CODRINGTON, J.—
Petitioner California Cannabis Coalition, a California nonprofit corporation, Nicole De La Rosa and James Velez (collectively, CCC) appeal the judgment entered after the trial court denied CCC's petition for writ of mandate (writ petition). CCC's writ petition requested the trial court to order the City of Upland and the city clerk, Stephanie Mendenhall (collectively, the City), to hold a special election on CCC's medical marijuana dispensary initiative (Initiative).
CCC contends the trial court erred in ruling CCC's Initiative could not be voted on during a special election under article XIII C (Article 13C), section 2 of the California Constitution, because the Initiative imposes a charge on medical marijuana dispensaries, which in effect is a general tax rather than a regulatory fee. CCC objects to the trial court requiring the Initiative to be placed on the next general election ballot, instead of presenting it to the voters earlier by holding a special election. CCC further argues the City council prematurely determined, before the election on the Initiative, that the Initiative constituted a tax rather than a regulatory fee.
CCC requests this court reverse the trial court judgment and order the trial court to issue a writ of mandate compelling the City to hold a special election on the Initiative. CCC suggests, in the interest of expediency, this court treat the instant appeal as a writ petition and directly order the City to call a special election on the Initiative, to be consolidated with the June 7, 2016 primary.
On March 19, 2015, CCC filed a writ petition and motion for peremptory writ of mandate (writ motion). The facts alleged in the writ petition are undisputed. CCC alleges in the writ petition the following facts: CCC is a California nonprofit corporation. CCC sponsored and drafted a proposed medical marijuana initiative petition. The key provisions of the Initiative are that the Initiative would repeal existing City code provisions prohibiting medical marijuana dispensaries and would adopt regulations permitting and establishing standards for the operation of medical marijuana dispensaries within the City. The proposed Initiative allows the City to permit a maximum of three medical marijuana dispensaries. An applicant must obtain a business license and applicable City permits. According to the Initiative, a medical marijuana dispensary must pay the City an "annual Licensing and Inspection fee" of $75,000 (Initiative, § 17.158.100). Initiative proponents, Nicole De La Rosa and James Velez, presented the Initiative petition to the City.
Before circulating the Initiative petition, Nicole De La Rosa and James Velez filed with the City a notice of intention to circulate the Initiative petition. The City attorney prepared a title and summary for the Initiative. Thereafter, a notice of intention to circulate the Initiative petition was published and circulated.
The Initiative requested it be considered at a special election. At least 5,542 signatures (15 percent of registered voters) were needed for the Initiative to qualify for a special election, which would be held sooner than the next regular election. The County of San Bernardino Registrar reported there were 6,865 signatures on the Initiative petition. On February 9, 2015, the City council accepted the county certificate of sufficiency from the San Bernardino County Registrar of Voters and ordered an agency report.
The agency report dated March 4, 2015 (Agency Report), was prepared jointly by City departments under Elections Code section 9212, to address the
The City attorney reported in the Agency Report that the annual $75,000 licensing and inspection fee was a general tax, which under the California Constitution, must be submitted to voters at a regularly scheduled election and cannot appear on a special election ballot. The development services department (Development Services) reported in the Agency Report that the estimated cost of processing a typical permit for a medical marijuana dispensary was $9,379.28, with an estimated $7,000 in cost recovery from additional fees charged for processing the application. Development Services estimated the annual inspection cost for a single medical marijuana dispensary totaled $4,000. Development Services estimated a medical marijuana dispensary would generate $84,480 per year in sales tax revenue.
The City administrative services director, Stephanie Mendenhall, summarized in the Agency Report the City departments' reported costs for obtaining a medical marijuana dispensary permit and for an annual permit inspection as follows. The fire department determined its initial costs for processing a typical medical marijuana dispensary permit would be $1,443, with the additional annual cost of $292 for two biannual inspections to ensure compliance with the Uniform Fire Code. Development Services estimated an initial cost of $9,279.28 for processing a typical permit and $4,000 annually for an annual permit inspection by the building and planning divisions. The total estimated cost for obtaining a medical marijuana permit amounted to $10,722.28. The total estimated cost for annual permit inspections was $4,292. Mendenhall further reported in the Agency Report that the estimated cost of a stand-alone special election was $179,800. The estimated cost of placing the Initiative on the 2016 statewide election (regularly scheduled election) was $25,000.
