FARWELL v. TOWN OF LOS GATOS (1990)

Plaintiff commercial property owners appeal from a judgment denying them declaratory and injunctive relief and a writ of mandate enjoining the Town of Los Gatos from levying assessments against them for the construction of four downtown parking lots.   Plaintiffs contend (1) the resolution of intention which conferred jurisdiction to create the assessment district was not validly passed, and (2) the assessment formula is invalid because it contains a general benefit component, is arbitrary, and is not proportional to benefits received.   We shall affirm.

FACTS

In 1985 the Town Council of Los Gatos (Town) established a parking commission to propose solutions to a parking shortage in the downtown business district.   The commission recommended formation of a parking assessment district and the construction of four parking lots.

On February 17, 1987, the Town council, by a vote of two in favor, two abstentions, and one absent, passed four preliminary resolutions announcing its intention to form the assessment district, identifying the improvements to be made, establishing boundaries for the district, directing that an engineer's report be prepared, that notice and an opportunity to protest be given, and that a public hearing be held.   A public hearing was set for March 23, 1987, and further hearings were held on April 13, May 11 and May 18.   Ninety-two commercial property owners filed written protests to the proposed parking district on or before the first public hearing;  however, by the final night of hearings, 24 of these protests were withdrawn.   Eventually, the Town engineer determined that certified protests comprised 26.79 percent of the area within the assessment district boundaries.

At the Town council meeting on May 18, 1987, the council adopted “A Resolution Ordering Changes and Modifications” to the preliminary report, “A Resolution Adopting Engineer's Report, Confirming the Assessment and Ordering the Work and Acquisitions, Directing Recording and Filing of Assessment, Assessment Diagram and Notice of Assessment, Appointing Collection Officer, and Providing for Notice to Pay Assessment,” and “A Resolution Overruling [the property owners'] Protests.”

As finally adopted, the plan called for the Town to contribute $2,092,548.70 from general funds towards the overall project cost of $3,875,000.   This left $1,782,451.30 to be assessed against owners of downtown commercial property.

The formula used to determine the assessment for each parcel took into account both the “general benefit” all commercial property owners would realize from “the positive impact on the orderly flow of traffic, and relief of street parking congestion” and the “specific benefit” each particular parcel would realize based on its size (existing floor area or 60 percent of lot area), its distance from the proposed parking lots, its use, its current on-site parking situation, and its prior participation in other parking assessment districts.

On June 12, 1987, plaintiff James Farwell and six other commercial property owners filed a complaint seeking declaratory and injunctive relief and a writ of mandate to bar the Town from proceeding with formation of the assessment district.   The case was subsequently certified as a class action.   In April 1988, the court granted Town's motion for summary adjudication, specifically finding that there was no evidence of Town council members making threats and inducements, including reduced assessments, to property owners outside regular meetings to persuade them to withdraw their protests to the district's formation.¹

Trial of the remaining issues was limited to the record of the proceedings before the Town council and to facts which could be judicially noticed.   On September 26, 1988, after a two-day court trial and extensive post-trial briefing, the court entered judgment in favor of Town.   After plaintiffs' motion for new trial was denied, the instant appeal was filed.

DISCUSSION

A. The Jurisdictional Issues

 In order to form an assessment district under the Municipal Improvement Act of 1913 (Sts. & Hy.Code, §§ 10000 et seq., 10100 et seq.),² certain prescribed procedures must be followed.   The first of these is the passage of a resolution of intention.  (§§ 2821, 10200 et seq.)  “[B]y it alone the [council] acquire[s] jurisdiction to subsequently [make the assessment] and order the work done.”  (McDonnell v. Gillon (1901) 134 Cal. 329, 330, 66 P. 314.)   Indeed, unless the statutory requirements for formation of an assessment district are observed, the district never legally comes into being.  (Todd v. City of Visalia (1967) 254 Cal.App.2d 679, 682, 62 Cal.Rptr. 485.)

 The resolution of intention forming the Los Gatos parking assessment district was adopted by the Town council at its February 17, 1987, meeting.   Plaintiffs contend that there was no quorum attained at that meeting and that consequently the resolution was not legally passed.   As stated in Roberts' Rules of Order, “In the absence of a quorum, any business transacted ․ is null and void.”  (Roberts' Rules of Order (Rev.1970) § 39, p. 295.)

