AUBURN MANOR HOLDING CORPORATION, et al., Plaintiffs and Appellants, v. CITY OF ROSEVILLE, Defendant and Respondent.
In the underlying action, plaintiffs Auburn Manor Holding Corporation, et al., developers of a senior citizen housing project within defendant City of Roseville (City), sought a refund of the residential construction tax imposed by the City one year after issuance of its building permit. The case was tried upon stipulated facts and submitted to the court for resolution. The court ruled in favor of the City and plaintiffs appeal.
Plaintiffs argue that imposition of development fees and the dedication of real property to finance the creation and maintenance of city parks are matters of statewide concern the Legislature addressed by an elaborate statutory scheme set forth in section 66477 of the Government Code. The residential construction tax is invalid as a conflicting municipal ordinance. The City, however, denies the validity of the tax hinges on section 66477 and asserts the tax is a valid exercise of its constitutional power to tax. (Cal.Const., art. XI, § 5, subd. (a).) We agree with plaintiffs' position and shall reverse the judgment entered by the trial court.
In the early 1970's, as the City continued to experience rapid growth, an urgent need for additional parks arose. In 1972 City staff prepared two alternative financing proposals. The first, entitled the “Land Dedication–In Lieu Fee Method,” was predicated on Business and Professions Code section 11546, the predecessor to Government Code section 66477 and, as noted by staff, would have required “the dedication of land, the payment of fees in lieu thereof, or a combination of both, for park and recreation purposes as a condition to the approval of the final subdivision map.” The city would have been required to adopt definite standards to govern the amount of land/or fees required. Staff, however, recommended adoption of the second method proposed, a “Residential Development Fee” which, according to staff, “requires all new construction to contribute a share of the city's capital burden produced by the additional dwelling unit.” According to the staff report, “[p]roperty development taxes are under the taxing power doctrine and not the police power doctrine as are the land dedication and/or in lieu fees method. Consequently, these taxes are for providing public facilities and services and not for the protection of the general welfare under the police power. Charter cities such as Roseville are authorized to impose such taxes or fees under California statutes applying the municipal affairs principle.”
The city council, accepting staff's recommendation, enacted ordinance No. 1164 imposing a “residential construction tax.” Section 3 reads: “A residential construction tax is hereby imposed on the privilege of constructing in the City of Roseville any mobile home lot or residential dwelling unit, and every person to whom a permit to construct any residential dwelling unit in the City of Roseville is issued ․ shall pay to the City of Roseville such tax․”
In 1974 Business and Professions Code section 11546 was recodified as Government Code section 66477 and in 1975 and 1976 the City's Municipal Code was recodified and the residential construction tax ordinance was reenacted in chapter 4.36. The City increased the tax rates in January 1978.
In June 1978 the voters of the State of California enacted “Proposition 13,” an initiative constitutional amendment (Cal. Const., art. XIIIA) reducing and restricting the imposition of property taxes. To assure that municipal governments would not replace the loss of revenue from property taxation with alternative taxes, the amendment requires the imposition of special taxes to be approved by a two-thirds vote of the electorate. (Art. XIIIA, § 4; Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal.3d 197, 208, 182 Cal.Rptr. 324, 643 P.2d 941.) The following year, the Legislature enacted implementing legislation setting forth the procedural requirements cities and counties must follow to enact special taxes. (Gov.Code, § 50077.)
Article XI, section 5, subdivision (a) of the state Constitution describes the “home rule” powers of charter cities: “It shall be competent in any city charter to provide that the city governed thereunder may make and enforce all ordinances and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws. City charters adopted pursuant to this Constitution shall supersede any existing charter, and with respect to municipal affairs shall supersede all laws inconsistent therewith.”