On March 9, 2015, the City council met. The City received the Agency Report and the City attorney provided additional information contained in the
CCC alleges in its writ petition that the Initiative is not subject to Article 13C because the Initiative fee is not a tax and is not imposed by a local government. Rather, if adopted, the Initiative fee would be imposed by the voters by initiative. CCC also alleges that, even if the $75,000 licensing and inspection fee is a tax, the remedy would be to allow the Initiative to go on the special election ballot. Then, if erroneously approved, the court could strike the Initiative or strike only the section imposing the $75,000 fee. CCC concludes that the City's failure to place the Initiative on a special ballot therefore violates Elections Code section 9214.
CCC further alleges the City refuses to allow CCC to participate in any discussion or hearing determining whether the Initiative imposes a general tax. In addition, Initiative section 17.158.100 allegedly is only a minor part of the overall Initiative and would only affect the three proposed medical marijuana dispensaries. CCC asserts in its writ petition the City took the position the Initiative imposes a general tax because the City is against the Initiative. CCC further alleges the City's position allegedly is a pretext and serves no legitimate purpose. CCC concludes the City's refusal to place the Initiative on a special election ballot violates CCC's rights under the Elections Code and California Constitution. CCC's writ petition therefore requests the trial court to issue a writ of mandate compelling the City and City clerk to place the Initiative on a special election ballot in compliance with Elections Code section 9214.
The City filed an answer and amended answer to CCC's writ petition and opposition to CCC's writ motion. The City argued CCC's writ motion was
The accountant report was prepared by New Era Certified Public Accountants, LLP (New Era), which specializes in accounting and tax preparation services for medical marijuana dispensaries. The accountant report provided a list of compliance areas, including licensing and permits, and estimated related costs incurred by cities and counties. New Era estimated the total annual cost of the enforcement procedures itemized in the accountant report totaled $56,540 per dispensary, plus an additional annual $10,000 per dispensary to cover possible fees resulting from a noncompliant dispensary failing to comply with applicable regulations and guidelines, which could lead to revocation or suspension of a license.
On May 19, 2015, the trial court heard oral argument on CCC's writ motion. Without addressing whether Article 13C, section 2 applies to initiatives that impose a tax, the trial court denied CCC's writ petition and writ motion, finding that the $75,000 fee imposed by the Initiative qualified as a tax and therefore the Initiative was required to be placed on the next general election ballot. On June 5, 2015, the trial court entered judgment in favor of the City and against CCC on each allegation in CCC's writ petition. Although CCC filed a premature notice of appeal of the May 19, 2015 ruling before entry of judgment, this court ordered the premature notice of appeal construed as an appeal of the judgment.
The parties agree that CCC's appeal is not moot. (See Jeffrey v. Superior Court (2002) 102 Cal.App.4th 1, 4-5 [125 Cal.Rptr.2d 175].) However, by
When reviewing the trial court's ruling denying CCC's petition for a writ of mandate to compel a special election on the Initiative, this court "`"need only review the record to determine whether the trial court's findings are supported by substantial evidence."' [Citation.] However, we review questions of law independently. [Citation.] Where, as here, the facts are undisputed and the issue involves statutory interpretation, we exercise our independent judgment and review the matter de novo. [Citation.]" (Wade, supra, 108 Cal.App.4th at p. 129.) The issues raised here, of whether imposition of the Initiative's $75,000 fee is a tax or a fee and whether, pursuant to Article 13C, section 2, the Initiative must be placed on a special election ballot, are questions of law for this court to decide on an independent review of the facts. (Weisblat v. City of San Diego (2009) 176 Cal.App.4th 1022, 1040 [98 Cal.Rptr.3d 366] (Weisblat).) "The construction of a statute or an initiative, including the resolution of any ambiguity, is a question of law that we review de novo." (Schmeer v. County of Los Angeles (2013) 213 Cal.App.4th 1310, 1317 [153 Cal.Rptr.3d 352] (Schmeer).)