Government Code section 36810 provides:  “A majority of the council constitutes a quorum for transaction of business․”  “Without the presence of a ‘quorum,’ a deliberative body cannot transact business other than to (1) fix the time to which to adjourn, (2) adjourn, (3) recess, or (4) take measures to obtain a quorum.  [Roberts', supra, § 39, p. 295.]  [¶] A quorum is the minimum number of members who must be present at a meeting for business to be legally transacted.”  (62 Ops.Cal.Atty.Gen. 698, 699 (1979).)

With respect to who may be counted in determining a quorum, Mason states:  “2. Every member entitled to vote should be counted in determining whether a quorum is present, but members disqualified on account of interest from voting on any question cannot be counted for the purpose of making a quorum to act on that question.”  (Mason's Manual of Legislative Procedure (1979) § 502, p. 345, see also Roberts', supra, § 39, p. 293.)

In the instant case, the Los Gatos Town council is composed of five members.   Accordingly, three members must be present at any meeting for business to be legally transacted.   Additionally, for purposes of making this quorum of three, no member disqualified because of a conflict of interest may be counted.

At the February 17, 1987, meeting, four council members were present and prepared to participate when the Town attorney announced:  “Yes, Mr. Mayor, with regard to participation in the Item 34 [assessment district resolutions], I have advised Councilmember Ferrito and Councilmember Hamilton that there is a potential conflict of interest that has not been resolved as of this date, and I am seeking, on their behalf, an advice letter from the Fair Political Practices Commission with regard to their participation in voting on items concerning the formation of the Parking District, because each of the Councilmembers have a business that's located within the district.  [¶] The issue is not clear at this time, and to be conservative, I'm advising them to abstain and not participate in this item.”  (Italics added.)

At that point, Ferrito stopped participating, but Hamilton indicated that he “strongly object[ed] to this going any further than this without ․ my knowing whether or not I can vote on this issue․”  After receiving assurances that the council's actions would be preliminary only, Hamilton agreed to abstain.   Later, when he attempted to comment on the proposal, the mayor told him, “I think you best address your comments as a member of the public, as opposed to a councilmember, given the indication that you are in a conflict of interest situation.”   To this Hamilton responded:  “No, I'm not in a conflict of interest.   We're going to check that out.   But I will accommodate you.”

The four resolutions of intention initiating the special assessment district process were passed on a vote of two in favor, Ferrito and Hamilton abstaining, and one absent.   The law is settled that when members of a quorum abstain from voting, they are deemed to have acquiesced or concurred with the majority of the quorum.  (Dry Creek Valley Assn. Inc. v. Board of Supervisors (1977) 67 Cal.App.3d 839, 843, 135 Cal.Rptr. 726.)   Thus, a proposition is carried when two vote in favor of it, two abstain, and one is absent.  (Martin v. Ballinger (1938) 25 Cal.App.2d 435, 437, 77 P.2d 888.)   For this rule to apply, however, the abstaining members must be part of the quorum.

In the present case, the Fair Political Practices Commission determined after the February 17 meeting that both Ferrito and Hamilton had a conflict of interest on the parking district assessment issue.³  Consequently, they were not permitted to participate in any subsequent proceeding concerning the formation of the district.

The issue we must decide is whether Ferrito and Hamilton should have been counted in determining whether a quorum was present at the February 17 meeting.   As noted above, in order to legally pass the resolution of intention, a jurisdictional requirement to the formation of a special assessment district (McDonnell v. Gillon, supra, 134 Cal. at p. 330, 66 P. 314), (1) there must have been a quorum present, and (2) the majority of the members necessary to constitute the quorum must have voted in favor of it.   And, as noted above, members who are disqualified because of a conflict of interest cannot be counted for purposes of making a quorum.

We conclude that Ferrito and Hamilton could properly be included as members making up a quorum at the February 17 meeting.   As of that date, neither had been disqualified because of a conflict of interest.   It was only as a precaution, given the potential conflict of interest, that the Town attorney requested they abstain from voting.   Because they were physically present and entitled to vote until advised otherwise, they could be counted for purposes of establishing a quorum.

