By Ruth Musser-Lopez and Mark Gutglueck
The judge overseeing the San Antonio Heights Association’s challenge of the recently effectuated dissolution of Upland’s municipal fire department this week turned down the citizen collective’s request for a temporary injunction. The injunction would have prevented the collection of assessments accompanying the annexation of the City of Upland and neighboring San Antonio Heights into a fire protection zone. It thus appears, pending appeal, that Upland and San Antonio Heights will be forced at least for a while and perhaps forever to pay a fire protection zone tax that was originally voted on more than a decade ago by 1,000 people in a desert community some 48 miles distant. Within the last two years, that zone in the Helendale/Silver Lakes area, known as Fire Protection Zone-5, has been utilized as a catch-all administrative entity and county taxing authority by the county and three other San Bernardino County cities to effectuate the shuttering of their local fire departments and turn them into divisions of the county fire department.
Despite the setback the San Antonio Heights Association suffered with Judge David Cohn’s denial of the request for an injunction, there was language in Cohn’s findings that offered more than a ray of hope that there is a sound basis for the overarching legal challenge the San Antonio Heights Association has made of the fire zone annexation tax, which was forced on both Upland and San Antonio Heights by a series of administrative procedures perpetrated by the Upland City Council, the Upland city manager, the San Bernardino County Local Agency Formation Commission and the San Bernardino County Board of Supervisors.
In processing the application which originated with the city council and was formally filed by Upland City Manager Martin Thoevenell on December 5, 2016, the Local Agency Formation Commission called for having the entirety of the Upland City Limits and the all of neighboring San Antonio Heights, an unincorporated community, annexed into the county fire district and Fire Protection Zone-5 (FP-5), which was created to serve the Mojave Desert communities of Helendale and Silver Lakes. Neither Helendale nor Silver Lakes is contiguous to Upland or San Antonio Heights, lying roughly 48 miles away as the crow files or at some 65 miles driving distance away. The deal was sealed without a vote of approval by the residents to be annexed into the zone. Rather, through a so-called protest process, all landowners and citizens impacted by the takeover were invited to lodge letters or certifications of protest. All such protest letters or affidavits were registered as a vote against the annexation. Those who did not lodge such a protest certification were deemed to have voted in favor of the annexation. Under the rules the Local Agency Formation Commission applied, if 25 percent of the residents or landowners had lodged protests, then a straightforward up-or-down vote on the annexation would have been held. If more than 50 percent had registered protests, than the annexation would have been abandoned entirely. At the close of the protest period in July, there were insufficient protest registrations to prevent the annexation from proceeding. During the open protest period, 4,930, or 11.9 percent, of the 41,301 registered voters in Upland and San Antonio Heights protested against the annexation, and 4,621, or 13.2 percent, of the 35,526 property owners protested.
Consequent to the FP-5 annexation was that each parcel owner in Upland and San Antonio Heights would be subjected to a $148.62 per year assessment to be collected by the county to partially defray the cost of the fire protection service operations of the county fire department in the two communities. Prior to the annexation, residents in both Upland and San Antonio Heights had been provided fire protection service, the cost of which was previously defrayed by the ad valorem, i.e., property tax , those residents routinely paid. In the case of Upland, that fire protection was provided by the Upland Fire Department, and in the case of San Antonio Heights, by the county fire department. The imposition of a special parcel tax on top of taxes those residents were already paying to provide for a service long considered to be a basic element of the local governmental function resulted in no little consternation among a significant number of those residents.
It was in large measure this bypassing of what a cross section of residents in both Upland and San Antonio Heights considered to be their right to vote under Proposition 26 on the imposition of any new tax they were to pay which led a number of residents to band together under the aegis of the San Antonio Heights Association to launch a legal challenge of the annexation.
Three similar fire department annexations had taken place in San Bernardino County in the two years prior to the Upland Fire Department takeover: in San Bernardino, Twentynine Palms and in Needles. The move to replicate in Upland and San Antonio Heights what happened in those three places, however, was met somewhat differently the fourth time around. A number of well-heeled residents in San Antonio Heights were prepared to spend money – far more money than they would pay in terms of the assessment – to hire legal representation and contest the dictate of local government.
Retaining Upland-based attorney Cory Briggs and Anthony Kim, the San Antonio Heights Association filed suit in early July, prior to the deadline for the protest period having ended. The suit is intended to unwind or undo the zone tax on the basis of the contention that it was illegally imposed.