Historically, the “home rule” provisions of the California Constitution were intended to grant charter cities a measure of autonomy over their internal affairs. “ ‘It was to enable municipalities to conduct their own business and control their own affairs to the fullest possible extent in their own way. It was enacted upon the principle that the municipality itself knew better what it wanted and needed than the state at large, and to give that municipality the exclusive privilege and right to enact direct legislation which would carry out and satisfy its wants and needs․ to give municipalities the sole right to regulate, control, and govern their internal conduct independent of general laws․' ” (Johnson v. Bradley (1992) 4 Cal.4th 389, 395–396, 14 Cal.Rptr.2d 470, 841 P.2d 990 (quoting Fragley v. Phelan (1899) 126 Cal. 383 at p. 387, 58 P. 923), emphasis in original.)
As more recently expressed, “ ‘home rule’ is a means of adjusting the political relationship between state and local governments in discrete areas of conflict.” (California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1, 18, 283 Cal.Rptr. 569, 812 P.2d 916 (CalFed ).) Defining the precise parameters of municipal and state authority, however, has proved difficult. Thus, the Supreme Court was moved to observe that “Since the addition of the ‘home rule’ provision to our Constitution in 1896, the organic law of California has granted charter cities sovereignty over ‘municipal affairs.’ Although this court and the Court of Appeal have parsed that cryptic phrase in literally scores of cases in the 95 years since the adoption of what is now article XI, section 5, subdivision (a) of the Constitution, what an early member of this court called those ‘wild words' have defeated efforts at a defining formulation of the content of ‘municipal affairs.’ ” (Id. at pp. 5–6, 283 Cal.Rptr. 569, 812 P.2d 916.) Nevertheless, the court in CalFed undertook to provide an analytical framework for the resolution of conflicts between state and municipal law.
Preliminarily, the Court admonished that ad hoc judicial circumspection is required. “ ‘[T]he constitutional concept of municipal affairs is not a fixed or static quantity’ and ․ the question ‘must be answered in light of the facts and circumstances surrounding each case.’ ” (CalFed, supra, 54 Cal.3d at p. 16, 283 Cal.Rptr. 569, 812 P.2d 916.) While acknowledging the need for fluidity in assessing the legitimacy of a “municipal affair” claim, the court also strove “to confine the element of judicial interpretation by hedging it with a decisional procedure intended to bring a measure of certainty to the process, narrowing the scope within which a sometimes mercurial discretion operates.” (Ibid.)
Blending ad hoc judicial flexibility with concrete analytical tools, CalFed, supplemented by Johnson v. Bradley, supra, 4 Cal.4th 389, 14 Cal.Rptr.2d 470, 841 P.2d 990, provides a three-step analysis. First, we must determine whether there is an actual conflict between the state statutory development fee structure and the municipal tax ordinance. “In broad outline, a court asked to resolve a putative conflict between a state statute and a charter city measure initially must satisfy itself that the case presents an actual conflict between the two. If it does not, a choice between the conclusions ‘municipal affair’ and ‘statewide concern’ is not required․ To the extent difficult choices between competing claims of municipal and state governments can be forestalled in this sensitive area of constitutional law, they ought to be; courts can avoid making such unnecessary choices by carefully insuring that the purported conflict is in fact a genuine one, unresolvable short of choosing between one enactment and the other.” (CalFed, supra, 54 Cal.3d at pp. 16–17, 283 Cal.Rptr. 569, 812 P.2d 916; Johnson, supra, 4 Cal.4th at pp. 398–399, 14 Cal.Rptr.2d 470, 841 P.2d 990.)
Second, if there is an unavoidable conflict between the municipal and state law, then “the question of statewide concern is the bedrock inquiry through which the conflict between state and local interests is adjusted․ [¶] The phrase ‘statewide concern’ is thus nothing more than a conceptual formula employed in aid of the judicial mediation of jurisdictional disputes between charter cities and the Legislature, one that facially discloses a focus on extramunicipal concerns as the starting point for analysis․ [¶] In cases presenting a true conflict between a charter city measure—whether tax or regulatory—and a state statute, therefore, the hinge of the decision is the identification of a convincing basis for legislative action originating in extramunicipal concerns, one justifying legislative supersession based on sensible, pragmatic considerations.” (CalFed, supra, 54 Cal.3d at pp. 17–18, 283 Cal.Rptr. 569, 812 P.2d 916.)