CCC contends that, even assuming the $75,000 fee imposed by the Initiative qualifies as a tax, Article 13C, section 2 does not apply because Article 13C is limited to taxes imposed by government, not by initiative. Therefore Article 13C does not preclude the Initiative from being placed on a special election ballot under Elections Code sections 1405 and 9214.
Article II, sections 8 and 11 of the California Constitution, and Elections Code sections 1405 and 9214 instruct on placing an Initiative on an election ballot. Article 13C provides voting requirements for taxes imposed by local government.
Elections Code section 9214 provides that, "If the initiative petition is signed by not less than 15 percent of the voters of the city according to the last report of registration by the county elections official to the Secretary of State ... and contains a request that the ordinance be submitted immediately to a vote of the people at a special election, the legislative body shall do one of the following:
In the instant case, the Initiative petition was signed by over 15 percent of the City voters, thereby qualifying the Initiative for placement on a special election ballot under Elections Code section 9214. The City council ordered a report pursuant to Elections Code section 9212, on the impact of the Initiative on the City. After the City Agency Report was presented to the City, the City ordered a regular election, instead of a special election.
The City argues the Initiative imposes a general tax and therefore Elections Code section 9214 is superseded by Article 13C, which requires the Initiative to be placed on the next regularly scheduled general election, on November 8, 2016. Article 13C, was enacted when voters passed Proposition 218 in 1996, "to implement Proposition 13, the predecessor initiative that voters passed in 1978 to constrain the taxation powers of state and local government." (Weisblat, supra, 176 Cal.App.4th at p. 1033; see Schmeer, supra, 213 Cal.App.4th at p. 1317.)
In response to Sinclair and the proliferation of governmental entities raising revenues through sales taxes without voter approval, Proposition 218, entitled the "Right to Vote on Taxes Act," passed in 1996. (See Schmeer, supra, 213 Cal.App.4th at p. 1319.) Proposition 218 added to the California Constitution Article 13C and article XIII D, which imposed additional approval requirements on the imposition of taxes by state and local government. (Schmeer, at p. 1319; Weisblat, supra, 176 Cal.App.4th at p. 1038; Bay
Article 13C, section 1, subdivision (d) defines a "special tax" as "any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund." "`[A] tax is special whenever expenditure of its revenues is limited to specific purposes; this is true even though there may be multiple specific purposes for which [the] revenues may be spent.' [Citation.] Under Proposition 218, `[n]o local government may impose, extend, or increase any special tax' until the matter is `submitted to the
Here, the dispositive issue is whether Article 13C applies to the Initiative, which imposes a $75,000 fee. We need not reach the issue of whether the fee is a tax under Article 13C because, regardless, Article 13C, section 2 does not apply to the Initiative. This is because Article 13C, section 2 is limited to taxes imposed by local government and is silent as to imposing a tax by initiative.
CCC argues that Article 13C does not apply to the Initiative because it is limited to taxes imposed by local government. We agree. Article 13C, section 1, subdivision (e) defines a tax as "any levy, charge, or exaction of any kind imposed by a local government," subject to seven specified exceptions. (Art. 13C, § 1, subd. (e), italics added.) Article 13C, section 1, subdivision (e) does not expressly include fees imposed by initiative. Because Article 13C is silent in this regard, we decline to construe Article 13C as applying to taxes imposed by initiative.
