Filed 12/1/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

DIANA LEJINS et al.,

Plaintiffs and 

Respondents,

v.

CITY OF LONG BEACH,

Defendant and Appellant.

 B305134, B306506

 (Los Angeles County

Super. Ct. No. 

18STCP02628)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, James C. Chalfant, Judge. Affirmed.

Charles Parkin, City Attorney, Howard D. Russell, 

Principal Deputy City Attorney, Richard Anthony, Deputy City 

Attorney; Jarvis, Fay & Gibson, Benjamin P. Fay, and Gabriel 

McWhirter for Defendant and Appellant.

Colantuono, Highsmith & Whatley, Michael G. Colantuono, 

and Matthew C. Slentz, for League of California Cities as Amicus 

Curiae on behalf of Defendant and Appellant.

Benink & Slavens, Eric J. Benink, and Vincent D. Slavens

for Plaintiffs and Respondents.

_______________________________
2

Diana Lejins and Angela Kimball (collectively, Plaintiffs) 

filed a petition for writ of mandate in the trial court, challenging 

a surcharge defendant City of Long Beach (the City) imposes on 

its water and sewer customers by embedding the surcharge in the 

rates the Long Beach Water Department (the Water Department) 

charges its customers for service. The surcharge covers transfers 

of funds from the Water Department to the City’s general fund, to 

be used for unrestricted general revenue purposes. The City 

contends the surcharge was legally imposed because it was 

approved by a majority of the City’s voters pursuant to article 

XIII C of the California Constitution.1 Plaintiffs argue 

notwithstanding majority voter approval, the surcharge violates 

article XIII D, which prohibits a local agency from assessing a fee 

or charge “upon any parcel of property or upon any person as an 

incident of property ownership” unless the fee or charge satisfies 

enumerated requirements the City acknowledges were not met 

here. (Art. XIII D, §§ 3, subd. (a) & 6, subd. (b).) The trial court 

entered judgment in favor of Plaintiffs, concluding the surcharge 

is unconstitutional and invalid under article XIII D for the reason 

Plaintiffs advance. As explained below, we agree with Plaintiffs’ 

argument and affirm the judgment and post-judgment order 

awarding attorney fees to Plaintiffs.

2

1 Undesignated article references are to the California 

Constitution.

2

Plaintiffs also argue, and the trial court also concluded, 

the surcharge is unconstitutional and invalid under article XI, 

section 7 to the extent the City collects the surcharge from water 

and sewer utility customers who receive service at a location 

outside the City. We need not reach this issue based on our 
3

BACKGROUND

I. Proposition 218 – A Brief Overview

In 1996, California voters adopted Proposition 218, the 

“Right to Vote on Taxes Act,” which added articles XIII C and 

XIII D—the California Constitution provisions the parties 

reference in this action. As our Supreme Court has explained: 

“ ‘Proposition 218 can best be understood against its historical 

background, which begins in 1978 with the adoption of 

Proposition 13,’ ” which added article XIII A. (Apartment Assn. of 

Los Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal.4th

830, 836 (Apartment Assn.).) Among other things, Proposition 

213 “ ‘limited ad valorem property taxes to 1 percent of a 

property’s assessed valuation and limited increases in the 

assessed valuation to 2 percent per year unless and until the 

property changed hands;’ ” it also prohibited local governments 

“ ‘from enacting any special tax without a two-thirds vote of the 

electorate.’ ” (Ibid.; art. XIII A, §§ 1, 2 & 4.)

Article XIII D, added in 1996 by Proposition 218, “ ‘allows 

only four types of local property taxes: (1) an ad valorem 

property tax; (2) a special tax; (3) an assessment; and (4) a fee or 

charge’ ” for a property-related service. (Apartment Assn., supra, 

24 Cal.4th at p. 837; art. XIII D, § 3, subd. (a), ¶¶ (1)-(4).) 

Proposition 218 “ ‘buttresses Proposition 13’s limitations on ad 

valorem property taxes and special taxes by placing analogous 

restrictions on assessments, fees, and charges.’ ” (Ibid.) The 

parties here agree the Measure M surcharge does not constitute 

an ad valorem property tax, a special tax, or an assessment; as 

discussed below, they disagree whether it constitutes a fee or 

holding the surcharge is unconstitutional and invalid as to all 

customers under article XIII D.
4

charge “assessed by any agency upon any parcel of property or 

upon any person as an incident of property ownership,” subject to 

article XIII D’s restrictions. (Art. XIII D, § 3.) A “propertyrelated fee [or charge] violates article XIII D if [among other 

things] the revenues derived from the fee [or charge] exceed the 

amount required to provide the property-related service [(art. 

XIII D, § 6, subd. (b), ¶ (1))]”; “if revenues derived from the fee [or 

charge] are used for any purpose other than that for which it was 

imposed (see art. XIII D, § 6, subd. (b)(2)) or if the fee [or charge] 

is imposed for general governmental services (see art. XIII D, § 6, 

subd. (b)(5)).” (Citizens for Fair REU Rates v. City of Redding

(2018) 6 Cal.5th 1, 14 (Redding).)

Article XIII C, added in 1996 by Proposition 218, “restricts 

the authority of local governments to impose taxes by, among 

other things, requiring voter approval of all taxes imposed by 

local governments.” (City of San Buenaventura v. United Water 

Conservation Dist. (2017) 3 Cal.5th 1191, 1200.) As defined in 

article XIII C, a general tax is “any tax imposed for general 

governmental purposes,” and a special tax is “any tax imposed for 

specific purposes, including a tax imposed for specific purposes, 

which is placed into a general fund.” (Art. XIII C, § 1, subds. (a) 

& (d).) “Article XIII C buttresses article XIII D by limiting the 

other methods by which local governments can exact revenue 

using fees and taxes not based on real property value or 

ownership.” (Redding, supra, 6 Cal.5th at p. 10.) 