The City of Upland, the county and the Local Agency Formation Commission are relying on the authority of a case, Sunset Beach vs. Orange County Local Agency Formation Commission, in confidently pronouncing that the annexation of Upland and San Antonio Heights into Fire Protection Zone 5 is permitted. The Sunset Beach case involved some residents of Sunset Beach, which was an unincorporated county area in Orange County adjoining and partially surrounded by Huntington Beach, objecting to paying preexisting Huntington Beach improvement zone assessments after Sunset Beach was annexed into Huntington Beach. Those Sunset Beach residents maintained they had not voted on those improvement assessments and therefore should not be forced to pay them. After the trial court agreed with the plaintiffs, the Orange County Local Agency Formation Commission appealed to an appellate court, which ruled that the Sunset Beach residents had to accept the assessments once they were a part of the city.
Briggs has posited in the San Antonio Heights Association suit that the circumstance involving Upland and San Antonio Heights is significantly different from that in Sunset Beach. In the first place, Sunset Beach was an unincorporated county area that was annexed into an existing municipality and Sunset Beach was contiguous with Huntington Beach.
In the case of Upland, it is not an unincorporated county area but an existing municipality that is being annexed into an unincorporated division of the fire district. Furthermore, whereas Huntington Beach was immediately adjacent to Sunset Beach, both Upland and San Antonio Heights are far removed from Helendale and Silver Lakes, and are in no way adjacent or contiguous. Nor are San Antonio Heights and Upland in Helendale’s or Silver Lake’s sphere of influence.
Briggs maintains that while the agency has the right to annex property into a municipality and its existing improvement zone and assessment district and impose assessment fees in accordance with the provision of those improvements, the annexation of a territory into a service zone is illegal and thus a special service tax in that zone cannot be imposed. The term “service zone” applies to a special tax area of a “district” or “special district,” all terms which are legally defined in the government code, according to Briggs. Briggs draws a distinction between districts/special districts as opposed to assessment districts, which are defined in the Health and Safety Code.
The city, county and the Local Agency Formation Commission have relied upon the Sunset Beach case to assert Upland and San Antonio Heights being annexed into Fire Protection Zone 5 is permitted because a zone’s service tax may be “extended” into an annexed area just as an improvement district assessment is extended when a territory is annexed into a district or city with an improvement district.
Briggs maintains the annexation is being done not for improvements but for service. “Improvements are for structures and buildings,” according to Briggs. “Fire protection services are something else and treated differently under the law.”
Briggs also maintains the California Constitution and Propositions 218 and 26 have some bearing on the matter. “When you do an annexation you can continue the tax that was already there in the affected territory,” Briggs asserted. “We don’t have that here. We have a tax in another territory being exported.” Briggs said. Moreover, Briggs said, there was a commitment made when the Helendale/Silver Lakes FP-5 zone was created that the tax area would not be expanded nor that there would be any increase without a vote. “Helendale said we won’t make this area bigger without going through the procedures to make the territory bigger,” Briggs said. “We didn’t ask anyone in Helendale if they now want this tax expanded elsewhere,” he said. “This annexation is illegal.”
Last week, Briggs argued in court before Judge Cohn that an injunction should be granted to prevent the county and its Fire Protection District-5 from proceeding with the assessments while the lawsuit is yet pending. Cohn said at that time he would issue his decision on whether to grant the motion for the injunction in writing. This week, Cohn entered that decision in writing, denying the request for the injunction and further weighing in on a central element of Briggs’ contention, that the the Sunset Beach case is distinguishable in several ways from what occurred in Upland and San Antonio Heights. In much of the language of his decision, Cohn appeared to break off or blunt several prongs in Brigg’s suit on behalf of the San Antonio Heights Association.
Nevertheless, Cohn gave the first tangible indication that he sees merit with regard to a crucial element to the plaintiff’s case, and thus grounds to unwind, further down in the litigation process, the annexation. More significant yet, Cohn shied away entirely from carrying out an analysis of the aspect of the case tied into Proposition 26, an untested area in the law that has yet to be explored in any previous case. Cohn’s reticence on the Proposition 26 issue at this point, taken together with the comprehensive language contained in Proposition 26 which goes well beyond the language of Proposition 218, is a signal, legal observers said, that the city, the county and the Local Agency Formation Commission are going to be given a run for their money in making sure the imposition of a new “annexation” tax is sustained.
