Katz lawsuits on shaky ground, scholars say Katz lawsuits on shaky ground, scholars say (August 26, 2005)

By Katie Vaughn

Saratoga resident Aaron Katz is unlikely to win his lawsuits against the El Camino Hospital and Mountain View-Whisman School districts, but if he did, the impact would resonate throughout the entire country, according to two professors at the Santa Clara University School of Law.

Katz, a lawyer, filed suits against the districts last year in order to block parcel tax measures which he calls unconstitutional. Although not a resident of the districts, Katz owns property within them and argues he should have been allowed to vote on Measure D and Measure J, passed by the hospital and school district, respectively.

Because he was taxed without being able to vote beforehand, Katz believes his case addresses a constitutional issue. However, professors Ed Steinman and Margaret Russell agreed that the constitution is clear about local governments having a right to impose taxes -- and to limit the elections to residents. And that's the way elections have traditionally been held, they said.

"He's basically arguing that you can't have an election on parcel taxes without including property owners," Russell said. "The law is pretty clear that governments can restrict them [elections] to residents."

"We have the notion that local communities have the right to govern themselves," Steinman said. "I don't see any legal basis to his lawsuit."

Furthermore, the professors said, Katz was aware of the laws before buying property within the districts. That he ended up purchasing the property, they said, shows he understood and acted in accordance with the laws.

Nevertheless, if Katz were to win his appeals, and ultimately his cases, the use of parcel taxes throughout the country could drastically change. For instance, Russell said, a person who owns a vacation home in Lake Tahoe would have the right to participate in the city's elections. And similar scenarios could play out across the country.

"It would have a dramatic impact," Steinman said. "He'd be upsetting every single community in the United States."

But if he loses, Steinman said, the use and legality of parcel taxes will go unchanged and the case will have no lasting impact. Both professors said this is likely to be the outcome.

While Steinman said Santa Clara Superior Court Judge McKenney, who is overseeing the case, has no reason to personally weigh in on Katz's claims, Russell said it could be beneficial if the judge were to explain why the case lacks legal merit.

"If he's trying to change the law, the judge should address the merit of the case," Russell said. "He should clarify it's not a denial of [Katz's] fundamental right to vote."

Russell added that if Katz really wanted to change the way parcel tax elections are run, he should seek change through the legislature, not the court system.

"The idea is that he does have a remedy through the political process, rather than a voting right," Russell said.

Parcel taxes are now a major source of revenue for schools and other districts thanks to Proposition 13, passed in 1978 to limit taxes on residential and commercial property.

One impact of Prop. 13 was that it essentially turned property taxes into state taxes, depriving local districts of a primary form of revenue. A parcel tax -- applied to parcels of real estate rather than to their monetary value -- was first passed by a California school district in 1983 to make up for the lost revenue. Since then, parcel taxes have become "a mechanism for local governments to raise money," Steinman explained.

While neither professor was aware of a previous lawsuit challenging parcel taxes in the way Katz's suit does, they did recall cases in which people sued because they wanted to vote on an issue that affects them, even if they didn't reside in the district holding the election.

Even so, "It hasn't been challenged the way this gentleman is doing it," Steinman said.

Mountain View-Whisman's Measure J is a $1.6 million annual parcel tax that is costing most residents about $75 per year, depending on the size of their property. (Katz says he pays about $375 for his ownership in several condominiums.)

Meanwhile, the sale of $148 million in bonds authorized by Measure D to seismically retrofit El Camino Hospital is on hold until Katz's lawsuit is resolved.

In June and July, Judge McKenney threw out the hospital and school district cases on the technicality that Katz failed to comply with requirements to publish his summons in a timely manner. Katz has expressed plans to appeal both dismissals.

E-mail Katie Vaughn at kvaughn@mv-voice.com

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