Judge Upholds School Power to Tax New Homes

A Los Angeles Superior Court judge Thursday refused to set aside results of a June 2 election that imposed stiff taxes on developers to pay for school construction in the fast-growing Santa Clarita Valley.

The ruling by Judge Jerry K. Fields was in response to a lawsuit filed June 23 by the California Building Industry Assn. and the Building Industry Assn. of Southern California, which claimed that the election in five school districts was illegal.

Before the election, Fields also turned back a challenge by the developer groups, refusing to order the tax measures removed from the ballot. The state Supreme Court upheld Fields’ decision on appeal.

Richard Wirth, spokesman for the associations, said the developers again will appeal the judge’s decision.

Backed by Two-Thirds of Voters

In the election, the William S. Hart, Newhall, Saugus, Castaic and Sulphur Springs school districts were authorized by more than two-thirds of the voters to immediately begin charging taxes ranging from $5,439 to $6,300 on each new home, depending on the needs of individual districts.

Attorney Alvin S. Kaufer argued that the school districts’ power to conduct the election was stripped by Proposition 62, the final ballot initiative of the late tax crusader Howard Jarvis, approved by voters last November.

Kaufer also maintained that the statewide school financing plan approved by the state Legislature and voters last year sets a maximum of $1.50 a square foot on charges school districts can impose on developers.

Terry Dixon, attorney for four of the school districts, said that property tax-cutting Proposition 13, approved by voters as a constitutional amendment in 1978, specifically gave special districts and public agencies the power to hold tax elections. Constitutional amendments take precedent by law over legislative statutes such as Proposition 62, Dixon said.

He argued that 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.

Siding with the school districts, Fields ruled that the school districts did have the power to conduct the election. He said that an election in which taxes are approved by two-thirds of those who voted takes precedent over any statute enacted either by the state Legislature or the people.

“Proposition 13 took away the property tax from cities, counties and special districts,” Fields said. But the framers of the measure gave these entities the power to enact special taxes, “provided they laid off real estate,” he said.

If the ruling stands, Wirth said, all special districts in the state could follow the school districts’ example and hold elections to enact taxes on new development.

“There are 560 special districts in Los Angeles County alone,” Wirth said.

He added that the taxes will price many first-time home buyers out of the market and may force some small builders to abandon their projects.

Resigned to a Long Court Battle

School district officials predictably said they were pleased by the judge’s ruling. However, they said they are resigned to a long court battle.

“It’s just another round in a long fight,” Castaic Supt. Reed Montgomery said.

In a related matter, the Assembly Education Committee on Monday approved a measure by state Sen. Ed Davis (R-Valencia) to set up a mechanism for the school districts to collect the tax. The measure is now in the assembly’s Ways and Means Committee.

Hart Supt. Clyde Smyth said the districts already are collecting the tax when developers get their permits from the county. However, that method could be challenged in court without sanction from the Legislature, he said.

Meanwhile, few developers of large housing tracts are applying for building permits, pending the outcome of the litigation, Wirth said.