Parcel taxes are likely unconstitutional. The legislature should fix that.


Local governments have
increasingly relied on parcel taxes — taxes on property that are assessed
independent of a property’s value —
to generate revenue and avoid
longstanding tax reform measures like Proposition 13. The California Supreme
Court’s recent decision in California
Cannabis Coalition v. City of Upland
lowered the threshold for voters to pass such taxes,
so they are likely to increase. Parcel taxes, however, are legally
suspect and largely unregulated: statutes barely mention parcel taxes,[1]
and almost no judicial decisions or legal scholarship discuss them.[2]
The current unregulated parcel tax system is untenable and requires judicial
and legislative solutions. Courts should enforce existing constitutional and
statutory requirements, and the legislature should create new ones. This
article analyzes the development of parcel taxes in California and proposes a legislative
framework for them that would make these questionable taxes less susceptible to
a constitutional challenge.  


legislature developed parcel taxes to mitigate Proposition 13

taxes are defined by what they are not. Unlike ad valorem taxes, parcel taxes are
not based on a property’s value. Instead, parcel taxes are based on a
characteristic of the parcel itself, like square footage or the number of units.
Parcel taxes are a critical source of revenue for local governments: in 2013
alone, California property owners paid over $1.79 billion in parcel taxes,
based on 754 local governments imposing 1,790 parcel taxes.[3]

taxes emerged as a workaround to Proposition 13’s constitutional tax
restrictions. In 1978, Proposition 13 capped the property tax rate, restricted
value assessments, and required a two-thirds legislative vote to increase state
taxes.[4] The
year after Proposition 13’s enactment, local property tax revenues decreased over
The legislature responded in 1979 by creating a “special tax” exception to
Proposition 13[6] that
authorized general law cities, counties, and districts to impose parcel taxes
and other special taxes.[7]
Two years later, the legislature extended this authority to park and open space
In 1985, the legislature permitted general law cities to levy special taxes.[9]
Between 1987 and 1990, the legislature similarly enabled school, hospital,
library, and park districts to tax parcels.[10]
And in 1991, the legislature passed omnibus legislation authorizing nearly every
other special district to impose special taxes.[11]
Today, nearly every government entity below the state level can impose special

Parcel taxes are constitutionally

it is well-settled that special taxes — taxes levied for a specific purpose — are
constitutional, the constitutionality of parcel taxes remains unresolved. After
Proposition 13, several judicial decisions ruled that parcel taxes were
unconstitutional ad valorem taxes. Since the early 2000s, however, courts have upheld
parcel taxes without addressing their underlying legality. The
constitutionality of parcel taxes currently rests on a single poorly-reasoned
Court of Appeal decision.

v. City of San Marino

(1986) — the lone California Supreme Court decision on parcel taxes — the state
high court upheld a city’s parcel tax for police and fire protection as a
special tax.[12]
The court reasoned that, although the tax applied different rates to the city’s
zoning classifications, it applied a flat rate to all parcels within
each zone, and thus was not an impermissible ad valorem tax.[13]

two years later, in City
of Oakland v. Digre
the Court of Appeal invalidated a parcel tax similar to the one upheld in Heckendorn.[14] There,
the city of Oakland sought to enforce a voter-approved parcel tax that varied
depending on a parcel’s size and location — a scheme common to many modern
parcel taxes. The court ruled that the measure imposed an ad valorem tax and
therefore violated the constitutional requirement that all property taxes be
assessed based on its fair value.[15]
Although the Digre court did not invalidate all parcel taxes, it reasoned
that the tax at issue was “a tax on property ownership in all its incidents.”[16]

v. City of East Palo Alto
the Court of Appeal went further, holding a parcel tax was “legally
indistinguishable” from a traditional ad valorem tax.[17] The
tax at issue there imposed a flat fee, depending on the type of parcel.[18]
The court reasoned that imposing different rates on different types of property
was tantamount to an ad valorem tax.[19]
The court concluded that parcel taxes are per se property taxes — suggesting they
could never be passed by less than a constitutionally required two-thirds vote.[20]

the Court of Appeal reversed course entirely in Neilson
v. City of California City
holding that “[n]on-ad valorem real property taxes are constitutional.”[21]
The Neilson court briefly (and inaccurately) distinguished Digre and
Thomas on the grounds that they dealt with general, not special taxes.[22]
Neilson’s reasoningwas superficial. It never distinguished the
analysis in Digre and Thomas. Nor did it provide a framework for
assessing whether a parcel tax was an ad valorem tax.

