I created a page on Archive.Org to collect pleadings from the Okulicks’ case, and you can find it right here. Unfortunately right now I only have the original petition and yesterday’s tentative ruling, since adopted as final. This article from the Times is also useful background.
Yesterday afternoon the final hearing in the Okulick’s lawsuit against the Venice Beach BID took place before Judge James C. Chalfant in Department 85 of the Stanley Mosk Courthouse of the Los Angeles County Superior Court. One of the petitioners’ claims was that BIDs don’t give any special benefits to property owners whose parcels are zoned commercial but are used solely as owner-occupied residential.
Last month, it seems, Chalfant agreed with the petitioners, stating in his tentative ruling at that time that:
The Petition for writ of mandate is granted in part. Only the portion of the assessment directed to properties used by their owner exclusively as their residence is unlawful. A writ shall issue directing a refund of that portion of the assessment and Petitioners are entitled to a declaratory judgment to that effect. In all other respects, the Petition is denied.
However, it seems that the respondents, i.e. the City of Los Angeles and the Venice Beach BID, convinced him to hold off on making this ruling final to allow for another round of briefing just on the specific part where he found in favor of the Okulicks. I don’t have copies of those briefs, but yesterday’s hearing consisted of the oral argument surrounding them. Whatever the City of LA put in its brief did the nasty trick, evidently.
By yesterday Chalfant had changed his mind completely, and nothing that the petitioners’ lawyer, the brave, the honorable Geoffrey T. Stover, could say would sway the judge. Turn the page for the money quote from yesterday’s bad news tentative ruling and a little bit of amateur discussion based on notes I took at the hearing.
In the tentative ruling issued yesterday, Chalfant ruled:
Since properties zoned for commercial use are provided special benefits under the BID Law, it is immaterial that the owner is using the parcel as a residence. Prop 218 is not violated when property in the Venice BID zoned as commercial but used for residential purposes is nonetheless assessed. … The petition is denied.
So that’s it for this petition, I guess, unless the petitioners decide to appeal. That can’t happen before the judgment is finalized in an order,1 which it seems can’t happen sooner than May 10, 2018.
Anyway, from what I could glean from the hearing yesterday, it seems that the City and the BID argued that since the BID law at §36632(c) states that:
Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.
it actually can’t be reasonable to require the City and/or the BID to investigate what the property is actually being used for.
Furthermore, and this is admittedly a damaging fact for the petitioners, it seems that the BID law originally said that properties in residential use couldn’t be assessed, and the legislature later changed it to its present wording. The argument goes that if the legislature had intended to require an investigation into the use of particular parcels rather than merely looking at their zoning, they would not have altered the law in this way.2
The key argument that the City and the BID made seems to rely on the fact that no one’s disputing that vacant commercially zoned parcels are exempt from assessments. Such parcels represent an owner voluntarily choosing not to take advantage of the putative benefits offered by the BID. Residential use of commercially zoned property, the argument goes, is indistinguishable from vacant commercial property in this sense. Here’s what he said specifically, and with this quote, at least until something concrete happens, I will leave you:3
Respondents persuasively argue that special benefits are conferred on commercially zoned properties regardless of their use. The term ‘special benefit’ means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. The BID’s services themselves are the special benefits conferred on the assessed parcels.
As Respondents argue, the BID’s special benefits are provided to real parcels regardless of whether the property owner actually adjusts his or her activities to take advantage of them because they are conferred on the real property pursuant to art. XIIID section §2(i) when the services are rendered. Respondents persuasively compare residential use of commercially zoned property to business property that is vacant; both illustrate the landowner’s choice not to take advantage of the commercial opportunities afforded.
When the BID Law was enacted in 1994, Sts. & Hy. code section 36634(b) read as follows: “Properties in private residential use , or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.” In 1996, this provision was amended as follows: “Properties zoned solely for residential use , or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.”