This holding is in accord with a long line of cases standing for the proposition that the fact that a member of an assessing body is the owner of property affected by the proposed improvement does not disqualify him to act or render the action of the body void.  (See generally 51 Cal.Jur.3d, Public Improvements, § 54, pp. 629–630;  Jeffery v. City of Salinas (1965) 232 Cal.App.2d 29, 40, fn. 5, 42 Cal.Rptr. 486;  Raisch v. Sanitary Dist. No. 1 (1952) 108 Cal.App.2d 878, 884, 240 P.2d 48;  Federal Construction Co. v. Curd (1918) 179 Cal. 489, 177 P. 469.)   Because these decisions predate Government Code section 87100 et seq. (the Conflict of Interests Act), however, we conclude they should be narrowly construed.   We reconcile the cases with the Act by holding that once a conflict of interest is acknowledged or established, then any participation by an interested government official will be void.   In the present case, neither councilmember acknowledged that he had a conflict of interest.   Moreover, as of February 17, it had not been established that their participation in the parking assessment district vote would materially affect their financial interests.

Having so concluded, it is unnecessary for us to address the Town's contention that, assuming there was no quorum at the February 17 meeting, then this “procedural defect” could be cured by various curative statutes.   We observe, nevertheless, that had there been no quorum, the curative statutes would have been to no avail.  “A curative statute or other curative enactment will cure defects resulting from a failure to comply with provisions that are merely directory of the mode of exercise of the power to assess, but defects or omissions that go to the jurisdiction of the assessing body to act at all, and that make its action absolutely void, cannot be cured in this manner.”  (See 51 Cal.Jur.3d, Public Improvements, § 18, p. 584.)

 Plaintiffs next urge that the resolution of intention was invalid in any event because it was passed with only two votes.   Plaintiffs claim that the resolution “was one designed to expend funds” and therefore subject to Government Code section 36936 which provides:  “Resolutions and orders for the payment of money, and all ordinances, require the votes of at least three councilmen for passage.”   This statute, however, is inapplicable because the preliminary resolutions implementing the assessment district formation process were not resolutions for the payment of money.

 Plaintiffs' final ground for urging that the resolution of intention was invalid is that it allegedly lacks certain statutorily required elements, to wit:  a specification of the “boundaries of any zones within the district” (§ 10204, subd. (d)(2)).   This contention is entirely without merit.   The engineer's report (trial exhibit 9) and the maps appended thereto (as exhibits 9a, 9b and 9c) provide all the information required by section 10204, subdivision (d).   First, the exterior boundaries of the assessment district are set forth on exhibit 9b, consisting of three maps delineating the assessment district boundaries, the assessment parcel numbers, and the assessor's parcel numbers.  (§ 10204, subd. (d)(1).)   The boundaries of zones within the district are ascertained by applying the distance factor explained on page 13 of the engineer's report to the distance from the improvements shown on the assessment diagrams (exhibit 9b).  (§ 10204, subd. (d)(2).)   Finally, the lines and dimensions of each parcel of land within the district are shown on exhibit 9b.  (§ 10204, subd. (d)(3).)

Having concluded that the resolution of intention forming the assessment district was valid, we now turn to plaintiffs' substantive contentions.

B. The Assessment Formula

 Plaintiffs contend that the special assessment district is invalid because it contains a “general benefit” component inuring to the benefit of the public as a whole and because the formula used to set the assessments does not accurately reflect benefits received.   We disagree.

As our Supreme Court observed in Dawson v. Town of Los Altos Hills (1976) 16 Cal.3d 676, 683, 129 Cal.Rptr. 97, 547 P.2d 1377, “the establishment of a special assessment district takes place as a result of a peculiarly legislative process grounded in the taxing power of the sovereign.”   Accordingly, the “scope of judicial review of such actions is ․ quite narrow[:] ․ A special assessment finally confirmed by a local legislative body in accordance with applicable law will not be set aside by the courts unless it clearly appears on the face of the record before that body, or from facts which may be judicially noticed, that the assessment as finally confirmed is not proportional to the benefits to be bestowed on the properties to be assessed or that no benefits will accrue to such properties.”  (Id., at pp. 684–685, 129 Cal.Rptr. 97, 547 P.2d 1377.)

Accordingly, unless “absence of benefit clearly appears from the record,” the local legislative body's “determination of benefit is conclusive․”  (White v. County of San Diego (1980) 26 Cal.3d 897, 904, 163 Cal.Rptr. 640, 608 P.2d 728.)   Here, the record supports the Town council's conclusion that downtown commercial properties would be specially benefitted by the parking lot improvements which would make their businesses more accessible.