California Supreme Court has not resolved the conflict between Digre, Thomas,
and Neilson. Yet Neilson provides the current rule for parcel
taxes: local governments may impose taxes on real property if the tax is
dedicated to a specific purpose (i.e.
a “special tax”) and two-thirds of local, qualified voters approve the tax.[23] Two
Court of Appeal decisions since Neilson havediscussed parcel
taxes, but neither considered their underlying constitutionality.[24]

is unclear what drove the reversal from questioning the underlying legality of
parcel taxes to presuming their validity. Nevertheless, local governments
increasingly propose parcel tax measures and use the revenue to fund
traditional government functions.[25]
Indeed, the ballot language for more than half of all parcel tax measures
proposed since 2001 reveals that their revenue supports essential public
services like public safety or medical services.[26]

parcel taxes likely violate the constitutional uniformity requirement

taxes that tax properties at different rates may violate Article XIII, section
1 of the state constitution, which requires property be “assessed” at the same
percentage of either fair market value or some other “value standard.” [27]
The uniformity requirement applies to special taxes, even though special taxes are
technically “impose[d],” not “assessed,” because the terms “assessed” and “imposed”
are not materially different. In fact, the definition of “assessment” includes

does not require all taxpayers to pay the same amount because, if it did, “no
property or parcel tax could ever be valid.”[29]
Even “the most earnest attempt at uniformity could not have a uniform effect.”[30]
For example, in Dondlinger
v. Los Angeles
, a
taxpayer challenged a parcel tax of 1.5 cents per square foot on all developed
property, arguing it was not “applied uniformly to all taxpayers.”[31]
The Court of Appeal upheld the tax, concluding that uniformity only requires
“uniform application.”[32]
A tax can require all taxpayers to pay the same rate, even if the final dollar
amount varies.

many non-charter city, county, and special district parcel taxes likely violate
the uniformity clause. Only about half of city parcel measures enacted between
2003 and 2012 applied uniform tax rates to all properties.[33]
Measures without a uniform rate often used a flat rate for residential parcels
or dwelling units and applied different rates to non-residential properties.[34]
For example, one tax applied 17 different rates depending on parcel use,
ranging from $20.24 to $629 per year, per parcel.[35]

statutes that allow local governments to impose various rates on different
types of properties may also be unconstitutional. For example, the 1981
enabling legislation for regional park and open space districts authorized
districts to establish different zones and decide the tax rate for each zone. The
tax rate within each zone must be uniform to be constitutional.[36] Nevertheless,
the East Bay Regional Park District (in Alameda and Contra Costa counties)
imposes a wide range of taxes within its zones.

some parcel taxes local governments use to fund specific services similarly
violate the uniformity requirement. For example, the legislature has enabled
local agencies to impose a parcel tax to provide fire and police services.[37]
But the legislature impermissibly authorized local agencies to “establish
zones” in which the tax imposed may vary by parcel.[38]
This could violate the requirement for uniformity and assessing a tax on
property at the same percentage. While a parcel tax does not impose a tax based
on value, it uses other criteria, such as ownership or lot size, as a proxy for
the “full value.”[39]

Upland probably applies to parcel taxes
and special districts

recent California Supreme Court decision will make it easier for voters to pass
constitutionally-suspect parcel taxes.

