Title: Hill RHF Housing Partners, L.P. v. City of Los Angeles
Citation: N/A
Docket Number: S263734
State: California
Issuer: California Supreme Court
Date: December 20, 2021

IN THE SUPREME COURT OF 
CALIFORNIA 
 
HILL RHF HOUSING PARTNERS, L.P., et al., 
Plaintiffs and Appellants, 
v. 
CITY OF LOS ANGELES et al., 
Defendants and Respondents. 
 
MESA RHF PARTNERS L.P., 
Plaintiff and Appellant, 
v. 
CITY OF LOS ANGELES et al., 
Defendants and Respondents. 
 
S263734 
 
Second Appellate District, Division One 
B295181, B295315 
 
Los Angeles County Superior Court 
BS170127, BS170352  
 
December 20, 2021 
 
Chief Justice Cantil-Sakauye authored the opinion of the Court, 
in which Justices Corrigan, Liu, Kruger, Groban, Jenkins, and 
Haller, J.* concurred.  
 
*  
Associate Justice of the Court of Appeal, Fourth Appellate 
District, Division One, assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution. 
1 
 
HILL RHF HOUSING PARTNERS, L.P. v.  
CITY OF LOS ANGELES 
S263734 
 
Opinion of the Court by Cantil-Sakauye, C. J. 
 
 
State law provides for the formation of business 
improvement districts, or BIDs, through which services, 
activities, and improvements may be funded by assessments 
imposed on benefitted businesses or properties.  When a BID is 
subsidized by assessments upon real property, these levies must 
comply with the Right to Vote on Taxes Act, an initiative 
measure more commonly known as Proposition 218.  The 
question before us is whether courts will entertain arguments 
that a BID’s assessment scheme violates certain provisions of 
Proposition 218 when raised by a party who did not articulate 
these objections at the noticed public hearing at which protests 
regarding a BID are to be considered by lawmakers.  (Cal. 
Const., art. XIII D, § 4, subd. (e); see also Gov. Code, § 53753, 
subd. (d).)1   
In proceedings below, the Court of Appeal concluded that 
petitioners’ failure to present their objections to BIDs at the 
appropriate public hearings meant they had not exhausted their 
extrajudicial remedies, a lapse that prevented the court from 
deciding petitioners’ claims on the merits.  We disagree.  The 
opportunity to comment on a proposed BID does not involve the 
sort of “clearly defined machinery for the submission, evaluation 
 
