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Zoning Bulletin December 10, 2016 I Volume 10 I Issue 23 Industry association challenges validity of tax Citation: Building Industry Association of the Bay Area v. City of San Ramon, 208 Cal. Rptn: 3d 320 (Cal. App. 1st Dist. 2016) CALIFORNIA (10/13/16)—This case addressed the issue of whether a tax approved by a developer, as landowner, pursuant to the Mello -Roos Com- munity Facility Act to raise necessary revenue to cover the cost to the city for providing services to a new townhouse development complied with the Mello - Roos Act. It also addressed whether the tax was a valid special tax, or a gen- eral tax that violated the state constitution. The Background/Facts: In 2013, the City of San Ramon (the "City") tentatively approved the subdivision of two parcels of land to create a 48-unit townhouse project known as the Acre Development ("Acre"). The approval process included a fiscal analysis that revealed that the cost of providing ser- vices to Acre would exceed revenue generated by Acre. Thus, as a condition of approval, the City required Acre's developer to provide a funding mecha- nism to mitigate the negative fiscal impact to the City. California's Mello -Roos Community Facilities Act of 1982 (the "Mello - Roos Act" or the "Act") (Ca. Gov. Code § 53311 to 53317.5.) provides an "alternative method of financing certain public capital facilities and services, especially in developing area and areas undergoing rehabilitation." (Ca. Gov. Code § 53311.5.) The Act authorizes the creation of community facilities districts by "all local agencies," defined to include any city. (Ca. Gov. Code, §§ 53316 & 53317, subd. (h).) A community facilities district may be established to finance one or more types of specified services (Ca. Gov. Code § 53313) or facilities (Ca. Gov. Code § 53313.5), or both. Once a local agency has approved the formation of a district, the agency's legislative body must submit the levy of any special tax to the voters for approval. (Ca. Gov. Code § 53326, subd. (a).) If there are not at least 12 persons registered to vote in the proposed district on each of the 90 days preceding the election, the vote is by the landowners of the real property in the district. (Ca. Gov. Code §§ 53317, subd. (f) & 53326, subd. (b).) In both types of election, approval of the tax requires approval by two-thirds of the votes cast. (Ca. Gov. Code § 53328.) Here, using the Mello -Roos Act, Acre's developer petitioned the city to cre- ate a "communities facilities district." Then, as the sole landowner and quali- fied elector, Acre's developer voted to approve a tax within the district to raise the necessary revenue. The City then adopted an ordinance, providing, among other things: "All of the collections of the special tax shall be used as provided for in the Act . . .." Subsequently, the Building Industry Association -Bay Area (the "Associa- tion") sued the City. The Association challenged the validity of the tax. The Association argued that: (1) the tax did not comply with the requirement of the Mello -Roos Act that services financed by a landowner -approved community facilities district must be "in addition to those provided in the territory of the district before the district was created" and "may not supplant services already available within that territory when the district was created" (Gov. Code § 53313); (2) the tax was an improper general tax, rather than a special tax, and therefore violated section 2, subdivision (a) of article XIII C of the Cali- © 2016 Thomson Reuters 3