California Cannabis Coalition v. City of
, the California Supreme
Court ruled that voter-proposed initiatives were not “imposed by any local
government” and thus not subject to the same constitutional restraints as other
initiatives. As Professor
Darien Shanske argues
, Upland’s reasoning suggests that voters could impose parcel taxes via
ballot initiative with only a bare
majority instead of a two-thirds vote. The Court of Appeal will likely
uphold parcel taxes approved at the lower threshold.

pending cases show courts are applying Upland inconsistently. In San
Francisco, the Superior Court recently upheld two voter initiatives (confusingly
both labeled Proposition C) that explicitly required only a simple majority
But in Oakland and Fresno, the Superior Court struck down two initiative tax measures
that received more than a simple majority but less than a two-thirds vote.[41]
And backers of a March 2020 tax measure in San Diego that fell short of the
two-thirds vote requirement are debating whether to make an Upland
argument in the courts.[42]
A case about the validity of a San Francisco Unified School District initiative
measure will test whether Upland applies to special districts.[43]

Upland will likely extend to special districts.
The constitutional provision interpreted in Upland
(which applied to general law
cities) is nearly identical Government Code section 53722, which governs
special districts. [44] Both
provisions require a two-thirds vote to approve special taxes. And special
district voters probably also have the initiative power.[45]
Given the state high court’s broad interpretation of the initiative power and its
reasoning in Upland, the Court of Appeal will likely uphold a
simple-majority voting threshold for taxes and extend it to special

Upland will probably increase the number
of parcel taxes

the Court of Appeal will probably uphold the lower threshold for voter-proposed
parcel taxes in cities, counties, and special districts, taxpayers should brace
for an increase in such taxes. Historical election results support this
conclusion. In the November 2018 election, most unsuccessful parcel tax
measures received more than 50% voter approval but fell short of two-thirds; a
substantial number received more than 60%.[46]
This means that while these taxes fail under a two-thirds voting rule, they
would pass under a majority rule. This result is consistent with historical
election results. If the two-thirds requirement were reduced to 55%, one study
estimated that the approval rate of local parcel tax measures for school
districts would increase by 29%.[47]
After California voters approved Proposition 39 in November 2000, which lowered
the two-thirds voter approval requirement for school construction bonds to 55%,[48]
the number of measures both introduced and approved increased.[49] The
natural consequence of the Upland  lowering the threshold for voters to pass local
taxes will be more taxes.

fiscal pressures are likely to increase the number of parcel taxes. The
Legislative Analyst’s Office determined parcel taxes to be an “integral part”
of local government finances and found that the number of proposed parcel taxes
has increased in the last 20 years.[50]
California cities are increasingly reaching their maximum local sales tax rate.[51]
Consequently, local governments will be forced to rely on parcel taxes to
generate revenue.

taxes are also likely to increase because previous initiatives and court
decisions have severely limited local governments’ abilities to charge fees and
assessments. Proposition 218, adopted November 1996, restricted local
government power to collect fees and charges. In 2010, the California Supreme
Court barred a county open space district from imposing an assessment on all
properties within its district for conservation acquisition.[52] Also
in 2010, California voters approved Proposition 26, a constitutional initiative
to further restrict government taxation by defining any “levy, charge, or
exaction of any kind” as a tax unless it meets one of seven exceptions. This
“recast many fee programs as tax increases.”[53]
Combined, these restrictions may force local governments to seek funds from
voter-approved parcel taxes.

taxes are probably municipal affairs

parcel taxes are almost certainty a municipal affair, any legislation
regulating parcel taxes would apply only to general law cities, not charter
cities. Under the state constitution, charter cities may “make and enforce all
ordinances and regulations in respect to municipal affairs.”[54]
This includes “the power to tax for local purposes.”[55]
Although the municipal affairs doctrine is a muddled area of law that does not
receive full attention,[56]
the California Supreme Court “rules for the city in nearly every case that
concerns local finance, especially taxes.”[57]

legislature cannot preempt charter cities’ parcel taxes because no legislative
scheme fully occupies the field and state regulation is not a “paramount state
concern.” Unlike the sales tax and income tax — which the state has preempted —
California does not have a direct revenue-raising interest in parcel taxes.[58]
Nor does California impose a single statewide parcel tax. Voters overwhelmingly
rejected the state’s sole effort at parcel taxes in November 2006 when they
voted down Proposition 88, which proposed a $50 parcel tax on “most parcels” of
real property in the state to fund education.[59]
And parcel taxes are not traditionally regulated by a central state or federal
authority.[60] Consequently,
the legislature cannot regulate parcel taxes in charter cities.  

