Much of San Joaquin County lies at or below sea level. The hundreds of miles of levees maintained by reclamation districts throughout the region provide the protection from flooding that is essential to the continuing health of the local economy and the safety of the citizenry. The levee systems are funded largely by assessments against private and public lands. Private landowners have long subsidized school district property traditionally exempt from such assessments.
Are school districts that benefit from flood protection still exempt, notwithstanding a voter-approved amendment to the California Constitution intended to achieve assessment proportionality, thereby requiring school districts to pay their fair share of reclamation district assessments?
The Court of Appeal answered that question in Manteca Unified School District v. Reclamation District No. 17 (2017) 10 Cal.App.5th 730. Schools must now pay their proportional share. The opinion illustrates how the rules of statutory interpretation are properly applied to determine the effect of a constitutional amendment on existing statutory law.
The facts are not complicated. Water Code section 51200, enacted in 1951, requires reclamation district assessments to include all public lands "other than public roads, highways, and school districts." One obvious consequence of this exemption for schools is that the landowners who do pay assessments for flood protection must also shoulder the assessment burden that would otherwise be borne by school districts.
Proposition 218, approved in 1996, added article XIII D section 4(a) ("Section 4(a)") to the California Constitution. That article states that public lands shall not be exempt from assessment absent a demonstration "by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit." However, Proposition 218 also stated: "Nothing in this article … shall be construed to: . . . Provide any new authority to any agency to impose a[n] . . . assessment."
For private landowners, the decision should assure proportional levee assessments, which means that school districts will now be required to bear their fair share of the cost of flood control.
Reclamation District No. 17 ("RD 17") landowners approved an assessment in 2008 for a major levee improvement project. One public landowner, Manteca Unified School District ("MUSD"), later claimed that assessment of its property is illegal because of the Section 51200 exemption. RD 17 responded that Section 4(a) merely conditions continuation of Section 51200's exemption on a factual showing that MUSD admitted it could not meet.
MUSD rebutted RD 17's position by citing Proposition 218's no "new authority" language. According to MUSD, that provision makes clear that if the school district property could not be assessed prior to enactment of Proposition 218, it cannot be assessed following enactment of Proposition 218.
In 2011, MUSD sued RD 17 for declaratory relief, alleging that under California law it was exempt from assessment by the reclamation district and that it was not required to pay the RD 17 levies of assessment against school property (in the approximate amount of $100,000.00 each year). The trial court ruled against RD 17, holding that school property exempt from assessment Page 10 Across the Bar Second Quarter 2017 prior to adoption of Proposition 218 remains exempt after Proposition 218. RD 17 appealed.
Applying basic rules of statutory interpretation, the Court of Appeal reversed. It found that Water Code section 51200 and Section 4(a) are clear and unambiguous on their face and, therefore, no extrinsic evidence of their meaning is required. Section 51200 authorizes reclamation districts to assess all publicly owned lands, but exempts schools from assessment. Section 4(a) commands that publicly owned parcels shall not be exempted unless clear and convincing evidence demonstrates that those parcels receive no special benefit. Again, in this case there was no factual dispute as to whether MUSD received a special benefit from RD's levee improvement project.
The Court of Appeal rejected MUSD's argument that since Proposition 218 did not confer "new authority" to assess, RD 17 cannot invoke Section 4(a) to assess MUSD property. It held that no "new authority" was needed: RD 17 already possessed such authority under Section 51200, which authorizes assessment of public property generally but "exempts" school districts. The Court recognized the logical fallacy in MUSD's argument that a broad grant of authority to assess public property, following by an exemption for school property, is the same as having "no authority" to assess school property:
Under School's logic, the existence of an exemption means there was no authority and since no authority existed, the attempt by the people through section 4 to bring school districts within the scope of that authority fails. … Were we to employ School›s interpretation, Section 4(a) . . . would become meaningless.
This illustrates another basic rule of statutory construction: judicial interpretation must give effect to every provision and avoid rendering any provision a nullity or mere surplusage. Accepting MUSD's proposed construction of the no "new authority" to assess language would have nullified Section 4(a)'s express intent to condition continuation of existing exemptions on a demonstration, by clear and convincing evidence, that the exempt entity receives no special benefit.
The Court of Appeal also rejected MUSD's argument that applying Section 4(a) to exempted school district property would amount to an "implied repeal." Implied repeals are highly disfavored under California law, which is why at all stages in the litigation RD 17 scrupulously avoided any argument based on implied repeal. Avoiding any argument based on an alleged "implied repeal" was prudent strategy, as confirmed in the Court of Appeal's reassuring statement: "Our reading of [Proposition 218] does not implicitly repeal Water Code section 51200."
For litigators, Manteca Unified School District v. Reclamation District No. 17 illustrates how the rules governing statutory interpretation are applied to the interplay of existing statutes and newer constitutional provisions. For private landowners, the decision should assure proportional levee assessments, which means that school districts will now be required to bear their fair share of the cost of flood control.
The author represented Reclamation District No. 17 in the case discussed in this article.