In May, developers took an unsuccessful attempt to block the election as far as the state Supreme Court, which refused to hear the case. Building-industry representatives said after the tax measures passed, by an average of 75% of the vote in each school district, that they would turn to the courts again.

“This is what we anticipated,” said J. Michael McGrath, superintendent of the Newhall Elementary School District.

Authority to Tax Contested

The new suit maintains that voters do not have the authority to impose such taxes, said Alvin S. Kaufer, attorney for the developer groups. Proposition 62, the final ballot initiative of the late Howard Jarvis, approved last November, took away from special districts “what appears to have been a blanket power to tax,” he said.

Kaufer said the suit also argues that a statewide school financing plan approved by the state Legislature and voters last year sets a maximum of $1.50 per square foot on charges school districts can impose on developers. The Santa Clarita Valley measures set flat fees, ranging from $5,439 to $6,300 per home, based on the needs of the individual districts.

The suit also contends that the measures constitute taxation without representation because the taxes will be passed on to the buyers of the new homes, who, because they have not yet arrived, had no opportunity to vote on the measures.

But Terry Dixon, attorney for the school districts, said that property-tax-cutting Proposition 13, approved by voters in 1978 as a constitutional amendment, specifically gave special districts and public agencies the power to hold tax elections. The school districts contend that the constitutional amendment cannot be changed by mere statute.

“Proposition 62 enacted a statute,” he said. “We don’t believe a statute can negate the constitutional provisions of Proposition 13.

Further, Dixon said, the state financing plan, which went into effect Jan. 1, does not preclude districts, with the approval of voters, from levying more taxes to build schools.

“I would rather see the developers devote their resources to getting the state to commit to additional funding for schools,” he said. “The real problem is where are the school districts going to get the funds.”

Insufficient Funds

School officials say that at least 25 new schools must be built at a cost of about $300 million to accommodate a student population that is expected to double to more than 40,000 by the year 2000. It is unlikely that they will receive any funds from the state, educators say, because only $400 million to $500 million is available for school construction, whereas school-district applications for construction funds amount to almost $3 billion.

Kaufer said that, if the courts uphold the taxes, the cost will be passed on to the consumer, pricing some low- and moderate-income home buyers out of the market.

A hearing on the issue is expected to be held in mid-July, Kaufer said. Whatever the court’s ruling, both sides of the dispute have said they will appeal the matter if the outcome is not in their favor.