legislature should enact comprehensive regulation

if charter city parcel taxes are a municipal affair, the legislature can
regulate the majority of parcel taxes, because only 121 of California’s 458
cities have charters.[61]
The parcel tax system (to the extent it has any foundation) is based on
statutory authority. The legislature can still regulate parcel taxes in general
law cities, counties, and special districts.

do so, the legislature should emulate the Bradley–Burns Uniform Local Sales and
Use Act. In 1953, that law created an “integrated, uniform system of city and
county sales and use taxation” to ensure uniformity between local and state
sales taxes and prevent chaos between overlapping taxing jurisdictions.[62] Bradley–Burns
fixed the sales tax rate and mandated certain exemptions.[63]
It also imposed conditions before local governments could enact tax ordinances
and required local cooperation with state tax collection.[64]

taxes need similar regulation. The only comprehensive study of parcel taxes
across the state found “no common standards, practices, or equalization” across
parcel taxes.[65]
Parcel taxes today resemble sales taxes before the Bradley–Burns sales tax
reform: as sales taxes formerly were, parcel taxes now are concentrated in
metropolitan areas.[66]
Also like pre-Bradley–Burns sales taxes, parcel taxes vary widely by area and
subject. And the absence of uniformity and set standards for local sales taxes fostered
diverse exemptions, imposed duplicate taxation on single sales, and created
issues with competitive advantage.[67]
That precisely describes parcel taxes today, which calls for a similar

more than 55 state statutes grant local governments the ability to enact parcel
These statutes provide inconsistent authority and allow varied local entities to
impose different structures for different purposes. The constitution demands uniform
standards. This confused taxing landscape, and the constitutional uniformity
mandate, call for reform.


area of the law needs a policy-level rewrite, not a piecemeal adjustment
through litigation. Unregulated parcel taxes have quietly grown into a major
local revenue source, but the absence of clear legal authority for these taxes
means that many local governments are potentially imposing unconstitutional
taxes. And Upland will likely lead to even more of these questionable
taxes. Strict procedural rules make challenging parcel taxes difficult, which results
in few challenges.[69]
The courts and the legislature should clarify the law on parcel taxes. Only
those principals can provide the fundamental review of previous judicial decisions
and taxation codes that is needed to provide guidance to local governments and
their taxpayers.


S. Flynn is a third-year law student at Berkeley Law and a California
Constitution Center research fellow.

See, e.g., Gov. Code § 54930, subd. (b) (describing parcel taxes in a manner
identical to ad valorem taxes). In 2018, a resolution in the Senate to
introduce a legislative constitutional amendment to lower the voter threshold
for school district parcel taxes to 55% included amending Article XIII of the
Constitution to read “‘parcel tax’ means a special tax imposed upon a parcel of
real property at a rate that is determined without regard to that property’s
value.’” See Sen. Const. Amend. 22 (2017–2018 Reg. Sess.), at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SCA22.

[2] Only one Attorney
General’s opinion available on Westlaw references parcel taxes; its analysis
focuses on whether the public may access a taxpayer’s request to be exempt from
a tax under a senior citizen exemption. See 81
Ops.Cal.Atty.Gen. 383


[3] California Tax Foundation, Piecing
Together California’s Parcel Taxes
(2014) at 2. The
state does not collect this information itself. In 2012, the Legislative
Analyst’s office concluded it was “unable to locate information on the
statewide amount of parcel tax revenue collected by cities, counties, and
special districts.” See Legis. Analyst’s Office, Understanding
California’s Property Taxes
(Nov. 29, 2012).

Ballot Pamp., Primary Elec.
(June 6, 1978) Legislative Analyst’s Summary of Prop. 13, at 56.

