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Jacks v. City of Santa Barbara

Filed 6/29/17 IN THE SUPREME COURT OF CALIFORNIA ROLLAND JACKS et al., ) ) Plaintiffs and Appellants, ) ) S225589 v. ) ) Ct.App. 2/6 B253474 CITY OF SANTA BARBARA, ) ) Santa Barbara County Defendant and Respondent. ) Super. Ct. No. 1383959 ____________________________________) Pursuant to an agreement between Southern California Edison (SCE) and defendant City of Santa Barbara (the City), SCE includes on its electricity bills to customers within the City a separate charge equal to 1 percent of SCE‟s gross receipts from the sale of electricity within the City, and transfers the revenues to the City. The City contends this separate charge, together with another charge equal to 1 percent of SCE‟s gross receipts that SCE includes in its electricity rates, is the fee paid by SCE for the privilege of using City property in connection with the delivery of electricity. Plaintiffs Rolland Jacks and Rove Enterprises, Inc., contend the 1 percent charge that is separately stated on electricity bills is not compensation for the privilege of using City property, but is instead a tax imposed without voter approval, in violation of Proposition 218. (Cal. Const., art. XIII C, § 2, added by Prop. 218.) As we explain below, the right to use public streets or rights-of-way is a property interest, and Proposition 218 does not limit the authority of government SEE DISSENTING OPINION to sell or lease its property and spend the compensation it receives for whatever purposes it chooses. Therefore, charges that constitute compensation for the use of government property are not subject to Proposition 218‟s voter approval requirements. To constitute compensation for a property interest, however, the amount of the charge must bear a reasonable relationship to the value of the property interest; to the extent the charge exceeds any reasonable value of the interest, it is a tax and therefore requires voter approval. The litigation below did not address whether the charges bear a reasonable relationship to the value of the property interests. Therefore, we affirm the judgment of the Court of Appeal to the extent it reversed the trial court‟s grant of the City‟s motion for judgment on the pleadings, but we reverse the Court of Appeal‟s order that the trial court grant summary adjudication to plaintiffs. I. FACTS The parties stipulated to the following facts in the trial court. Beginning in 1959, the City and SCE entered into a series of franchise agreements granting SCE the privilege to construct and use equipment along, over, and under the City‟s streets to distribute electricity.1 At issue in this case is an agreement the City and SCE began negotiating in 1994, when their 1984 agreement was about to expire. The 1984 agreement required SCE to pay to the City a fee equal to 1 percent of the 1 A franchise is a privilege granted by the government to a particular individual or entity rather than to all as a common right. A utility franchise is a privilege to use public streets or rights-of-way in connection …
Original document
Source: California Supreme Court