“As a constitutional initiative, Proposition 218 is binding 

upon charter cities,” such as the City here. (Howard Jarvis 

Taxpayers Assn. v. City of San Diego (2004) 120 Cal.App.4th 374, 

391, italics omitted.)
5

II. The City and Its Water Department 

The City is governed by the Long Beach City Charter 

(Charter), which created its Water Department at article XIV, 

section 1400 et seq. of the Charter. The City’s Water 

Department, which is not a legal entity separate from the City, 

provides water and sewer services to most of the City’s residents 

and businesses and to a small number of customers located in 

nearby cities or unincorporated areas of Los Angeles County. At 

all relevant times, plaintiff Diana Lejins has resided in the City 

and is a water and sewer customer of the Water Department; and 

plaintiff Angela Kimball has resided in an unincorporated area of 

Los Angeles County and is a water customer of the Water 

Department.

The Water Department is managed by a five-member 

Board of Water Commissioners (the Board). (Charter, art. XIV,

§ 1400.) One of the Board’s powers, as provided in the Charter, is 

to fix rates charged for water and sewer services. The rates

ultimately must be approved by the City Council. (Id. at 

§ 1403(5)-(6).) Monies collected from customers for water service 

are accounted for and initially maintained in the City’s Water 

Revenue Fund, and monies collected from customers for sewer 

service are accounted for and initially maintained in the City’s 

Sewer Revenue Fund. (Id. at §§ 1403(13) & 1407.) 

As described in the record on appeal, there is a long history

in the City of transferring revenues from the City’s utilities to the 

City’s general fund to help support general City services, such as 

police, fire, library, and parks.

III. Prior Litigation and Settlement

The City devised the surcharge at issue in this case to 

account for a reduction of general fund revenue that resulted 
6

after Diana Lejins (one of the plaintiffs in this case) sued the City 

in 2016 (in a different case), challenging a pipeline permit fee the

City required the Water Department to pay to the City’s general 

fund to install and operate pipelines and other facilities in the 

City’s streets and rights-of-way. The City established the 

pipeline permit fee by ordinance, without approval by the City’s 

voters. The Water Department’s pipeline permit fee payments 

that were placed in the City’s general fund were treated as 

unrestricted revenue. The Water Department, with City Council 

approval, fixed its water and sewer rates at a level to recoup the 

amount of the pipeline permit fees from its customers.

On November 8, 2017, the City and Lejins settled the 

pipeline permit fee lawsuit. The City agreed to stop collecting 

pipeline permit fees from the Water Department. The settlement 

also allowed the Water Department to make payments to the 

City’s general fund to cover street repair and public safety costs 

associated with the Water Department’s activities. The City 

commissioned studies of such costs during the pipeline permit fee 

litigation and determined payments to the general fund to cover 

such costs would be less than the amount the pipeline permit fee 

had generated for the general fund. The City reduced water and 

sewer rates accordingly, and agreed to transfer $12 million from 

the City’s general fund to the Water Department over 

approximately four years. On December 5, 2017, the City Council 

adopted an ordinance reducing water and sewer rates in 

accordance with the settlement.

IV. Measure M and the Surcharge Embedded in the 

Rates the Water Department Charges Its Customers

In early 2018, the City Council held public meetings to 

consider amending its Charter to address the loss of general fund 
7

revenue resulting from the settlement of the pipeline permit fee 

lawsuit—the amount which exceeded the Water Department’s 

payments to the City’s general fund to cover street repair and 

public safety costs associated with the Water Department’s 

activities. During a January 10, 2018 meeting of the City’s 

Charter Amendment Committee and the City Council there was 

discussion regarding the long history in the City of transferring 

revenues from the City’s utilities to the City’s general fund to 

help support general City services, such as police, fire, library, 

and parks. 

The City devised Measure M, which would amend article 

XIV, section 1407 of the Charter to authorize the Water 

Department to transfer to the City’s general fund any funds from 

the Water Revenue Fund and/or the Sewer Revenue Fund that 

the Board determined “to be unnecessary to meet” other 

obligations of the Water Department, not to exceed 12 percent of 

the “annual gross revenues of the water works and sewer system, 

respectively.” (Charter, art. XIV, § 1407(5).) Measure M would 

permit the City to use the proceeds from these transfers for 

“unrestricted general revenue purposes,” as the City Council may 

direct “by budget adoption or other appropriation.” (Id. at 

§ 1407(6)-(7).) Measure M would also authorize, but not require, 

the Board to fix, and the City Council to approve, “water and 

sewer rates in an amount sufficient to recover the cost” of any 

transfers to the general fund that the Board may make. (Id. at 

§ 1407(8).) As set forth in the City’s opening brief on appeal, the 

purpose of the Measure M revenue transfers was “to provide 

financial support for general city services.”

On March 7, 2018, the City Council adopted a resolution 

calling for the submission of the proposed Charter amendment to 
8

City voters at the next general election. The Official Sample 

Ballot for the general election at which Measure M was approved 

asked voters the following: “To maintain general City services 

like 9-1-1 emergency response, police/fire protection, 

street/pothole repairs, senior services, parks and libraries, shall 

the City of Long Beach amend its Charter to authorize annual 

fund transfers from the City’s water, sewer and gas utilities to 

the General Fund not to exceed 12% of utility gross revenues, 

generating approximately $25,500,000 annually for unrestricted 

general revenue purposes, requiring annual independent audits, 

until ended by voters?” An “Impartial Analysis of Measure M” 

prepared by the city attorney described the revenue to be 

transferred from the utilities to the general fund under Measure 

M as “surplus” revenue that is “not necessary to pay for a utility’s 

capital improvements, bond/debt service, operations and 

maintenance, personnel, reserves, and other costs.” At the June 

5, 2018 general election, 53.76 percent of City voters approved 

Measure M. 

