One challenge for increasing the ad valorem property tax in a water district was the 60-day limitation period in the validation laws. Coachella Valley Water District v Superior Court (Roberts), No.E074010 (4th Dist., March 9, 2021).
Sections 860-870 of the Code of Civil Procedure provide expedited procedures for determining the validity of certain bonds, assessments and agreements entered into by public authorities. They are known as the validation statutes and enable an agency to file a lawsuit to promptly determine the validity of any acts of the agency that fall within the scope of its provisions. They also allow any “interested person” to file a lawsuit against the validity of such acts (sometimes referred to as “reverse” validation acts) within 60 days of the disputed lawsuit.
The Coachella Valley Water District has decided to increase ad valorem property tax by two cents annually to meet its contractual obligations to the State Water Project (SWP). Roberts filed a lawsuit to invalidate the tax and receive a refund under the provisions of the Water Code and the California Constitution (Proposals 13, 26, and 218). The water district argued that the entire lawsuit was statute barred because the validation laws required Roberts to present his claims in a “reverse validation” no later than 60 days after the water district introduced the tax.
The appeals court agreed and ordered the case to be dismissed. The court began its analysis by finding that the validation laws do not specify the matters to which they apply; Rather, their procedures apply to “all matters which may be determined under another law” under the Code of Civil Procedure. The court concluded that provisions of the County Water District Law that enable water districts to levy and levy taxes on “property within the district” provide a measure “to validate the validity of any appraisal or warrant, contract, Obligations or evidence to determine the indebtedness according to [the County Water District Law] can be brought according to [the validation statutes]”Represented such a licensing law.
Roberts argued that this was not the case because the word “tax” was not used in the provisions governing the approval of a validation measure. The court found this focus unduly narrow given the overarching tax system of the County Water District Law and the apparent interplay [between] Provisions that authorize the collection of property taxes and those that make the validation procedures applicable to the “valuation” of a county waterfront. “The court relied on another provision of the Water District Act which defined a“ valuation ”in this context as establishing a tax rate based on the value of the property. The tax in question is “clearly such an” assessment.
Roberts also argued that his claims, even if they were statute-barred under the validation laws, were still valid as a tax lawsuit under Section 526a of the Code of Civil Procedure, as he had challenged both the introduction of the tax and the issuance of the allegedly illegal funds. The court disagreed and found that a validation suit and a taxpayer suit are not mutually exclusive. Both types of claims could be pursued provided they were submitted for a validation action within the 60 day period. The “core of Roberts’ claim,” the court said, is “a challenge to the validity of the SWP tax.” Roberts’ taxpayer claim was based on his claim that the SWP tax was invalid; hence “Roberts’ imposition and spending challenges [were] Two sides of the same coin. “
The court also found no reason for Robert’s argument that the introduction of the 60-day limitation period within this framework would effectively protect future water district tax rates from judicial review. It was pointed out that a water district would have to redefine the SWP tax rate annually in order to create a new “rating” the validity of which could be questioned under the validation laws. In fact, Roberts had already filed a timely re-validation suit against the SWP tax rate set by the Water District for the following fiscal year.
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