Early in his written decision, within the introduction, Cohn spells out that he is not going to grant the injunction.
“Petitioner has failed to demonstrate that the balance of interim harm, if the injunction is denied, weighs in its favor,” wrote Cohn. “Respondents have shown that an injunction would disrupt the provision of fire protection services in the affected communities if the injunction is granted, placing the entire community at risk. In sharp contrast to this palpable harm, the taxpayers of Upland and San Antonio Heights, whom petitioner purports to represent, may have an adequate remedy at law – a return of taxes paid (approximately $150 per parcel per year) if petitioner ultimately prevails on the merits. The court therefore denies the application for a preliminary injunction.”
Cohn then rained down on Briggs a further blow, enunciating that the case of Citizens Association of Sunset Beach is not distinguishable from the present matter involving the annexation of the City of Upland and San Antonio Heights into the county fire district.
“Petitioner attempts to distinguish Citizens Association of Sunset Beach on the ground that, unlike this case, it involved an ‘island annexation’ under Government Code Section 56375,” wrote Cohn. “This is a distinction without a difference. Although the case did involve an island annexation, the court addressed non-island extensions as well. The reasoning of the court in declining to apply Proposition 218 applies with equal force to annexations of any kind. Beyond the multiplicity of elections that might be required, neither Proposition 218 itself, nor any of the ballot materials presented to the electorate in connection with Proposition 218, mentioned taxes incident to annexation, although such taxes had been imposed for years. The court in Citizens Association of Sunset Beach noted that ‘more than a decade and a half prior to Proposition 218,’ the court in Metropolitan Water District v. Dorff ‘directly held that Proposition 13 did not preclude the application of a preexisting property tax to land previously not part of an annexing water district to pay for that water district’s outstanding obligations.’ Nothing in Proposition 218 changed that longstanding law.”
Cohn dismissed another San Antonio Heights contention, “Petitioner also attempts to distinguish Citizens Association of Sunset Beach on the ground that Sunset Beach was a small community annexed to a much larger city, while this annexation involves the reverse dynamic,” wrote Cohn. “The argument is one of policy, better addressed to the Legislature. Nothing in the Citizens Association of Sunset Beach case depends or even mentions the relative sizes of the jurisdictions as a factor to consider. The sweeping pronouncement of Citizens Association of Sunset Beach appears to be all inclusive. Proposition 218 simply does not apply to annexations. Period. Therefore, if the annexation is valid, perforce the tax is valid. The issue, then, is whether the annexation is valid.”
Cohn moves on in discussing the validity of the annexation, further undercutting the plaintiffs, going so far as to state that the petitioner’s argument, based upon Government Code Section 56886 Subdivision (e), that the entity Upland and San Antonio Heights are being annexed into is not an “improvement district” but rather “a special tax zone” is an irrelevant distraction.
“Petitioner correctly observes that the San Bernardino County Fire Protection District is not an ‘improvement district,’” Cohn states. “An ‘improvement district’ is defined as a ‘district, area, or zone formed for the sole purpose of designating an area which is to bear a special tax or assessment for an improvement benefiting that area.’ The San Bernardino County Fire District was formed for a broader purpose – to provide fire protection services to residents of the district. But subdivision (e) does not provide or imply that it is only annexation to improvement districts which are permissible. Section 56021 specifically recognizes annexations to districts. The reason section 56886, subdivision(e), references an annexation to an improvement district as a permissible term and condition of a reorganization is because Government Code Section 56036 excludes improvement districts from the otherwise broad definition of districts. Therefore, while annexations to improvement districts may depend upon the authority of subdivision (e), annexation to districts do not. Subdivision (e) is simply a red herring – it has no application to the facts of this case.”
Still after dismantling many of the elements in the San Antonio Heights Association suit, Cohn turned to an issue which he said carries the possibility the suit may succeed.
“The annexation into ‘zones’ may be invalid,” Cohn pointed out. “The certificate of completion for the annexation, by its terms, provided for ‘Reorganization to include annexations to the San Bernardino County Fire Protection district, its Valley Service Zone, and its Service Zone FP-5, and for Formation of Service Zone FP-5 West Valley.’ While annexation to the district as a whole may be proper, petitioner argues the annexation to the designated ‘zones’ is improper because Government Code Section 56036, which defines a district or special district to include a county service area, excludes a ‘zone of any special district.’ Respondents assert that the ‘zones’ referenced in the annexation are not those intended by the reference in section 56036, but merely represent the manner in which the district internally organizes itself. The argument is nonresponsive. The term ‘zone’ is not defined anywhere in the statutory scheme. If a ‘zone’ is not defined statutorily, it arguably can only refer to the manner in which districts organize themselves. If so, annexation to such internally organized ‘zones’ would be exactly what is prohibited under section 56036.”
