Lawsuit Challenges Key Proposition 13 Provision

In a potentially far-reaching challenge to Proposition 13, a Los Angeles public interest law firm filed suit Thursday seeking to strike down a key provision of the landmark law providing for disparate taxation of comparable properties.

The suit, filed in Los Angeles Superior Court by the Center for Law in the Public Interest, is similar to one dismissed in July by a San Diego County judge. That, too, relied on a U.S. Supreme Court ruling in January, which tossed out a West Virginia law that assessed new property owners at a higher level than longtime owners on grounds that it violated equal protection.

Attorney Carlyle W. Hall Jr. said the suit is a formidable challenge to the 1978 voter-approved initiative because it includes a survey documenting as much as a 15-1 disparity in taxes paid by owners of similar properties. Hall said he is prepared to take the case to the U.S. Supreme Court.

If successful, Hall said, “the 1% cap would stay in effect, but what would be removed is the restriction on the Legislature from setting up a system that allows for more equal treatment of taxpayers.”

Proposition 13 set property taxes at 1% of assessed valuation and froze tax assessments for existing homeowners at 1975 levels. Unless a property is sold, these assessments may rise no more than 2% a year for inflation.

When a property changes hands, however, the new buyer pays taxes based on the purchase price. Since home prices have soared in most areas of California, new owners pay as much as 10 times more in property taxes than neighbors who have owned their homes since the mid-1970s.

The California Supreme Court upheld the constitutionality of Proposition 13 in 1978. The issue was not appealed to the U.S. Supreme Court. In last January’s ruling, Chief Justice William Rehnquist, who wrote the unanimous opinion, specifically noted that “we need not and do not decide” whether the case covered Proposition 13.

Thursday’s suit was brought on behalf of a young attorney, Stephanie Nordlinger, who recently purchased a house in Baldwin Hills. Her tax bill was $1,701, five times higher than that of a neighbor, Hall said.