On June 21, 2018, the Board passed a resolution fixing

water and sewer rates effective October 1, 2018, raising rates for 

potable and recycled water by 7.2 percent, and leaving sewer 

rates unchanged. In a Notice of Public Hearing for an August 30, 

2018 hearing, the Water Department informed customers the

proposed increase in water rates was due to the following: “In 

June 2018, voters in the city of Long Beach passed Measure M, 

reauthorizing and affirming the City’s historical practice of 

revenue transfers from the City’s utilities to the General Fund, as 

approved by the City Council and Board of Water Commissioners. 

The revenue transfer is subject to a cap of twelve percent (12%) of 

each utility’s annual gross revenues, as shown by audited 
9

financial reports. All proceeds from utility revenue transfers to 

the General Fund shall be used to maintain local General Fund 

services, which include general City services such as police, fire 

and paramedic response, street repair, parks, libraries and 

youth/senior programs.” On September 6, 2018, the City Council 

passed Ordinance No. ORD-18-0022, approving the rates fixed in 

the Board’s June 21 resolution, including the potable and 

recycled water rates that were increased by 7.2 percent to fund 

the transfers to the City’s general fund authorized by Measure M.

The Measure M surcharge, which the City characterizes as 

a general tax, is embedded in the Water Department customers’

utility service charges and is not separately identified in the 

Water Department’s bills to customers. Thus, it is not possible to 

discern from looking at the bills what percentage of the 

customers’ utility charges make up the Measure M surcharge.

As the City explains in its opening brief on appeal, the 

Measure M surcharge is “the part of the [water and sewer] rates 

that raises unrestricted revenue for the support of the City’s 

general fund,” not the part of the rates that is “designed to recoup 

the Water Department’s costs of providing water and sewer 

service.” The City characterizes the surcharge as a tax because it 

“exceeds the Water Department’s costs of providing water and 

sewer service,” as the City explains in its opening brief.

V. The Present Action

On October 22, 2018, Plaintiffs filed in this action a verified 

petition for writ of mandate and complaint for declaratory and 

injunctive relief, asserting the Measure M surcharge violates 

article XIII D, section 6, subdivision (b) because the rate revenue

collected through the surcharge “does not benefit the water or 

sewer utility, is not used for the provision of water and sewer 
10

service, and is not a reimbursement of costs incurred in the 

General Fund for the benefit of the water and sewer utilities. 

Instead, such rate revenue is used for general governmental 

purposes.” Plaintiffs further asserted, to the extent the City 

contends the Measure M surcharge is a general tax, article XIII 

D, section 3, subdivision (a) “precludes local governments from 

imposing general taxes upon any parcel [of property] or upon any 

person as an incident of property ownership.”

By their first cause of action, Plaintiffs sought a writ of 

mandate directing the City (1) to invalidate the September 6, 

2018 ordinance (Ordinance No. ORD-18-002) approving utility 

rates that include the Measure M surcharge; (2) to cease 

transferring proceeds from the surcharge to the City’s general 

fund; (3) to return to the Water Department any proceeds already 

so transferred; and (4) to cease embedding the surcharge in water 

and sewer fees and charges. In their second cause of action for 

declaratory relief, Plaintiffs sought a judgment declaring the City 

violated article XIII D, section 3, subdivision (a), and section 6, 

subdivision (b), paragraphs (1)-(2) and (5), by imposing the 

Measure M surcharge. In their third cause of action for an 

injunction pursuant to Code of Civil Procedure section 526a, 

Plaintiffs sought a permanent injunction precluding Measure M 

transfers of funds from the Water Department and ordering the 

return to the Water Department of previously-transferred funds. 

Finally, Plaintiffs sought an award of attorney fees and costs. 

After the City filed an answer to the petition for writ of 

mandate and complaint, Plaintiffs filed a motion asking the trial 

court to issue the requested writ of mandate, declaration, and 

permanent injunction. In their opening brief on the petition for 

writ of mandate, Plaintiffs argued the Measure M surcharge 
11

violates article XIII D, section 3, subdivision (a), and section 6, 

subdivision (b), paragraphs (1)-(2) and (5), for the reasons

asserted in their petition, as summarized above.3 

In opposition to the petition for writ of mandate, the City 

argued article XIII D is inapplicable to a general tax imposed on 

the use of a property-related service (water and sewer) after 

approval by a majority of the City’s voters pursuant to article 

XIII C. The City also conceded that to the extent a court 

concludes the Measure M surcharge is a fee or charge subject to 

article XIII D, the surcharge does not comply with article XIII D’s 

requirements. The City’s opposition brief below states: “[T]he 

City concedes that the general fund surcharges do not comply 

with article XIIID [sic], section 6(b)’s substantive requirements; 

after all, proceeds from the surcharges are not used to fund the 

City’s water and sewer services, and instead are intended for 

‘general revenue purposes.’ ” 

On January 2, 2020, the trial court held a hearing on 

Plaintiff’s petition for writ of mandate and causes of action for 

declaratory and injunctive relief. After hearing argument by the 

parties, the court adopted its 24-page tentative ruling as its final 

decision, with oral modifications as set forth in the reporter’s 

transcript of the hearing. The court concluded the Measure M 

surcharge violates article XIII D, section 6, subdivision (b) 

3

Plaintiffs also argued the Measure M surcharge violates 

article XI, section 7 to the extent the City collects the surcharge 

from water and sewer utility customers who receive service at a 

location outside the City. As stated above, we need not reach this 

issue because we conclude the surcharge is unconstitutional and 

invalid as to all customers under article XIII D, for the reasons 

set forth below. 
12

because it “is a general tax imposed as an incident of property 

ownership and not a charge based on actual water usage. The 

surcharge is not required to provide the water and sewer service 

[(art. XIII D, § 6, subd. (b), ¶ (1))], is not used for that service 

[(art. XIII D, § 6, subd. (b), ¶ (2))], and only benefits the general 

community [(art. XIII D, § 6, subd. (b), ¶ (5))].” The court also 

concluded the Measure M surcharge violates article XIII D, 

section 3, subdivision (a) “because it is a charge as an incident of 

property ownership that does not fall under any of the 

enumerated exceptions” for a permissible fee or charge. The 

court explained article XIII D, section 3, subdivision (a) “ensures 

that the only levies that can be imposed on property ownership 

per se are an ad valorem tax, a special tax, an assessment, or 

some other levy that complies with the substantive requirements” 

of article XIII D, section 6, subdivision (b), and the Measure M 

surcharge does not fit within any of these categories. (Italics 

omitted.) The court rejected the City’s contention that obtaining 

voter approval of Measure M pursuant to article XIII C rendered 

XIII D inapplicable to the surcharge, stating in its decision, “The 

answer is that [article XIII C] does not relieve the City from 

complying with [article XIII D], which carries independent 

constitutional requirements.” Finally, the court concluded the 

City’s imposition of a general tax (the Measure M surcharge) 

upon customers who receive water and sewer services at locations 

outside the City’s boundaries violates article XI, section 7.