The City relies on Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809 [107 Cal.Rptr.2d 369, 23 P.3d 601] (La Habra) for the proposition a tax imposed by local government refers to, not only enactment of a tax by local government, but also its continuing collection by and payment to a local government. But La Habra is not on point. It concerns Proposition 62, which, in 1986, added Government Code sections 53727
In La Habra, supra, 25 Cal.4th 809, the city adopted an ordinance establishing a utility users tax to raise revenue for general government purposes. The La Habra court held the statute of limitations had not run on the petitioner's challenge to the City of La Habra's continuing collection of a tax without obtaining voter approval of the tax. In reaching its holding, the
In La Habra, supra, 25 Cal.4th at pages 823-824, the court further explained: "[T]he City appears to contend that Proposition 62 can be violated only at the time a tax ordinance is first enacted because, in the City's view, all Proposition 62 prohibits is `imposition' of a tax without voter approval, and imposition is limited to the time of initial enactment. Both premises are faulty. Government Code section 53727, subdivision (b), which governs taxes imposed prior to the measure's passage, provides that no such tax `shall continue to be imposed' without a vote within two years of the measure's effective date, and that a taxing jurisdiction that fails to obtain a majority vote `shall cease to impose such tax on and after November 15, 1988.' Clearly, in this provision, `imposition' is not limited to the time of initial enactment, and nothing in Proposition 62 suggests that it was used in a more restricted sense in Government Code section 53723,[
The instant case is distinguishable from La Habra. La Habra is founded on Proposition 62 and statutory language that expressly prohibits, not only taxes imposed by government without voter approval, but also taxes imposed by local government before adoption of Proposition 62, which the government has continued to impose without obtaining voter approval of the taxes. There is no similar language in Proposition 218 (Art. 13C) or Proposition 26, from which this court can reasonably infer Propositions 218 and 26 are intended to
The purpose and intent of Propositions 13 and 218 is to limit the power of local governments to impose taxes by imposing voting requirements. "`Section 5 of Proposition 218 required that the provisions of the act be "liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent."' [Citation.]" (Weisblat, supra, 176 Cal.App.4th at p. 1039, citing Pajaro, supra, 150 Cal.App.4th at p. 1378 and quoting Bay Area Cellular, supra, 162 Cal.App.4th at p. 693; see Howard Jarvis Taxpayers Assn. v. City of Riverside (1999) 73 Cal.App.4th 679, 681-682 [86 Cal.Rptr.2d 592].) As explained in Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 Cal.App.4th 637, 640 [119 Cal.Rptr.2d 91], in adopting Proposition 218, adding Article 13C, "the people found and declared `"that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent."'" (Italics added.)
Likewise, the purpose of Proposition 26, which amended Article 13C by adding section 1, subdivision (e), was to "curb the perceived problem of a proliferation of regulatory fees imposed by the state without a two-thirds vote of the Legislature or imposed by local governments without the voters' approval" by defining "a `tax' to include `any levy, charge, or exaction of any kind imposed by' the state or a local government, with specified exceptions." (Schmeer, supra, 213 Cal.App.4th at p. 1326, italics added.) As stated in Proposition 26's "Findings and Declarations of Purpose," Proposition 26 was passed in response to "the recent phenomenon whereby the Legislature and local governments have disguised new taxes as `fees' in order to extract even more revenue from California taxpayers without having to abide by these constitutional voting requirements. Fees couched as `regulatory' but which exceed the reasonable costs of actual regulation or are simply imposed to raise revenue for a new program and are not part of any licensing or permitting program are actually taxes and should be subject to the limitations applicable to the imposition of taxes." (Voter Information Guide, Gen. Elec. (Nov. 2, 2010) text of Prop. 26, § 1, subd. (e), p. 114; see Weisblat, supra, 176 Cal.App.4th at p. 1041.) Proposition 26 further states that, "[i]n order to ensure the effectiveness of these constitutional limitations, this measure also defines a `tax' for state and local purposes so that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by
Although not binding authority, the Proposition 26 Implementation Guide, citing Ponderosa, supra, 23 Cal.App.4th at page 1770, discusses the meaning of the term "impose," as follows: "By its terms, Proposition 26 applies only to fees that are `imposed' by government. Fees imposed by private parties (like telephone charges and many solid waste collection fees) are not within the scope of Proposition 26. Moreover, many fees collected by local governments are not `imposed' by them, either because local government is collecting a fee imposed by the state or because the fee is voluntarily paid. Courts can be expected to rely, as they have in similar contexts, on the dictionary meaning of `impose,' which is to establish or apply by authority or force." (League of Cal. Cities, Proposition 26 Implementation Guide (Apr. 2011 ed.) pp. 9-10 <http://www.cacities.org/Resources-Documents/Policy-Advocacy-Section/Hot-Issues/Proposition-26-Implementation-Guide> [as of Mar. 18, 2016].)