Third, if a genuine conflict is presented and the state statute qualifies as a matter of statewide concern, “we next consider whether it is both (i) reasonably related to the resolution of that concern, and (ii) ‘narrowly tailored’ to limit incursion into legitimate municipal interests.” (Johnson, supra, 4 Cal.4th at p. 404, 14 Cal.Rptr.2d 470, 841 P.2d 990.)
Consequently, a state statute reasonably related and narrowly tailored to address a matter of statewide concern prevails over conflicting municipal ordinances. We must determine whether: 1) City's residential construction tax conflicts with section 66477, 2) the exaction for park purposes is a matter of statewide concern, and 3) section 66477 is reasonably related, and narrowly drawn, to provide an equitable financing mechanism to promote the construction of public parks without a deleterious impact on the state housing supply.1
A. Is there an actual conflict?
We first consider whether there is an actual conflict between Government Code section 66477's exaction on developers for park purposes and the City of Roseville's park tax.
The 1972 Roseville ordinance imposed a residential construction tax “on the privilege of constructing in the City of Roseville any mobile-home lot or residential dwelling unit․” The ordinance declares that it is enacted pursuant to the City's “taxing power” and “solely for the purpose of producing revenue.” However, the ordinance also states that the revenue “shall be used and expended solely for the acquisition, improvement and expansion of the public park, playground and recreational facilities of the City of Roseville and/or in accordance with applicable law for the ․ development of playground and recreational facilities having immediate public street access owned by elementary and high school districts and devoted to public school purposes.”
At the time the ordinance was enacted Business and Professions Code section 11546 provided that the “governing body of a city or county may by ordinance require the dedication of land [or] the payment of fees in lieu thereof ․ for park or recreational purposes as a condition to the approval of a final subdivision map ․” provided that ․ “The land [or] fees ․ are to be used only for the purpose of providing park or recreational facilities to serve the subdivision.” (Stats.1965, ch. 1809, § 2, p. 4183.) Section 11546's successor, Government Code section 66477 currently provides: “The legislative body of a city or county may, by ordinance, require the dedication of land or impose a requirement of the payment of fees in lieu thereof, or a combination of both, for park or recreational purposes as a condition to the approval of a tentative map or parcel map, provided that” various criteria are satisfied. The Legislature thereby established a means for charging subdividers for parks.
“A conflict [between a city ordinance and state law] exists if the local legislation duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication. [Citations.] [¶] Local legislation is duplicative of general law when it is coextensive therewith. [Citation.] [¶] Similarly, local legislation is contradictory to general law when it is inimical thereto. [Citation.] [¶] Finally, local legislation enters an area that is fully occupied by general law when the Legislature has expressly manifested its intent to fully occupy the area [citation], or when it has impliedly done so․” (Sherwin–Williams Co. v. City of Los Angeles (1993) 4 Cal.4th 893, 897–898, 16 Cal.Rptr.2d 215, 844 P.2d 534, internal quotation marks omitted.)
While City's residential construction tax parallels section 66477 in many important respects, it targets a more expansive class and finances school recreational facilities as well as parks.2 A review of the legislative history of the ordinance discloses that the broader scope of the ordinance was touted as one of the advantages to a residential construction tax over a developer fee. Whereas section 66477 applies only to subdividers and must be paid as a condition to approval of a tentative or parcel map, the tax applies to all new construction and is due upon issuance of a building permit. Developers' fees under section 66477 “are to be used only for the purpose of developing new or rehabilitating existing neighborhood or community park or recreational facilities to serve the subdivision.” Revenues from the residential construction tax, however, can also be used for the “installation and development of playground and recreational facilities having immediate public street access owned by elementary and high school districts and devoted to public school purposes.”
Key elements of the ordinance are coextensive with section 66477. Both require the segregation of the moneys received into a special fund and restrict the expenditure of the fund to finance park and recreational facilities. Both allow for the dedication of land in lieu of the payment of the fee or tax. And both necessitate the establishment of standards for determining the amount of the assessment based on residential densities. In these ways, the residential construction tax is coextensive with a developer fee and as duplicative legislation, the ordinance is in conflict with section 66477.