On February 7, 2020, the trial court entered judgment in 

favor of Plaintiffs and against the City, providing (1) the Measure 

M general tax is unconstitutional and invalid under article XIII 

D; (2) the Measure M general tax is unconstitutional and invalid 

under article XI, section 7, to the extent the City collects the 
13

surcharge from water and sewer utility customers who receive 

service at a location outside the City; (3) “any transfers of the 

proceeds of the Measure M general tax from the City’s Water 

Revenue Fund and Sewer Revenue Fund to its General Fund are 

unconstitutional and invalid” under article XIII D; and (4) “all 

City ordinances that establish and/or fix water or sewer rates, 

including, but not limited to, Ordinance No. 18-0022 and 

Ordinance No. 19-0018 [the then-current water and sewer rate 

ordinance, which became effective October 1, 2019], are 

unconstitutional and invalid to the extent that they embed or 

otherwise impose the Measure M general tax on the City’s water 

and sewer utility customers.” The judgment enjoined the City 

from making any further transfers of Measure M proceeds to its 

general fund. The judgment also ordered the issuance of a 

peremptory writ of mandate. On February 11, 2020, the clerk of 

the trial court issued a peremptory writ of mandate to the City, 

commanding it to set aside or rescind Ordinance No. 

ORD-19-0018 and return all prior transfers of Measure M 

proceeds from the City’s general fund to the Water Revenue Fund 

and Sewer Revenue Fund. 

The City appealed from the judgment. Pursuant to 

stipulation by the parties, the trial court stayed enforcement of 

the peremptory writ of mandate and the injunction, subject to 

certain enumerated conditions, pending resolution of this appeal. 

The parties stipulated to an award of attorney fees to 

Plaintiffs. On May 27, 2020, the trial court entered an order 

awarding attorney fees based on the stipulation. The City 

appealed from the order, seeking reversal of the attorney fees 

award to the extent this court reverses the judgment in favor of 

Plaintiffs on the merits. 
14

Amicus curiae League of California Cities (Cal Cities) filed 

in this appeal a brief in support of the City, and Plaintiffs filed an 

answer to the amicus curiae brief. Cal Cities describes itself as 

“an association of 476 California cities dedicated to protecting 

and restoring local control to provide for the public health, safety, 

and welfare of their residents and enhance the quality of life for 

all Californians.” We have considered this additional briefing in 

analyzing the matter before us.

DISCUSSION

The City contends the trial court erred in invalidating the 

Measure M surcharge, arguing “a voter-approved general tax on 

the use of municipal water and sewer service” is not a fee or 

charge subject to article XIII D’s restrictions. We disagree with 

the City’s interpretation of article XIII D’s scope and conclude the 

trial court properly found in favor of Plaintiffs and against the 

City.

I. Standard of Review

Whether the Measure M surcharge violates article XIII D is 

a question of law that we review de novo based on the undisputed 

facts. (Apartment Assn., supra, 24 Cal.4th at p. 836; Tesoro 

Logistic Operations, LLC v. City of Rialto (2019) 40 Cal.App.5th 

798, 806 (Tesoro).) 

In construing article XIII D, “The aim of constitutional 

interpretation is to determine and effectuate the intent of those 

who enacted the constitutional provision at issue. [Citation.] To 

determine that intent, we begin by examining the constitutional 

text . . . .” (Richmond v. Shasta Community Services Dist. (2004) 

32 Cal.4th 409, 418 (Richmond).) “ ‘The principals of 

constitutional interpretation are similar to those governing 

statutory construction.’ [Citation.] If the language [of the
15

constitutional text] is clear and unambiguous, the plain meaning 

governs. [Citation.] But if the language is ambiguous, we 

consider extrinsic evidence in determining voter intent, including 

the Legislative Analyst’s analysis and ballot arguments for and 

against the initiative.” (Silicon Valley Taxpayers’ Assn., Inc. v. 

Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 

444-445 (Silicon Valley).) We conclude the language of article 

XIII D is clear and unambiguous. In evaluating the issue before 

us, however, we quote California Supreme Court authority, which 

references extrinsic evidence, such as the Proposition 218 

Legislative Analyst’s analysis.

II. The Measure M Surcharge Violates Article XIII D

A. Article XIII D, section 3

Article XIII D, section 3 provides:

“Property Taxes, Assessments, Fees and Charges Limited. 

(a) No tax, assessment, fee, or charge shall be assessed by any 

agency upon any parcel of property or upon any person as an 

incident of property ownership except:

“(1) The ad valorem property tax imposed pursuant to 

Article XIII and Article XIII A.

“(2) Any special tax receiving a two-thirds vote pursuant to 

Section 4 of Article XIII A.

“(3) Assessments as provided by this article.

“(4) Fees or charges for property related services as 

provided in this article.

“(b) For purposes of this article, fees for the provision of 

electrical or gas service shall not be deemed charges or fees 

imposed as an incident of property ownership.”

The word “agency,” as used in article XIII D “means any 

local government,” including a charter city. (Art. XIII D, § 2, 
16

subd. (a); art. XIII C, § 1, subd. (b).)4 “Property ownership” is 

defined in article XIII D “to include tenancies of real property 

where tenants are directly liable to pay the assessment, fee, or 

charge in question.” (Id. at § 2, subd. (g).)5A “property-related 

service” for purposes of article XIII D, “means a public service

having a direct relationship to property ownership.” (Id. at § 2, 

subd. (h).)

