On December 20, 2021, the California Supreme Court ruled that a property owner seeking to challenge a proposed assessment is not required to present their objection(s) at the public hearings held to consider the adoption of the assessment in order to later file suit against the assessment in court. In a unanimous decision in Hill RHF Housing Partners, L.P., et al. v. City of Los Angeles (S263734), the Supreme Court declined to infer that a plaintiff is required to appear at the public hearing to present their objections (thereby exhausting an administrative remedy) before they could file suit to challenge the proposed assessment based on an assertion that the assessment violates Proposition 218.
Although the decision is unfavorable for special districts that adopt fees and charges subject to Proposition 218, it does not affect the procedural or substantive process districts are required to follow pursuant to Proposition 218. On April 1, 2021, CSDA joined a coalition to file an amicus brief in favor of the City of Los Angeles, urging the Court to rule that potential plaintiffs should be required to present their objection(s) to an assessment at the public hearings to consider or adopt the assessment, also known as exhausting an “administrative remedy,” before they are permitted to bring a challenge to the assessment pursuant to Proposition 218 in court. The CSDA brief argued that the exhaustion doctrine “Improves Administrative and Judicial Decision-Making, Reduces Wasteful and Counter-Productive Litigation Tactics, Protects Administrative Autonomy and Separation of Powers, and Applies to Public Agencies' Quasi-Adjudicatory and Legislative Acts.”
Unfortunately, the Supreme Court disagreed and reversed a favorable decision from the Court of Appeal. The Supreme Court decision focused on the process of Proposition 218 public hearings, finding that the opportunity to comment in a Prop 218 hearing “does not involve the sort of ‘clearly defined machinery for the submission, evaluation and resolution of complaints by aggrieved parties,’” that would require the court to infer an exhaustion requirement for the plaintiff. Writing in a unanimous decision, Chief Justice Tani Cantil-Sakauye argued that a requirement that objections be considered, by itself, places no legal obligation upon the agency to respond to objections to an assessment. Ultimately, the Court determined that “a process proffered as an administrative remedy does not have to be exhausted when its dispute resolution procedures are so meager that it cannot fairly be regarded as a remedy at all.”
For more information about this case and how it may impact your district, contact CSDA Deputy General Counsel Mustafa Hessabi at mustafah@csda.net.
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