[5] Cal. Legis.
Analyst’s Office, An Analysis of the Effect of Proposition 13 on Local Governments
6–10 (Oct. 1979).

Gov. Code § 50075. See Cal. Bldg. Industry Assn. v. Gov. Bd. (1988)
at 223 (“[f]ollowing voter approval of article XIII A, the Legislature moved
promptly to provide such statutory authority”).

See Cal. Bldg. Industry Assn., supra note
6, at 224, 227–28 (“[T]he
history of this state, with respect to taxation by local governing bodies, is
that each such tax must be authorized by a specific general law.”); see also Hughes v. Ewing (1892) 93 Cal. 414 at
418. See Cal. Const., art. XI, § 5. Charter cities did not require
legislative action because their taxing power is derived from the state
constitution. See Cal.
Fed. Savings & Loan Assn. v. City of Los Angeles
; Weekes
v. City of Oakland
at 392 (“the power to tax for local purposes
clearly is one of the privileges accorded charter cities by the home rule
provision of the California Constitution”).

Pub. Resources Code § 5566.

Gov. Code § 37100.5.

Gov. Code § 50079, subds. (a)
and (b); Gov. Code § 53717; Gov. Code § 53730.01; Pub. Resources Code § 5789.1
(formerly § 5784.39, repealed by Stats. 2001, ch. 15, section 16, p. 37). Local
park and recreation districts, among many other local agencies, may also impose
parcel taxes under the Mello-Roos Community Facilities Act of 1982 (Gov. Code §

Sen. Bill No. 158 (1991–1992
Reg. Sess.). See also Borikas v. Alameda Unified School Dist. (2013) at 162 (explaining how “the purpose
of the comprehensive bill was to ‘complete[] the job by allowing nearly all
special districts to ask their voters if they want to tax themselves’”).

Heckendorn v. City of San Marino (1986) at 483–84.

Id. at 484–85.

Oakland v. Digre (1988) at 102.

Id. at 109–10.

Id. at 103, 106.

Thomas v. City of East Palo Alto (1997) at 1086–88, 1092.


Id. at 1092.

Id. at 1087.

Neilson v. City of California City
at 460; see also id. at 456 (“[T]he California Constitution does not prohibit
a tax on the mere ownership of real property if the tax is a special tax and
not an ad valorem tax.”).

Id. at 461.

Neilson, supra note 21, at 461.

supra note 11; Dondlinger
v. Los Angeles County Regional Park & Open Space Dist.

[25] Legis. Analyst’s Office, A
Look at Voter-Approval Requirements for Local Taxes

(Mar. 20, 2014).

Michael Coleman, An
Overview of Local Revenue Measures in California Since 2001
, California
City Finance (Jan. 2017) at 6.

See Cal. Const. of 1849, art. XI, § 13 (“taxation shall be equal and uniform
throughout the state”).

Black’s Law. Dict. (10th. ed. 2014).

note 24, at 1000.


Id. at 998; Pub. Resources Code § 5566.

Dondlinger, supra note 24, at 998.

[33] Jon Sonstelie, California’s Parcel Tax, Lincoln
Institute of Land Policy (2014) at 12.

Id. at 13.


Pub. Resources Code § 5566.

Gov. Code § 53978, subd. (a).

Id. at subds.

Cal. Const., Art. XIII, § 1, subd. (a).

[40] Dominic Fracassa,Judge
Says SF Correct in Passing Two Tax Measures on Simple Majority Vote
, S.F. Chronicle
(July 5, 2019).

Angela Ruggiero, Oakland
Loses Measure AA Lawsuit, Judge Calls it a “Fraud on Voters”
, Mercury
News (Oct. 15, 2019); Results
of Measure P Stand, Fresno Co., Superior Court Says
, ABC News (Sept. 6,

Lisa Halverstadt, Hotel-Tax
Backers Are Weighing Plan C: The Courts
, Voice of San Diego (Mar. 4,

Robert P. Merten III and Richard E. Nielsen, The 5 Supermajority Tax
Challenges Facing Calif.
, Law360 (July 22, 2019).