In two important respects, the provisions of the ordinance are inimical to section 66477. Limitations on the amount of the fee and the time within which the revenue must be committed for park purposes are set forth in subdivisions (e) and (f). Subdivision (e) provides: “The amount and location of land to be dedicated or the fees to be paid shall bear a reasonable relationship to the use of the park and recreational facilities by the future inhabitants of the subdivision.” Subdivision (f) goes on to state: “The city, county, or other local public agency to which the land or fees are conveyed or paid shall develop a schedule specifying how, when, and where it will use the land or fees, or both, to develop park or recreational facilities to serve the residents of the subdivision. Any fees collected under the ordinance shall be committed within five years after the payment of such fees or the issuance of building permits on one-half of the lots created by the subdivision, whichever occurs later. If the fees are not committed, they, without any deductions, shall be distributed and paid to the then record owners of the subdivision in the same proportion that the size of their lot bears to the total area of all lots within the subdivision.”
The ordinance contains no such limitations. There is no attempt to create a nexus between the tax and the burden imposed on the City by the project. Nor is there any assurance the parks or recreational facilities will be constructed to benefit those for whom the tax was paid. Whereas section 66477 contains an express guaranty purchasers within a subdivision will either receive parks or a refund of their proportionate share of the developers' fee, there is no reversion of the tax to similarly situated residential construction taxpayers if the parks or recreational facilities are not constructed.
The conflict between City's ordinance and section 66477 is neither tangential nor hypothetical. The Legislature constructed a balanced scheme to provide a vehicle for exacting payment for an increased need for parks from developers while assuring those fees could not surpass the additional burden placed on recreational facilities by the future inhabitants of the subdivision. Section 66477 also includes the mechanism to compel the municipality to develop the parks the fees were collected to finance. The ordinance, however, attempts to evade such controls. Under the guise of a residential construction tax, City exacts payment from developers which may bear no reasonable relationship to the use of the parks generated by the subdivision. Hence, the ordinance enables City to do that which the statute expressly proscribes.
In presenting a genuine and immediate conflict, City's ordinance stands in stark contrast to the municipal tax ordinances which survived Map Act preemption challenges in The Pines v. City of Santa Monica (1981) 29 Cal.3d 656, 175 Cal.Rptr. 336, 630 P.2d 521, and Centex Real Estate Corp. v. City of Vallejo (1993) 19 Cal.App.4th 1358, 24 Cal.Rptr.2d 48. In both The Pines and Centex the respective ordinances imposed a general tax to provide a revenue source for general governmental purposes. The moneys collected were designated for the general fund. “The City has the power to impose taxes to generate revenue for public purposes. ‘[T]he power to raise revenue for local purposes is not only appropriate but, indeed, absolutely vital for a municipality. [Citations.]’ ” (Centex Real Estate Corp. v. City of Vallejo, supra, 19 Cal.App.4th at pp. 1363–1364, 24 Cal.Rptr.2d 48.) The ability of charter cities “to impose revenue taxes can be curtailed only by the charter itself or when ‘in direct and immediate conflict with a state statute or statutory scheme.’ [Citation.] That the state has preempted a field of statewide concern for purposes of regulation does not itself prevent local taxation of the persons or activities regulated.” (The Pines v. City of Santa Monica, supra, 29 Cal.3d at p. 660, fn. 3, 175 Cal.Rptr. 336, 630 P.2d 521.)
Concluding the ordinance imposing a revenue tax does not conflict with the state scheme for regulating subdivisions, the court, in The Pines, expressly declined to consider whether the city's local taxation was a municipal affair “in which legislation by a charter city prevails over conflicting state law.” (The Pines v. City of Santa Monica, supra, 29 Cal.3d at p. 664, 175 Cal.Rptr. 336, 630 P.2d 521.)