Cohn continues, “Even so, it is unclear whether the portion of the annexation into ‘zones,’ if invalid, would render the overall annexation to the district improper. Assuming that the annexation to the district remains valid, can the tax be imposed in only a portion of the district (i.e., to one or more of its internally organized ‘zones’ as determined by the district?) A final determination on the merits will require considerably more analysis than the parties have provided to the court at this time. For now, however, petitioner has shown, at the least, a colorable defect in the annexation, which respondents have inadequately refuted.” Judge Cone stated that a crucial area of the law that would assist in determining if a tax can be selectively imposed within a district is Government Code Section 56886 (t). Government Code Section 56886 (t) or “subdivision (t),” which Cohn referred to, states: any “change of organization or reorganization,” such as a valid annexation, can be effectuated in accordance with “(t) The extension or continuation of any previously authorized…tax by the local agency in the affected territory.” Cohn said that it is “logical” to assume that the use of separate terms “extension” and “continuation” means two different actions. “If both terms meant the same thing, then there would be no need for separate words,” he said.
Briggs and Kim last week before the judge had argued that court precedence had established that the interpretation of the term “extension” was a temporal one, meaning extension through time, not a physical one meaning extension through space, and that Proposition 26 had closed the loophole on any local interpretation of state code that would “physically extend” the arm of a tax voted on by the people in the tiny community of Helendale.
Cohn however said that “Petitioner cites no authority to support its argument” and that “Subdivision (t) allows an annexation under the broad authority of section 556375 to be conditioned upon an extension or continuation of a tax…Ultimately, the court will need the parties to provide further analysis of subdivision (t) and its application to this case, but at this time petitioner has failed to demonstrate that it serves as an impediment to a valid annexation.”
He then determined that the annexation to the zone was likely invalid, but left for further argument the validity of applying a zone tax to other portions of the district.
In his conclusion, Cohn states, “Petitioner has made a preliminary showing of a likelihood of success on the merits, which respondents have not adequately refuted.”
Cohn’s decision last week extended only to whether the injunction would be granted. Nevertheless, in making his analysis of whether an injunction was warranted, he did a parallel analysis of the merits of the case, and his preliminary assessment was that there was at least one seemingly valid or genuine legal claim that was plausible enough to sustain the lawsuit the San Antonio Heights Association filed if the facts it has cited can be proved at trial.
Cohn did not, in his analysis, take up the issue of Proposition 26, which requires that “any” new special tax to be imposed must first be voted upon and approved by those to pay it. Proposition 26 passed in 2010, when the Sunset Beach case was under consideration by the appellate court. The appellate court made no mention of Proposition 26 in its Sunset Beach case ruling. Thus, Briggs maintains, the Sunset Beach ruling may not be fully applicable to the circumstance in Upland and San Antonio Heights, and Proposition 26 may yet prove a basis upon which to invalidate the application of the FP-5 zone tax to other parts of the district.
The battle against the annexation has been an uphill one, with those opposed to it having been outgunned politically and outmuscled administratively at every stage, at the city, county and Local Agency Formation Commission levels. Prior to the protest deadline, the San Antonio Heights Association had sought, unsuccessfully to obtain a temporary restraining order to prevent the city, county, district and the Local Formation Commission from proceeding. That application was denied as premature, since the outcome of the protest vote was not known at that time, and a successful show of protest would have rendered the entire suit moot. But the city and county immediately went forward with transitioning the city fire department into the county agency, a further setback which was confirmed by Cohn’s refusal to grant the preliminary injunction. But a string of seven consecutive setbacks against a mélange of governmental entities holding all, or nearly all of the administrative cards has not daunted those determined to see the challenge through.
The language in Cohn’s decision pertaining to the plaintiff’s likelihood to prevail on the merits heartened members of the San Antonio Heights Association, the first victory in what looks to be a long twilight struggle. At press time, word has come that the decision to deny the injunction is being appealed.
By Ruth Musser-Lopez and Mark Gutglueck