Gov. Code § 53722; see also Carrillo & Shanske, California Constitutional Law: Interpreting Restrictions of the
Initiative Power
(2017) 51 U.C. Davis
L. Rev. Online 65, at 74, fn. 43.

Multiple statutes and constitutional provisions suggest special districts have
initiative power. Election Code § 9300 et seq., for example, authorizes
citizens of special districts to use the initiative to propose ordinances.
Proposition 218 broadly expanded the constitutional right to vote on local
taxes and significantly expanded the local initiative power. The state
constitution arguably provides school districts with a limited form of home
rule, which could permit use of the initiative. If school districts, which
serve fewer citizens than many special districts, have initiative power, then
special districts should also.

See Michael Coleman, Local Revenue
Measure Results November 2018
, California City Finance (Dec. 15, 2018),
at 13 (showing that of 19 parcel taxes that failed, 14 received more than 50%
of the vote, and 7 received more than 60% of the vote).

[47] McGhee & Weston, Parcel Taxes for Education in California, Public Policy Institute of California (Sept. 2013).

Cal. Const. Art. XIII A, §
(1)(b)(3); Cal. Educ. Code § 15268.

[49] Lopes & Ugo, Bonds for K-12 School Facilities in
, Public Policy Institute of California (May
2017) (as of November 5, 2018).

Legis. Analyst’s Office, supra note 3.

Sales and Use Rate
, Cal. Dept. of Tax and Fee Admin.; see also Local
Revenue Measure Results November 2018
, CaliforniaCityFinance.com, at 26.

McCarthy, Silicon Valley Taxpayers Association: Local Voters, State Propositions,
and the Fate of Property Assessments
(2009) 97 Calif. L. Rev. 1899, 1907.

Richard Frank, Proposition
26: California’s Stealth Initiative
, Berkeley Law (Oct. 29, 2010).

Cal. Const., art XI, § 5.

and County of San Francisco v. UC Regents

“Taxation is one of the problems most difficult of resolution because of
the numerous conflicting interests between the chartered cities and the state.”
Sho Sato, Municipal Affairs in California
(1972) 60 Calif. L. Rev. 1055. See also California Constitution Center, Municipal
Taxation is Now Interesting
, SCOCABlog (June 28, 2019) (explaining how municipal affairs is a “doctrinal area that’s been
characterized by opacity and inconsistency since 1879”).

[57] SCOCABlog, supra note

[58] Michael Coleman
and Michael G. Colantuono, The Origin &
Devolution of Local Revenue Authority
, Western City (June 2003).

Ballot Pamp., Gen. Elec. (Nov. 9, 2006) text
of Prop. 88

, supra note 7 ; see also SCOCABlog,
supra note 56.

League of California Cities, Learn About Cities
(as of July 1, 2011).

Geiger v. Bd. of Supervisors of Butte County
at 837; see also Cal.
Senate Fact Finding Committee on
Revenue and Taxation, A Study Of The Feasibility Of Increasing State And
Government Revenues From Selected Taxes, at p. 33 (1963); Sho Sato, Municipal Occupation Taxes in California:
The Authority to Levy Taxes and the Burden on Intrastate Commerce
(1964) 53
Calif. L. Rev. 801, 816–17.

See Century
Plaza Hotel Co. v. City of Los Angeles
at 625; see also Rivera
v. City of Fresno
at 136.

Santa Clara County Local Transportation
Authority v.
Guardino (1995)
at 249 (referencing Rev. & Tax.
Code § 7200 et seq.).

Parcel Taxes
, supra note 3, at 2.



Parcel Taxes
, supra note 3, at Appendix 1, 1–4.

To challenge a parcel tax, a taxpayer must file a reverse validation action
within 60 days of passage of a measure. Gov. Code § 50077.5. The public is
“forever barred from contesting the validity of an agency’s action” to validate
a tax if a challenge is not brought within the 60-day window. Golden Gate Hill Development Co. Inc. v.
County of Alameda