The second case, Centex Real Estate Corp. v. City of Vallejo, supra, 19 Cal.App.4th 1358, 24 Cal.Rptr.2d 48, in which the court upheld the validity of a tax over a Map Act preemption claim, bears remarkable similarity to the case presently before us. In Centex, a Vallejo ordinance imposed a property development excise tax on developers as a condition of the issuance of a building permit. Like plaintiff, real estate developers challenged the validity of the ordinance contending the tax was in fact a fee designed to circumvent Government Code section 66000 et seq. which restrict the imposition of development fees. The court upheld the validity of the exaction as a legitimate tax expressly excluded by the Legislature from the definition of a fee. (Id. at p. 1360, 24 Cal.Rptr.2d 48.) The court also concluded the legislative history of the ordinance demonstrated an intent to comply with, rather than to circumvent, the statute. (Id. at p. 1365, 24 Cal.Rptr.2d 48.)
The court reasoned: “The excise tax here has all of the characteristics of a privilege tax. It is imposed only upon approval and issuance of a building permit which generally precedes the exercise of the privilege of developing property. It is imposed to raise revenue for the City's general fund and not for the limited purpose of funding public facilities or services related to a new development.” The court went on to recite the findings by the city council: “ ‘The City Council finds that during the course of the process [responding to Assembly Bill No. 1600 and reassessing the City's fees and taxes] it has recognized the ambiguous status of the former Real Property and Bridge Construction Development Taxes, which despite their name, actually resembled fees in many respects. Those taxes were adopted at a time when the distinctions between fees and taxes did not carry the implications they do today. In response to AB 1600, and in recognition of the City's need to develop a general funding mechanism to meet general service needs, the City Council finds that the former Development Taxes have been reassessed and, where appropriate, structured as fees or taxes. For example, to the effect that those former Taxes were meant to offset new development's impact on capital facilities, they have been restructured as fees; the Public Facilities Fee loosely succeeds the former Real Property Development Tax and the present Transportation Fee loosely succeeds the former Bridge Construction Development Tax. To the effect that those former Taxes were meant to be construed as taxes and provide the City with discretion to spend their proceeds, they have been succeeded by the Property Development Excise Tax.’ ” (Id. at pp. 1364–1365, 24 Cal.Rptr.2d 48.) The court concluded: “In view of this clear expression of legislative intent and appellants' failure to show that the excise tax conflicts with a state statute, we conclude that the excise tax is valid.” (Id. at p. 1365, 24 Cal.Rptr.2d 48.)
We begin with the obvious observation that the fiscal realities of municipal government were vastly different in 1972, when the Roseville City Council enacted its residential construction tax, than in 1989 when the Vallejo City Council, in revamping its fee and tax structure, imposed a property development excise tax on developers. Roseville's ordinance was passed in a pre-Proposition 13 world when, as the Vallejo Council acknowledged, “the distinctions between fees and taxes did not carry the implications they do today.” (Centex, supra, 19 Cal.App.4th at p. 1364, 24 Cal.Rptr.2d 48.)
An examination of the legislative history of City's residential construction tax reveals the council chose between what it considered two viable options to finance its escalating need for additional parks and recreational facilities: imposition of developer fees pursuant to the Map Act or imposition of a tax on construction pursuant to a charter city's home rule right to tax for local purposes. City adopted the staff's recommendation to enact a tax ordinance unencumbered by the restrictions set forth in the Map Act. Unlike its counterpart years later in Vallejo, the Roseville council brashly adopted a tax ordinance in conflict with the statutory fee scheme believing it had the constitutional prerogative to do so as a municipal affair. Where Vallejo carefully constructed a complimentary tax and fee scheme, Roseville asserted its purported raw authority to legislate for local concerns.
While we do not disagree with the result in Centex, we hesitate to ascribe such importance to legislative intent in assessing whether the local ordinance conflicts with a statute. Legislative intent is relevant in determining whether the state Legislature fully occupied the field either expressly or by implication. A local government may be applauded for its diligent attempt to subscribe to state law, but its benign intent does not determine whether the laws clash or whether the issue involves a matter of statewide concern. Rather, the arbitration of conflicting state and municipal legislation devolves exclusively upon the judiciary—a task we hesitantly but dutifully undertake.