B. Article XIII D, section 6

Article XIII D, section 6 provides, in pertinent part:

“(b) Requirements for Existing, New or Increased Fees and 

Charges. A fee or charge shall not be extended, imposed, or 

increased by any agency unless it meets all of the following 

requirements:

“(1) Revenues derived from the fee or charge shall not 

exceed the funds required to provide the property related service.

4

Cal Cities asserts in its amicus curiae brief that “voter 

approval takes [a tax, like the Measure M surcharge,] outside 

article XIII D, as such a tax is not imposed by an ‘agency,’ but by 

voters.” Not so. As our Supreme Court has explained, when an 

agency places a measure on the ballot for voter approval—as the 

City did here—it is the agency, not voters, that assesses or 

imposes the tax, assessment, fee, or charge within the meaning of 

article XIII D. (California Cannabis Coalition v. City of Upland

(2017) 3 Cal.5th 924, 940-941, 942 [“that a local government’s 

imposition of a general tax ‘will not take effect’ absent 

subsequent approval by the voters” does not mean it is the voters, 

as opposed to the local government, who impose the tax].) 

5

Thus, “article XIII D broadly defines ownership to include 

rental interests.” (Howard Jarvis Taxpayers Assn. v. City of 

Fresno (2005) 127 Cal.App.4th 914, 925, fn. 3 (Fresno).) 
17

“(2) Revenues derived from the fee or charge shall not be 

used for any purpose other than that for which the fee or charge 

was imposed.

[¶] . . . [¶]

“(5) No fee or charge may be imposed for general 

governmental services including, but not limited to, police, fire, 

ambulance or library services, where the service is available to 

the public at large in substantially the same manner as it is to 

property owners. . . . In any legal action contesting the validity of 

a fee or charge, the burden shall be on the agency to demonstrate 

compliance with this article.”

“Fee” or “charge,” as used in article XIII D “means any levy 

other than an ad valorem tax, a special tax, or an assessment, 

imposed by an agency upon a parcel or upon a person as an 

incident of property ownership, including a user fee or charge for 

a property related service.” (Art. XIII D, § 2, subd. (e).) As our 

Supreme Court has explained, “Because article XIII D provides a 

single definition that includes both ‘fee’ and ‘charge,’ those terms 

appear to be synonymous,” and may be used interchangeably. 

(Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 

205, 214, fn. 4 (Bighorn).)

C. The City imposed the Measure M surcharge as 

an incident of property ownership

As set forth above, article XIII D, section 3, subdivision (a)

prohibits an agency from assessing a tax, fee, or charge “upon 

any parcel of property or upon any person as an incident of 

property ownership,” with limited exceptions. Article XIII D, 

section 6, subdivision (b) places restrictions on an agency’s 

imposition of a fee or charge “upon a parcel or upon a person as 

an incident of property ownership, including a user fee or charge 
18

for a property related service.” (Art. XIII D, § 2, subd. (e).) 

Whether the Measure M surcharge is imposed upon a parcel or 

upon a person as an incident of property ownership is the key

dispute between the parties to be resolved in this appeal. The 

City has acknowledged the Measure M surcharge does not comply 

with article XIII D, section 6, subdivision (b)’s requirements

applicable to fees or charges imposed upon a parcel or upon a 

person as an incident of property ownership, as set forth more 

fully below.

As our Supreme Court explained in Apartment Assn., 

“article XIII D only restricts fees imposed directly on property 

owners in their capacity as such.” (Apartment Assn., supra, 24 

Cal.4th at p. 838.) “In other words, taxes, assessments, fees, and 

charges are subject to the constitutional strictures [of article XIII 

D] when they burden landowners as landowners.” (Id. at p. 842.) 

The Supreme Court in Apartment Assn. concluded an inspection 

fee imposed on private landlords by city ordinance was not a fee 

upon a parcel or upon a person as an incident of property 

ownership, within the meaning of article XIII D, because the fee 

was imposed on landlords “by virtue of their ownership of a 

business—i.e., because they [were] landlords,” not because they 

were property owners. (Apartment Assn., at p. 842.) The fee was 

“imposed only on those landlords who [chose] to engage in the 

residential rental business, and only while they [were] operating 

the business.” (Id. at p. 840.) In other words, the fee was 

“imposed because the property [was] being rented. It cease[d] 

along with the business operation, whether or not ownership 

remain[ed] in the same hands.” (Id. at p. 838; cf. Tesoro, supra, 

40 Cal.App.5th 798, 801, 814 [“an ‘annual business license tax’ of 

‘up to One Dollar [($1.00)] per year for each One (1) cubic foot of 
19

liquid storage capacity’ on ‘[a]ny person engaged in the business 

of owning[,] operating, leasing, supplying[,] or providing a 

wholesale liquid fuel storage facility’ in the City” violated article 

XIII D, section 3 because it was “a tax on real property and on 

persons, namely, owners of wholesale liquid fuel storage 

facilities, as an incident of owning the facilities,” “regardless of 

whether the facilities or the storage tanks [were] used in any 

business operations,” and no exception set forth in section 3 

applied].)

The City characterizes the Measure M surcharge as a valid 

“utility users tax, or an excise tax levied on the use of utility 

services—including water and sewer service.” The City argues 

the surcharge is not imposed upon a parcel or upon a person as 

an incident of property ownership, within the meaning of article 

XIII D, because one may own real property without obtaining 

water or sewer service. Case law does not support the City’s 

view.

In Richmond, supra, 32 Cal.4th 409, our Supreme Court 

held “a charge that a local water district imposed as a condition 

of making a new connection to the water system, and that the 

district used to finance capital improvements to the water 

system,” was not subject to article XIII D’s restrictions, as the 

district did not “impose the capacity charge on real property as 

such, but on individuals who apply for new service connections.” 

