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<br />by Proposition 62 were upheld by the State Supreme Court in Santa Clara County Local Transportation
<br />Authority v. Guardino, 11 Cal.4th 220 (1995).
<br />Following the Guardino decision upholding Proposition 62, several actions were filed challenging taxes
<br />imposed by public agencies since the adoption of Proposition 62. In 2001, the State Supreme Court released its
<br />decision in one of these cases, Howard Jarvis Taxpayers Association v. City of La Habra, et al., 25 Cal.4th 809
<br />(2001). In La Habra, the court held that a public agency’s continued imposition and collection of a tax is an
<br />ongoing violation upon which the statute of limitations period begins anew with each collection. The court also
<br />held that, unless another statute or constitutional rule provided differently, the statute of limitations for
<br />challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to
<br />Proposition 62 may only be made for those taxes received within three years of the date the action is brought.
<br />The City believes that all of the taxes that the City currently collects comply with the requirements of
<br />Proposition 62. However, the requirements of Proposition 62 are largely subsumed by the requirements of
<br />Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996.
<br />See the caption “—Proposition 218” below.
<br />Proposition 218
<br />On November 5, 1996, State voters approved Proposition 218, an initiative measure entitled the “Right
<br />to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing
<br />certain vote requirements and other limitations on the imposition of new or increased taxes, assessments
<br />(meaning any levy or charge upon real property for a special benefit conferred upon the real property) and
<br />property-related fees and charges. Proposition 218 states that all taxes which are imposed by local governments
<br />are deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have
<br />no power to levy general taxes. No local government may impose, extend or increase any general tax unless and
<br />until such tax is submitted to the electorate and approved by a majority vote. No local government may impose,
<br />extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-
<br />thirds vote.
<br />Proposition 218 also provides that no tax, assessment, fee or charge may be assessed by any agency
<br />upon any parcel of property or upon any person as an incident of property ownership except: (a) the ad valorem
<br />property tax imposed pursuant to Articles XIII and XIIIA of the State Constitution; (b) any special tax receiving
<br />a two-thirds vote pursuant to the State Constitution; and (c) assessments, fees and charges for property-related
<br />services as provided in Proposition 218. Proposition 218 then goes on to add voter requirements for assessments
<br />and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water,
<br />and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of
<br />property ownership, including sewer, water and refuse collection services, are subjected to various additional
<br />procedures, such as hearings and stricter and more individualized benefit requirements and findings. The effect
<br />of such provisions is to increase the difficulty a local agency will have in imposing, increasing or extending such
<br />assessments, fees and charges.
<br />In the case of assessments, fees and charges, in most instances, in the event that the City is unable to
<br />collect revenues relating to specific programs as a consequence of Proposition 218, the City will curtail such
<br />services rather than use amounts in the General Fund to finance such programs. However, no assurance can be
<br />given that the City may or will be able to reduce or eliminate such services to avoid new costs for the City’s
<br />General Fund in the event that the assessments, fees or charges which presently finance them are reduced or
<br />repealed.
<br />Proposition 218 also extends the initiative power to reducing or repealing any local taxes, assessments,
<br />fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6,
<br />1996, the effective date of Proposition 218, and is not limited to property-related taxes or other charges, and
<br />could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to
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