A charter city's right to tax for general revenue was central to both decisions. “The City has the power to impose taxes to generate revenue for public purposes. ‘[T]he power to raise revenue for local purposes is not only appropriate but, indeed, absolutely vital for a municipality. [Citations.]’ ” (Centex Real Estate Corp. v. City of Vallejo, supra, 19 Cal.App.4th at pp. 1363–1364, 24 Cal.Rptr.2d 48.) Here, however, the exaction was not imposed to generate revenue for the general fund but to finance the parks needed to service future residents. The ability of the municipality to generate the income necessary to perform the wide panoply of services asked of local government and to sustain the administration of government as in The Pines and Centex is not implicated; home rule is of less moment because the limited incursion on a charter city's taxing authority to generate revenue for parks does not threaten its ability to tax in order to sustain itself. Consequently, the vitally different purpose for which the exaction, whether a tax or a fee, is imposed distinguishes this case from its Map Act predecessors.
B. Is the exaction here at issue a matter of statewide concern?
Since there is an unavoidable conflict between section 66477 and the residential construction tax, we are compelled to perform our “ineluctable duty under the ‘municipal affairs' clause to allocate supremacy between the Legislature and charter cities.” (CalFed, supra, 54 Cal.3d at p. 25, 283 Cal.Rptr. 569, 812 P.2d 916.) With meager precedent for guidance, we rely on “ad hoc intuition informed by pragmatic common sense rather than a rigid fidelity to some theoretical model.” (Ibid.)
In an early Map Act case, Santa Clara County Contractors etc. Assn. v. City of Santa Clara (1965) 232 Cal.App.2d 564, 578, 43 Cal.Rptr. 86, the court remarked, albeit without analysis, “[W]e are dealing with a subject which is not purely a municipal affair, but one of statewide concern in which the state has occupied the field.” A municipal ordinance imposed developer fees as a condition of approval of a final subdivision map but the moneys received were deposited in the Capital Outing Recreational Fund.
We agree. We will, however, attempt to justify our conclusion with “the identification of a convincing basis for legislative action originating in extramunicipal concerns.” (CalFed, supra, 54 Cal.3d at p. 18, 283 Cal.Rptr. 569, 812 P.2d 916.) There appear to be at least three extramunicipal concerns the Legislature sought to address by establishing a state statutory scheme for charging developers for parks: 1) the development of adequate parks, with open space and recreational opportunities throughout the state; 2) the equitable distribution of the costs of building and maintaining parks between existing and new residents; and 3) minimizing the financial disincentives which impede the development of an adequate supply of housing throughout the state.
Parks, whether local or regional, enhance the quality of life for California's diversified population. In urban areas, the open space afforded by parks offer a respite from high density living. Children play; families celebrate; communities gather. Parks offer a wide array of benefits for people of all ages, providing small enclaves from poverty and blight, offering highly structured competitive sports programs and serving as natural preserves. Parks hearken back to our past and provide playgrounds for the future.
But we must ask whether these concerns are primarily intramural, confined to the people of the planned subdivision or development. We think not. In a highly mobile society, seldom do residents restrict their enjoyment of parks to those located within a designated subdivision. Public parks, to date, do not have residency requirements. Members of the public travel beyond their neighborhoods to take advantage of unique recreational opportunities offered at different parks or to enjoy the variety provided by a vast assortment of local and regional parks. City boundaries mean little to Californians in search of, and drawn to, the piece of land designated “a park.”
Consequently, we cannot say the future residents of a subdivision are the primary beneficiaries of the parks subsidized by exactions on developers. The acute collective need for open space and recreational opportunities transcends municipal boundaries. To the extent one municipality fails to meet the demand for parks within its jurisdiction, parks in adjacent municipalities will become overburdened. We conclude the Legislature sought to address the cumulative need for parks interspersed throughout new developments to maintain and enhance the quality of life throughout the state.