(Richmond, at pp. 415, 420.) The Court “conclude[d] that a water 

service fee is a fee or charge under article XIII D if, but only if, it 

is imposed ‘upon a person as an incident of property ownership.’ 

(Art. XIII D, § 2, subd. (e).) A fee for ongoing water service 

through an existing connection is imposed ‘as an incident of 

property ownership’ because it requires nothing other than 
20

normal ownership and use of property. But a fee for making a 

new connection to the system is not imposed ‘as an incident of 

property ownership’ because it results from the owner’s voluntary 

decision to apply for the connection.” (Richmond, at p. 427.)

The Court in Richmond explained that the Proposition 218 

“Legislative Analyst apparently concluded that water service has 

a direct relationship to property ownership, and thus is a 

property-related service within the meaning of article XIII D 

because water is indispensable to most uses of real property; 

because water is provided through pipes that are physically 

connected to the property; and because a water provider may, by 

recording a certificate, obtain a lien on the property for the 

amount of any delinquent service charges [citation]. But the 

Legislative Analyst was apparently referring to fees imposed on 

existing water service customers, not fees imposed as a condition 

of initiating water service in the first instance.

“Several provisions of article XIII D tend to confirm the 

Legislative Analyst’s conclusion that charges for utility services 

such as electricity and water should be understood as charges 

imposed ‘as an incident of property ownership.’ For example, 

subdivision (b) of section 3 provides that ‘fees for the provision of 

electrical or gas service shall not be deemed charges or fees 

imposed as an incident of property ownership’ under article XIII 

D. Under the rule of construction that the expression of some 

things in a statute implies the exclusion of other things not 

expressed [citation], the expression that electrical and gas service 

charges are not within the category of property-related fees 

implies that similar charges for other utility services, such as 

water and sewer, are property-related fees subject to the 
21

restrictions of article XIII D.” (Richmond, supra, 32 Cal.4th at 

pp. 426-427.)

In Bighorn, supra, 39 Cal.4th 205, a case in which our 

Supreme Court held article XIII C, section 3 “grants local voters a 

right to use the initiative power to reduce the rate that a public 

water district charges for domestic water,” the Court cited with 

approval the above-quoted principles from its opinion in 

Richmond. (Bighorn, at pp. 209, 214-215.) In analyzing the issue 

presented to it under article XIII C, the Court in Bighorn

reiterated its conclusion in Richmond “that a public water 

agency’s charges for ongoing water delivery . . . are fees and 

charges within the meaning of article XIII D.” (Bighorn, at p. 

216.)

In Fresno, supra, 127 Cal.App.4th 914, the Fifth District 

Court of Appeal relied on the Supreme Court’s analysis in 

Richmond in concluding a fee “ ‘in lieu of property and other 

taxes normally placed upon private business,’ ” imposed “by 

Fresno on its utility departments and divisions, and passed 

through to ratepayers [by blending it into the user fees], [was] a 

fee subject to the restrictions of article XIII D, section 6” because 

it was imposed as an incident of property ownership. (Fresno, at 

pp. 917, 918, 925, 926.) The appellate court rejected Fresno’s 

argument—identical to the City’s argument here—that the fee 

was “ ‘imposed on the use of utility services,’ ” rather than 

“ ‘solely on the basis of property ownership.’ ”6 (Id. at p. 925; see 

6

The City attempts to distinguish Fresno based on 

differences between Fresno’s charter and the City’s charter, for 

example, the fact Fresno’s charter expressly prohibited Fresno 

from taxing any person for using a utility service. (Fresno, supra, 

127 Cal.App.4th at p. 926.) The facts the City cites are not 
22

also Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 

Cal.App.4th 637, 647 [Third District Court of Appeal held article 

XIII D applied to in lieu franchise fee of four percent on water, 

sewer, and refuse collection utilities’ annual budgets, paid by 

ratepayers and transferred to Roseville’s general fund, as the fee 

was “necessarily tied to property ownership”]; Crawley v. 

Alameda County Waste Management Authority (2015) 243 

Cal.App.4th 396, 408 [“Ordinance’s fee for the collection of 

household hazardous waste is imposed ‘as an incident of property 

ownership’ ” because it is imposed on each household in the 

county and “ ‘vacant [h]ouseholds also require household 

hazardous waste collection and disposal in connection with 

property improvements, maintenance, or landscaping.’ Thus, the 

fee requires nothing other than normal ownership and use of 

property”].)

Following our Supreme Court’s guidance, we conclude the 

City imposed the Measure M surcharge upon a parcel or upon a 

person as an incident of property ownership, within the meaning 

of article XIII D. “A fee for ongoing water service through an 

existing connection is imposed ‘as an incident of property 

ownership’ because it requires nothing other than normal 

ownership and use of property.” (Richmond, supra, 32 Cal.4th at 

p. 427.) Because the Measure M surcharge therefore qualifies as 

a “levy other than an ad valorem tax, a special tax, or an 

assessment, imposed by an agency upon a parcel or upon a 

person as an incident of property ownership, including a user fee 

germane to our analysis of whether the Measure M surcharge is 

imposed upon a parcel or upon a person as an incident of 

property ownership, and violates article XIII D, and we need not 

address such facts further.
23

or charge for a property related service,” it satisfies the definition 

of “fee” or “charge” in article XIII D. (Art. XIII D, § 2, subd. (e).)

D. The Measure M surcharge must comply with 

article XIII D, section 6, subdivision (b)’s 

requirements regardless of voter approval

As set forth above, and as relevant to the parties’ dispute 

here, article XIII D, section 6, subdivision (b) requires that 

“[r]evenues derived from the fee or charge shall not exceed the 

funds required to provide the property related service”; 

“[r]evenues derived from the fee or charge shall not be used for 

any purpose other than that for which the fee or charge was 

imposed”; and “[n]o fee or charge may be imposed for general 

governmental services, including but not limited to, police, fire, 

ambulance or library services, where the service is available to 

the public at large in substantially the same manner as it is to 

property owners.” (Art. XIII D, § 6, subd. (b), ¶¶ (1), (2) & (5).) 