 The justification for imposing a special assessment is that the property to be assessed will receive a “special” benefit from the public improvement which is over and above the “general” benefit received by the public at large.  (City of Baldwin Park v. Stoskus (1972) 8 Cal.3d 563, 568, 105 Cal.Rptr. 325, 503 P.2d 1333;  San Diego Gas & Elec. Co. v. Sinclair (1963) 214 Cal.App.2d 778, 29 Cal.Rptr. 769.)   The mere fact that the public is benefitted does not render an assessment district invalid so long as the improvement results in some special benefit to the particular lot owners whose lands are assessed.   For an assessment to be invalid because it confers a general public benefit, the general benefit must be the only result of the assessment.  (Federal Construction Co. v. Ensign (1922) 59 Cal.App. 200, 210 P. 536.)   In the present case, as in White v. County of San Diego, supra, a portion of the costs of the improvement was paid out of general funds while the remainder was assessed against those properties which would be specially benefitted by the improvement.

Plaintiffs claim that the parking proposal includes general benefits and is therefore invalid.   They focus on the language in the engineer's report which states, “Each parcel will receive a general benefit from the creation of the additional parking due to the positive impact on the orderly flow of traffic, and relief of street parking congestion” as a ground for invalidating the assessment district.   They point out that certain commercial lots were assessed only the amount for the “general benefit.”   While it is true that the words “general benefit” in a special assessment district context are legal terms of art, it is apparent that the Town engineer was unaware of this special meaning when he attempted to differentiate between the special benefit all commercial property owners would receive from having additional parking spaces downtown from the special benefits each particular lot would receive based on its current parking situation, its distance from the new lots, and its particular use.   Both the “general benefit” and the “special benefit” were special benefits peculiar to the downtown property owners which were separate and distinct from the incidental or indirect benefits received by the community at large.

 Plaintiffs next attack the assessments on the ground they do not accurately reflect the benefits received.  “Though an assessment must be generally proportional to benefits, it may not be set aside for nonproportionality that does not clearly appear from the record or judicially noticed facts.  [Citations.]”  (White v. County of San Diego, supra, 26 Cal.3d at p. 905, 163 Cal.Rptr. 640, 608 P.2d 728.)   Here the formula devised by the Town engineer took into account the use to which the property was put, whether it currently had on-site parking, its distance from the four new lots, and its participation in prior parking assessment districts.   Based on this formula, the Town exempted from assessment church owned properties which were used at off-peak hours for religious purposes.

Plaintiffs contend that the formula was imprecise and specifically that the distance factor was arbitrary and unreasonable because it provided only for three zones (businesses within 300 feet from a lot, those 301 feet to 600 feet away, and those over 600 feet away).   Plaintiffs claim that a business 1500 feet from a parking facility should not have been assessed the same percentage (50 percent of the amount charged a business located within 300 feet of a lot) as a business which was only 601 feet away.   While it is conceivable that a more precise formula, taking into account a greater number of distance factors, could have been developed, this fact alone will not invalidate the assessment district.   In the absence of fraud, mistake or gross injustice, the absence of an exact relationship between the assessment levied and the benefit received will not invalidate the assessment.  (City of Baldwin Park v. Stoskus, supra, 8 Cal.3d at pp. 568–569, 105 Cal.Rptr. 325, 503 P.2d 1333.)

 Plaintiffs also claim that the assessment is invalid because undeveloped lots were assessed the basic charge of $1,250 and because the “parking deficiency” formula resulted in inequities in certain cases.   Neither contention has merit.   First, the vacant lots were clearly benefitted.   An undeveloped lot zoned for commercial use which has no available parking will not be as valuable as the same lot with available parking.   Furthermore, apportioning the assessment based upon a reduction for off-site parking is clearly reasonable.   Had all commercial establishments maintained off-site parking, then the parking lot improvement would not have been necessary.

In short, we conclude the Los Gatos parking assessment district provides a special benefit to the downtown commercial property owners and that the formula upon which the assessments are based is proportionate to and based on the benefit received.

The judgment is affirmed.

FOOTNOTES

1.   Plaintiffs do not appeal from the order granting summary adjudication of this issue.

2.   All further statutory references are to the Streets and Highways Code unless otherwise stated.

3.   Government Code section 87100 provides that:  “No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.”   Additionally, section 8 of the Town's Resolution No. 1968–29 provides that:  “Any councilman who has a conflict of interest, as defined herein in any manner before the Town Council, shall disclose such fact on the records of the Town Council, shall step down, shall refrain from participating in any discussion, whether in his official or in a representative capacity or voting thereon.”

COTTLE, Associate Justice.

PREMO, Acting P.J., and ELIA, J., concur.