In the wake of Proposition 13, local governments have scrambled for alternative sources of financing for municipal services and often have targeted developers. As a second extramunicipal concern, the Legislature sought to curtail the inequitable imposition of excessive fees on developers asked to subsidize municipal projects and replenish exhausted reserves. As the court observed in Centex, “In 1987, the Legislature enacted sections 66000 to 66003 in response to concerns among developers that local agencies were imposing development fees for purposes unrelated to development projects. [Citation.] Sections 66000 to 66003 set forth uniform procedures for imposing development fees and require that local agencies demonstrate a reasonable relationship between the fee imposed and the proposed project's burden on the community.” (Centex, supra, 19 Cal.App.4th at p. 1361, 24 Cal.Rptr.2d 48, fn. omitted.) Similarly, although section 66477 preceded the 1987 legislation discussed in Centex, it contains the same restriction on the amount of the fee to correlate to the proposed project's burden on the municipality's park system. The Legislature has consistently sought to limit the exactions placed on developers keenly aware of the ravenous appetite of starving municipalities.
Fielder v. City of Los Angeles, (1993) 14 Cal.App.4th 137, 17 Cal.Rptr.2d 630, provides a fitting contrast wherein the court was confronted with a clash between municipal tax on the transfer of real property and section 53725 of the Government Code. Section 53725 provides: “Except as permitted in Section I of Article XIII A of the California Constitution, no local government ․ may impose any ad valorem taxes on real property. No local government ․ may impose any transaction tax or sales tax on the sale of real property within the city, county or district.”
In the absence of a statewide concern, the court rejected the preemption claim. The court concluded: “The transfer tax is purely local in its effect. It is ‘ “confined in operation to the City of Los Angeles and affect [s] none but its citizens and taxpayers and those doing business within its limits.” [Citation.]’ (California Fed. Savings & Loan Assn. v. City of Los Angeles, supra, 54 Cal.3d at p. 12, 283 Cal.Rptr. 569, 812 P.2d 916.) The courts must be mindful that ‘ “the sweep of the state's protective measures may be no broader than its interest.” ’ (Id. at p. 25, 283 Cal.Rptr. 569, 812 P.2d 916.) Government Code section 53725, subdivision (a), makes a substantial incursion on defendant's taxing authority. It affects all taxpayers subject to the transfer tax and eliminates a significant part of the annual budget revenues. Thus, the loss of revenue does not leave defendant's taxing authority substantially intact. This substantial interference in defendant's ability to levy an excise tax far exceeds the state's interest in regulating ad valorem property taxes. (Cf. California Fed. Savings & Loan Assn., supra, at pp. 24–25, 283 Cal.Rptr. 569, 812 P.2d 916.) Inasmuch as the subject of property transfer taxes is not one of statewide concern, it is a municipal affair which lies ‘ “beyond the reach of legislative enactment” ’ in the case of charter cities. (Id. at p. 17, 283 Cal.Rptr. 569, 812 P.2d 916.)” (Fielder v. City of Los Angeles, supra, 14 Cal.App.4th at p. 146, 17 Cal.Rptr.2d 630.)
The state does not have a substantial interest in regulating property transfer taxes; the taxes were purely local in their effects, and the statute made a substantial incursion on the City of Los Angeles's taxing authority. On the other hand, the state has an elaborate statutory scheme governing exactions on developers which directly impacts the availability of both parks and housing throughout the state and nominally intrudes upon City's taxing authority by prescribing some limitations on the exactions municipalities can charge developers. In other words, transfer taxes within a municipality do not implicate those outside its boundaries. The same is true of local campaign reform laws which have minimal, if any, extramunicipal effect. (Cawdrey v. City of Redondo Beach (1993) 15 Cal.App.4th 1212, 1228, 19 Cal.Rptr.2d 179.) By contrast, the implication of developer fees for parks reverberate throughout the state.