The City argues article XIII D, section 6, subdivision (b)’s 

restrictions on fees and charges are inapplicable to the surcharge 

at issue here because Measure M was approved by a majority of 

the City’s voters pursuant to article XIII C, which requires voter 

approval of taxes imposed by local governments. There is no 

language in article XIII C or article XIII D that supports the 

City’s argument. Article XIII D makes clear that regardless of 

whether the imposition is characterized as a tax, assessment, fee, 

or charge, if it is imposed upon a parcel of property or upon a 

person as an incident of property ownership—as we have 

concluded the Measure M surcharge is—it must satisfy one of the 

exceptions to the prohibition on an agency’s imposition of a tax, 

assessment, fee, or charge upon a parcel of property or upon a 

person as an incident of property ownership, enumerated in 
24

article XIII D, section 3. The only exception relevant here is a fee 

or charge for a property-related service that complies with the 

requirements of article XIII D, section 6, subdivision (b). (Art. 

XIII D, § 3, subd. (a), ¶ (4).)7 There is no exception for a voterapproved tax, assessment, fee, or charge imposed upon a parcel of 

property or upon a person as an incident of property ownership

that does not satisfy one of the four enumerated exceptions in 

article XIII D, section 3, subdivision (a). Indeed, article XIII D, 

section 6, subdivision (c) has its own voter approval requirements 

for certain property-related fees and charges (not applicable 

here), which do not obviate subdivision (b)’s requirements for a 

valid property-related fee or charge. (Art. XIII D, § 6, subd. (c) 

[“Voter Approval for New or Increased Fees and Charges. Except 

for fees or charges for sewer, water, and refuse collection services, 

no property related fee or charge shall be imposed or increased 

unless and until that fee or charge is submitted and approved by 

a majority of the property owners of the property subject to the 

fee or charge or, at the option of the agency, by a two-thirds vote 

of the electorate residing in the affected area”].)

Thus, voter approval of Measure M pursuant to article XIII 

C does not rescue the City from an independent constitutional 

violation of article XIII D. (See Silicon Valley, supra, 44 Cal.4th 

at p. 449 [“voter consent cannot convert an unconstitutional 

7

The other exceptions to the prohibition on an agency’s 

imposition of a tax, assessment, fee, or charge upon a parcel of 

property or upon a person as an incident of property ownership 

are for an ad valorem property tax, a special tax receiving a twothirds vote, and an assessment. (Art. XIII D, § 3, subd. (a), ¶¶ 

(1)-(3).) The City does not dispute that none of these other 

exceptions applies here. 
25

legislative assessment into a constitutional one”].) The cases the 

City cites in support of its position are inapposite.

For example, in Capistrano Taxpayers Assn. v. City of San 

Juan Capistrano (2015) 235 Cal.App.4th 1493 (Capistrano), the 

Fourth District Court of Appeal held Proposition 218 allows 

“public water agencies to pass on to their customers the capital 

costs of improvements to provide additional increments of water,” 

but Proposition 218 also “requires public water agencies to 

calculate the actual costs of providing water at various levels of 

usage” under article XIII D, section 6, subdivision (b), paragraph 

(3)—a provision not pertinent to the parties’ dispute here. 

(Capistrano, at p. 1497.) The City relies on Capistrano for the 

following dicta set forth in the conclusion of the appellate court’s 

opinion:

“The way Proposition 218 operates, water rates that exceed 

the cost of service operate as a tax, similar to the way a ‘carbon 

tax’ might be imposed on use of energy. But, we should 

emphasize: Just because such above-cost rates are a tax does not 

mean they cannot be imposed—they just have to be submitted to 

the relevant electorate and approved by the people in a vote. 

There is no reason, for example, why a water district or local 

government cannot, consistent with Proposition 218, seek the 

approval of the voters to impose a tax on water over a given level 

of usage—as we indicated earlier, that might be a good idea. 

However, if a local government body chooses to impose tiered 

rates unilaterally without a vote, those tiers must be based on 

cost of service for the incremental level of usage, not 

predetermined budgets. (For the moment, of course, we need not 

decide whether such a proposed tax would constitute a general 
26

tax or special tax.)” (Capistrano, supra, 235 Cal.App.4th at p. 

1515.)

The court in Capistrano did not analyze the tax it proposed 

to determine if it might qualify as a valid special tax under 

article XIII D, section 3, subdivision (a), and we have no cause to 

engage in that undertaking. Suffice it to say, we conclude the 

Measure M surcharge at issue here is a fee or charge imposed 

upon a parcel of property or upon a person as an incident of 

property ownership, that was not approved by two-thirds of the 

City’s voters (and is not an ad valorem tax or an assessment), and 

therefore must comply with article XIII D, section 6, subdivision 

(b)’s requirements in order to be valid. (Art. XIII D, § 3, subd. 

(a).)

The City also cites Redding, supra, 6 Cal.5th 1, a case in 

which our Supreme Court concluded an electric utility’s transfer 

of utility funds to Redding’s general fund did not result in an 

increase in rates customers paid, and the customers’ rates did not 

exceed the reasonable costs of providing electric service, so voter 

approval of the rates was not required pursuant to article XIII C. 

(Redding, at pp. 4-5, 15.) In analyzing the issue, the Supreme 

Court did not interpret article XIII D. As set forth above, article 

XIII D expressly states: “For purposes of this article, fees for the 

provision of electrical or gas service shall not be deemed charges 

or fees imposed as an incident of property ownership.” (Art. XIII 

D, § 3, subd. (b).) Nonetheless, the City cites the following 

language the Court used in Redding in discussing article XIII C 

in relation to the facts of that case: “[F]or any service charge to 

which the article [art. XIII C] applies, a local government must 

either charge a rate that does not exceed the reasonable costs of 

providing the service or obtain voter approval for rates that exceed 
27

costs.” (Redding, at p. 18, italics added.) This language has no 

applicability here, as charges for water and sewer service—like 

those at issue here—are not excluded from article XIII D’s 

definition of fee or charge.

