Legal Alerts Jul 09, 2019

Cities May Record Special Assessment Liens for Delinquent Fees

Calif. Appellate Court Holds These Liens Not Subject to Prop. 218

Cities May Record Special Assessment Liens for Delinquent Fees

California cities are authorized by statute to record special assessment liens on property for delinquent solid waste service fees, an appellate court has ruled. This method of collecting delinquent fees, the court concluded, is not subject to the California Constitution’s provisions governing a local government’s authority to impose or increase revenue measures. The First District Court of Appeal’s ruling in Kahan v. City of Richmond affirms cities’ and counties’ practice and authority to collect delinquent solid waste collection fees on the tax roll as a special assessment.
 
Under its Municipal Code, the City of Richmond is authorized to record “special assessment” liens on properties for delinquent solid waste collection fees. Shortly before the plaintiff purchased a property at a foreclosure sale, the City recorded a lien on the property for delinquent solid waste collection fees that remained unpaid by the prior owner. When the plaintiff later sold the property, he was required to pay the delinquent fees, as well as administrative charges and escrow fees, to obtain a release of the City's lien. He subsequently filed a lawsuit that sought class action status against the City, alleging that the City’s Municipal Code provisions and practice of recording “special assessment” liens violated — and was preempted by — state law and California Constitution articles XIII C and D (commonly referred to as Proposition 218). The appellate court held that the lien recording for the delinquent fees is expressly authorized by statute, regardless of whether the fees are, by their nature, special assessments or user fees.
 
The court first found the City was authorized to record the lien as a special assessment under its Municipal Code. The court held the authority to do so lies in Government Code section 38790.1, which provides that a city may collect delinquent fees or charges in the same manner as counties under Government Code section 25831. That section in turn provides that a county may collect, as a special assessment, certain fees authorized by statute that remain unpaid and may collect such assessments at the same time as ad valorem property taxes on the tax roll. (An ad valorem tax is based on the assessed value of an item or property.)
 
The court also declined to apply the “tax,” “assessment” and “user fee” definitions under Proposition 218 that the plaintiff argued prevent the City from labeling the delinquent solid waste collection fees as “special assessments.” These definitions, the court noted, relate to procedural requirements and restrictions on a local government’s authority to impose or increase revenue measures, not methods for collection of delinquent service fees. 
 
If you have any questions about this case or how it may impact your agency, please contact the authors of this Legal Alert listed to the right in the firm’s Special Districts and Municipal Law practice groups, or your BB&K attorney.
 
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