Finally, we suspect that a pressing concern for the development of an adequate supply of housing undergirds the legislation on developers' fees. Escalating fees compromise the financial viability of many housing projects and dissuade developers from pursuing diversified housing projects, thereby compounding the shortage of affordable housing in the state. Again, it is impossible to accurately characterize an inadequate housing supply as an intramural concern when the impact spills over from one municipality to another. Communities throughout the state are intimately connected and housing, although often local in its immediate impact, perpetrates boundaries and creates statewide concerns.
C. Is section 66477 reasonably related and narrowly tailored to address matters of statewide concern?
Identification of a statewide concern does not enable the Legislature to override all municipal legislation involving the same subject matter. Rather, as the court admonished in Johnson, the state statute must be reasonably related and narrowly tailored to address the extraterritorial concerns. Our final task is to compare the scope of the statute to the statewide concerns sought to be addressed.
Section 66477 enables municipalities to charge developers for parks thereby promoting the development of new parks to accommodate the increased burden by future residents. Moreover, the mechanism provided by 66477 requiring a nexus between the amount of the fee and the additional burden created by the development addresses the statewide interest in equitably distributing the cost of parks between new and existing residents. Finally, the cap provided by section 66477 restricts municipalities' ability to charge developers a disproportionate share of the costs of building and maintaining parks without creating a deleterious impact on the construction of housing throughout the state.
We conclude the statute carefully circumscribes the incursion on a charter city's ability to generate revenue for parks to the significant extraterritorial concerns the Legislature sought to address. The crux of the statute is a now recurring theme throughout the Map Act: there must be a reasonable relationship between the fees charged developers and the burdens imposed on a community by the development for which approval or permits are sought. The statute does not provide developers immunity from any and all taxes imposed by a charter city. For as the courts concluded in The Pines and Centex, a charter city is constitutionally granted the right to tax for general revenue purposes, and developers, when part of a larger class of taxpayers, may be taxed to sustain the operation of the municipality. Section 66477 does not provide a blanket exemption from taxation. Since, however, City's residential construction tax blatantly conflicts with section 66477's mechanism for assessing developers their proportionate share of the costs of parks, a matter of statewide concern, it is preempted by the statutory scheme. The municipal ordinance is invalid and plaintiffs are entitled to a refund of the taxes paid.
In their responses to our request for supplemental briefing, both sides appear to concede that to the extent City's ordinance imposes a tax for school purposes it is preempted by state law. (§ 65995; Grupe Development Co. v. Superior Court (1993) 4 Cal.4th 911, 16 Cal.Rptr.2d 226, 844 P.2d 545.) We agree. The ordinance in its entirety must bow to the legislative schemes designed to finance both parks (66477) and schools (65995); both matters of statewide concern.
The judgment of the trial court is reversed. Plaintiffs shall recover costs on appeal.
1. We acknowledge City's position that section 66477 is irrelevant because the ordinance at issue was enacted based on the City's constitutional right to tax and not on the authority conferred by section 66477. (Cal.Const., art. XI, § 5, subd. (a).) This argument, however, misses the point. If, as urged by plaintiff, the municipal tax ordinance conflicts with section 66477 and the exaction for parks is a matter of statewide concern, the residential construction tax is invalid whether or not City ostensibly relied on the applicable legislation.
2. This fact has been largely ignored by the parties who have instead focused on the interplay between the ordinance and section 66477, relating to exactions for public park, playground and recreational facilities. In its supplemental brief, City appears to concede that Government Code section 65995 regulates development fees for school facilities, including recreational facilities, to the exclusion of local measures on the subject. However, City asserts the financing of school facilities is an inconsequential aspect of the ordinance and can be severed from the remainder. City makes no such concession with respect to exactions for park and playground facilities. While making no claim that its tax “would pass muster as a fee imposed pursuant to Government Code § 66477,” City asserts the statute is irrelevant; its authority to impose the tax is neither dependent on nor restricted by section 66477.
RAYE, Associate Justice.
BLEASE, Acting P.J., and SPARKS, J., concur.