In Ponderosa, supra, 23 Cal.App.4th 1761, the court addressed the question of "whether the `imposition of fees' in [Ponderosa] occurred when the City first set the traffic mitigation fees as a condition on its tentative subdivision map approval, or when Ponderosa paid an installment on the fees already required by the City." (Id. at p. 1769.) Ponderosa Homes, Inc. (Ponderosa Homes), argued that no cause of action protesting development project fees Government Code section 66020 accrues "`until the challenged
The court in Ponderosa further explained that "[t]he statutory definition of `imposition of fees' does not contradict this interpretation. Section 66020, subdivision (h) states that `imposition of fees, dedications, reservations, or other exactions occurs ... when they are imposed or levied on a specific development.' The statute does not say that imposition occurs `when they are paid or complied with.'" (Ponderosa, supra, 23 Cal.App.4th at p. 1770, citing Webster's 3d New Internat. Dict., supra, p. 1301.) The court in Ponderosa therefore concluded that Ponderosa Homes's payment of the required map processing fee "simply constituted the satisfaction of the condition already imposed earlier," and was not paid at the time the government imposed the fee. (Ponderosa, at p. 1771.)
Likewise, here, based on our review of Propositions 13, 218, and 26 as whole and taking into consideration the stated intent of these propositions (preventing government from imposing taxes without voter approval), we conclude the drafters, proponents, and voters of Propositions 13, 218 and 26 did not intend the language, "imposed by local government," to encompass taxes imposed by initiative, but later collected or received by local government.
The only mention of the initiative power in Article 13C is in section 3, which clarifies that, "[n]otwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all
Article II, section 8 of the California Constitution creates the statewide initiative power. (Rossi, supra, 9 Cal.4th at p. 695.) It provides in pertinent part:
Article II, section 11, subdivision (a) of the Constitution further provides: "(a) Initiative and referendum powers may be exercised by the electors of each city or county under procedures that the Legislature shall provide." "The local initiative power may be even broader than the initiative power reserved in the Constitution." (Rossi, supra, 9 Cal.4th at p. 696.) The initiative procedures that the Legislature has enacted are included in Elections Code sections 1405 and 9214. The constitutional grant of authority to the Legislature to pass laws regarding taxation does not limit the people's plenary power of initiative, and that power may be used to enact or repeal taxes. (Rossi, at p. 709.)
Elections Code section 1405, subdivision (a) provides in relevant part:
Here, the Initiative qualifies under Elections Code section 9214 for a special election, since the Initiative petition was signed by at least 15 percent of the City voters and the initial Initiative petition contained a request that the Initiative be submitted immediately to a vote of the people at a special election. Therefore the City is required to place the Initiative on a special election ballot. Where the City council "refuses to discharge its duty and fix a proper time for the election, it may be compelled to do so by mandamus." (Blotter v. Farrell (1954) 42 Cal.2d 804, 812-813 [270 P.2d 481].) The trial court therefore abused its discretion by denying CCC's writ petition to compel the City to place CCC's Initiative on a special ballot, as required under article II, sections 8 and 11 of the California Constitution, and Elections Code sections 1405 and 9214.
The trial court's ruling and judgment denying CCC's writ petition is reversed, and the trial court is directed to issue a writ of mandate compelling the City to place the Initiative on a special ballot, in accordance with article II, sections 8 and 11 of the California Constitution, and Elections Code sections 1405 and 9214. CCC is awarded its costs on appeal as the prevailing party.
Hollenhorst, Acting P. J., and McKinster, J., concurred.
"(b) Any tax imposed by any local government or district on or after August 1, 1985, and prior to the effective date of this Article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the issue of imposition, which election shall be held within two years of the effective date of this Article. Any local government or district which fails to seek or obtain such majority approval shall cease to impose such tax on and after November 15, 1988." (Italics added.)