As Respondents contend, the court’s tentative ruling resurrects the superseded version of the statute because it would hold that no special benefit is conferred on commercial properties that are used as a residence. Of course, the Legislature cannot override a constitutional provision. But, as the court previously noted, the 2014 amendments to the BID Law was intended to provide the Legislature’s guidance for the BID Law’s interaction with art. XIIID (Sts, & Hy. Code §36601(h)), and that there is a strong presumption in favor of the Legislature’s interpretation of art. XIIID. As enacted and amended, the BID Law requires evaluation of a property’s zoning, not use, in determining the special benefit conferred. There is no basis for the court to conclude that this statutory law is inconsistent with art. XIIID’s permitted assessments for special benefits conferred on real property.
Thus, the Venice BID’s special benefits are those conferred on real property located in the district. The proper inquiry is whether the special benefits are conferred on a parcel irrespective of whether the owner is actually capitalizing on the benefit. In this sense, the benefit is not prospective, but present and realizable. Since properties zoned for commercial use are provided special benefits under the BID Law, it is immaterial that the owner is using the parcel as a residence. Prop 218 is not violated when property in the Venice BID zoned as commercial but used for residential purposes is nonetheless assessed.
Image of James C. Chalfant doing his thing up there in Department 85 is ©2018 MichaelKohlhaas.Org. It was mooshed up out of this picture of Chalfant, of whom it is really, really hard to find a high-definition picture, and this picture of the only beach that matters, of which it is really, really easy to find a high-definition picture. There’s a lesson in that, friends.
- Or whatever it’s called. I don’t know the proper terminology to use here.
- Note, however, that the Judge did say explicitly a number of times that the BID was not required to include all commercially zoned properties, which at least, and obviously this is a Pyhrric victory, exposes Tara Devine as the shameless liar that she is.
- With a lot of the references removed.
One thought on “Judge James Chalfant Issues Final Judgment In Okulick Petition Against The Venice Beach BID — The News Is Not Good, Friends, Even Though It Seemed Last Month Like It Was Going To Be”
Maybe the lawyers raised these, but…
Would it have been possible to argue that since residential uses are legal in commercial zones, the BID tax represents an illegally discriminatory effort to coerce the property owner to adopt a particular use among legal uses? “…the BID’s special benefits are provided to real parcels regardless of whether the property owner actually adjusts his or her activities to take advantage of them…”
Also, the court cites the fact that the legislature explicitly put agricultural or strictly residential land off limits to BIDs as evidence to support his decision that residential use of commercial property doesn’t protect it from inclusion in the BID.
There are two likely reasons for the legislature doing so: 1) it would be unfair to tax them for benefits to a use they were not permitted, and 2) if residential or agricultural lands were allowed in the BID, they could not be trusted as voters to focus the BID’s policies and benefits on commercial interests. In both instances, the only logical inference is that the legislature recognized that BIDs were specifically to serve business interests that might conflict with, or fail to serve, those of the residential or agricultural landholders. Therefor, involuntary inclusion of residential land in a BID discriminates against the owner who has chosen one of the legal uses of that land. Notice that the legislature’s amendment of the BID statute says properties zoned residential “…are conclusively presumed not to benefit from the improvements and service funded through these assessments…” It does NOT make the converse argument that properties zoned commercial, and on which the use is residential, must be presumed to benefit from the improvements. That is obviously not the case.
Vacant land is a different issue. The value of vacant land is in its potential uses. Therefor, the value of a commercially zoned vacant lot may be raised by the improvements in a BID. However, if it’s already built out as residential, that potential doesn’t apply unless the use is changed.
The judge also seems to ignore another whole aspect of the BID, which is that it is not only about taxation but also about fair representation. I wonder if another legal argument could be made that a residential member of a BID is structurally denied equal representation, since the stated purpose and design of the BID are to promote business interests, and “special benefits” are tailored to commercial uses. A residential member of the BID is essentially gerrymandered into it and has no chance of prevailing in any vote on an issue or benefit where business interests compete against residential.
BTW, I thought you might be interested in this obsequious editorial in the Argonaut, a local newspaper for the northern Santa Monica Bay area, including Venice.