E. The City has conceded the Measure M 

surcharge is not a valid fee or charge under 

article XIII D, as it does not comply with

subdivision (b)’s requirements

The City has acknowledged that to the extent article XIII D

applies to the Measure M surcharge—as we concluded above—

the surcharge is unconstitutional because it does not comply with 

article XIII D, section 6, subdivision (b)’s requirements. The 

City’s opposition brief in the trial court states: “[T]he City 

concedes that the [Measure M] general fund surcharges do not 

comply with article XIIID [sic], section 6(b)’s substantive 

requirements; after all, proceeds from the surcharges are not 

used to fund the City’s water and sewer services, and instead are 

intended for ‘general revenue purposes.’ ” Similarly, the City’s 

opening brief on appeal asserts: “Because the proceeds of a 

general tax [referring to the Measure M surcharge] are used for 

general governmental purposes [citation], and the proceeds of a 

‘fee’ or ‘charge’ may only be used to provide the service for which 

the ‘fee’ or ‘charge’ is collected [citing art. XIII D, § 6, subd. (b), 

par. (2)], general taxes can never satisfy the substantive 

limitations applicable to ‘fees’ and ‘charges.’ ” 

The City made no attempt to prove the Measure M 

surcharge complies with article XIII D, section 6, subdivision (b)’s 

requirements, relying instead and solely on its argument article 

XIII D does not apply to a voter-approved general tax imposed on 

the use of municipal water and sewer services, an argument we 
28

have rejected. For example, the City did not attempt to 

demonstrate any correlation between the Measure M transfers 

from the Water Department to the City’s general fund/the 

Measure M surcharge, and the costs to the City associated with 

the Water Department’s use of the City’s infrastructure. (See art. 

XIII D, § 6, subd. (b), ¶ (1) [“Revenues derived from the fee or 

charge shall not exceed the funds required to provide the 

property related service”].) As the record before us shows, and 

the City acknowledges in its briefing, the purpose of Measure M 

is to raise unrestricted revenue to support a variety of municipal 

services (9-1-1 emergency response, police/fire protection, 

street/pothole repairs, senior services, parks, and libraries), not 

to reimburse the City for costs associated with the Water 

Department’s use of the City’s infrastructure.

In this regard, the matter before us is distinguishable from 

Wyatt v. City of Sacramento (2021) 60 Cal.App.5th 373, a recent 

Third District Court of Appeal case on which the City relies in 

support of its contention a city’s voter-approved general tax on 

utility services, to fund transfers to the city’s general fund, does 

not violate article XIII D. In Wyatt, Sacramento argued—and the 

Court of Appeal concluded Sacramento proved—a voter-approved 

mandatory 11 percent tax Sacramento imposed on utilities’ 

revenues was a cost of providing services that the utilities could 

pass on to ratepayers without violating article XIII D, section 6, 

subdivision (b). (Wyatt, at pp. 378, 380, 383.) We express no 

opinion on whether Wyatt was correctly decided. We note only 

that Wyatt’s analysis is inapplicable to the case before us because

the City here never argued, and there is nothing in the record 

indicating, the Measure M transfers and/or surcharge were in 
29

any way related to the costs of providing water and sewer 

services.

As it pertains to whether the City proved—or even 

attempted to prove—the Measure M surcharge complies with 

article XIII D, section 6, subdivision (b)’s requirements, this case 

is more similar to Fresno, supra, 127 Cal.App.4th 914, where the 

Court of Appeal explained: “On the current record . . . Fresno has 

not even claimed the in lieu fee approximates the cost of city 

services to the utility departments and divisions, much less has it 

established such a relationship as a fact. (See art. XIII D, § 6, 

subd. (b)(5) [allocating to governmental agency burden to 

demonstrate compliance with art. XIII D].) Accordingly, the trial 

court correctly issued an injunction to prohibit Fresno from 

collecting the current 1 percent in lieu fee from the water, 

wastewater, and solid waste divisions of the department of public 

utilities.” (Fresno, at p. 927.)

Based on the City’s concessions that the Measure M 

surcharge does not comply with article XIII D, section 6, 

subdivision (b)’s requirements, and the absence of anything in the 

record before us indicating such compliance, we need not address 

this issue further. The Measure M surcharge is a fee or charge 

within the meaning of article XIII D, section 6, and the City has 

not carried its burden of demonstrating compliance with 

subdivision (b)’s requirements. (Art. XIII D, § 6, subd. (b), ¶ (5)

[“In any legal action contesting the validity of a fee or charge, the 

burden shall be on the agency to demonstrate compliance with 

this article”].) Thus, we hold the Measure M surcharge is 

unconstitutional because it violates article XIII D.

The City and Cal Cities assert the invalidation of the 

Measure M surcharge on these grounds will mean the 
30

invalidation of numerous taxes imposed by local governments 

throughout California. The only tax, fee, or charge before us is 

the Measure M surcharge. We express no opinion on the validity 

of taxes not before us.

Because we conclude the Measure M surcharge violates 

article XIII D as to all Water Department customers, for the 

reasons explained above, we need not determine whether the 

trial court correctly decided the surcharge also violates article XI, 

section 7 to the extent the City collects the surcharge from water 

and sewer utility customers who receive service at a location 

outside the City. And because we affirm the judgment on the 

merits, we have no cause to reverse the stipulated award of 

attorney fees to Plaintiffs.

DISPOSITION

The judgment and post-judgment order awarding attorney 

fees are affirmed. Respondents are entitled to recover costs on 

appeal.

CERTIFIED FOR PUBLICATION

CHANEY, J.

We concur:

ROTHSCHILD, P. J.

CRANDALL, J.*

* Judge of the San Luis Obispo County Superior Court, 

assigned by the Chief Justice pursuant to article VI, section 6 of 

the California Constitution.