1  
Unspecified references to “article” in this opinion refer to 
articles of the California Constitution. 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
2 
and resolution of complaints by aggrieved parties” (Rosenfield v. 
Malcolm (1967) 65 Cal.2d 559, 566 (Rosenfield)) that has 
allowed us to infer an exhaustion requirement in other contexts.  
Furthermore, the Court of Appeal’s exhaustion analysis does not 
find support in the policy rationales that inform the exhaustion 
doctrine nor in the intentions behind Proposition 218.  These 
considerations lead us to hold that petitioners need not have 
raised their specific objections to the BIDs at the public hearings 
in order to subsequently advance these arguments in court.  We 
therefore reverse the judgment of the Court of Appeal.  
I.  FACTUAL AND PROCEDURAL BACKGROUND 
Petitioners Mesa RHF Partners L.P. (Mesa), Hill RHF 
Housing Partners, L.P. (Hill), and Olive RHF Housing Partners, 
L.P. (Olive) (collectively, petitioners) are nonprofit providers of 
housing and services to low-income seniors.  Mesa owns real 
property, known as Harbor Tower, in San Pedro.  Hill owns a 
property known as Angelus Plaza and Olive owns another 
property, Angelus Plaza North, in downtown Los Angeles.  
Harbor Tower is within the boundaries of the San Pedro Historic 
Waterfront Property and Business Improvement District (the 
San Pedro BID), and the Angelus Plaza and Angelus Plaza 
North properties are within the Downtown Center Business 
Improvement District (the Downtown Center BID).   
These two BIDs were created pursuant to the Property 
and Business Improvement District Law of 1994 (Sts. & Hy. 
Code, § 36600 et seq., added by Stats. 1994, ch. 897, § 1; 
hereinafter referred to as the PBID Law).  The San Pedro BID 
was originally established in 2012; the Downtown Center BID 
in 1998.  In 2012, petitioners brought legal challenges against 
these BIDs.  Those disputes were resolved through settlement 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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3 
agreements, reached in 2013, in which it was determined that 
the City of Los Angeles would reimburse petitioners for their 
BID assessment payments.   
In 2017 it was proposed that the San Pedro and Downtown 
Center BIDs be renewed for ten-year terms.  Each proposal 
engaged the process for approving a BID, as set out in the PBID 
Law, Proposition 218, and the Proposition 218 Omnibus 
Implementation Act (Gov. Code, § 53750 et seq.; hereinafter 
referred to as the Implementation Act).  As part of this process, 
the Los Angeles City Council (hereinafter sometimes referred to 
as the City Council) adopted two ordinances, one for each BID, 
expressing an intent to consider the establishment of the BID.  
Each of these ordinances adopted and approved a detailed 
management district plan and associated engineer’s report for 
the relevant BID, provided a general description of the BID’s 
boundaries, gave the total projected assessment for the BID over 
its ten-year term as well as for its first year, identified the 
number of assessed parcels in the proposed BID (804 parcels 
owned by 270 stakeholders for the San Pedro BID; 2,865 parcels 
owned by 1,710 stakeholders for the Downtown Center BID), and 
summarized the improvements and activities to be undertaken 
through the BID.  For each BID, the appropriate ordinance also 
announced the date, time, and place of a public hearing before 
the City Council at which, per the ordinances, “all interested 
persons will be permitted to present written or oral testimony, 
and the City Council will consider all objections or protests to the 
proposed assessment” used to fund the BID.   
Mesa received written notice of the public hearing before 
the Los Angeles City Council on the San Pedro BID; Hill and 
Olive received notice of the public hearing before the City 
Council on the Downtown Center BID.  Each notice stated that 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
4 
at the designated hearing, “the City Council will hear all 
interested persons for or against establishment of the District, 
the extent of the District, and the furnishing of specified types 
of improvements or activities and may correct minor defects in 
the proceedings.”  The notices explained that no assessment for 
the BID would be imposed if there was a majority protest.  Each 
notice was accompanied by a ballot for voting on the BID, along 
with instructions regarding how to return it.  Also enclosed with 
each notice was a summary of the BID’s management district 
plan, containing information including the reasons for the 
assessment, a breakdown of the BID’s proposed activities, the 
total amount of the assessment chargeable to the district, the 
basis upon which the assessment had been calculated, a 
description of the BID’s boundaries, and a list of the parcels 
included in the BID.   
Petitioners’ authorized representative voted against the 
San Pedro BID and the Downtown Center BID.  Petitioners did 
not raise any specific challenges to the BIDs at the public 
hearings before the City Council.  Nor is there any indication in 
the administrative records that any legal arguments against the 
BIDs were presented by anyone else at these sessions.  
Meanwhile, on the same day as the hearing on the San Pedro 
BID (which took place three weeks after the hearing on the 
Downtown Center BID), a City of Los Angeles representative 
advised petitioners’ counsel that due to differences between the 
BIDs as formerly constituted and as renewed, the previously 
negotiated 2013 settlement agreements — which by their terms 
applied for so long as the earlier-established BIDs “continue[d] 
in [their] current formulation[s]” — were no longer in effect.   
When all ballots were counted, petitioners were 
substantially outvoted; there was no majority protest against 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
5 
either BID.  Shortly after each tabulation, the City Council 
adopted an ordinance regarding the relevant BID, announcing 
in each instance that the City Council had “heard all testimony 
and received all evidence concerning the establishment of the 
District and desires to establish the District.”   
Petitioners then initiated two actions, each within the 30-
day time frame prescribed by section 36633 of the Streets and 
Highways Code,2 with Mesa challenging the San Pedro BID and 
Hill and Olive attacking the Downtown Center BID.  The 
verified pleadings contain similar allegations, with each 
averring that the BID in question violates Proposition 218.  
Boiled down, petitioners assert that the assessments imposed 
for the BIDs contravene the initiative because they are premised 
on an incorrect and inadequately supported understanding of 
the “special” versus “general” benefits that will accrue from each 
BID’s activities — treating as “special” what petitioners contend 
are in fact “general” benefits, a distinction that will be explained 
later in this opinion — and because the assessments imposed on 
petitioners exceed the reasonable cost of the proportional special 
benefits conferred on their parcels.  Petitioners seek various 
forms of relief that would remove any obligation that they pay 
assessments for the BIDs.3   
 
2  
This section of the PBID Law provides, “The validity of an 
assessment levied under this part shall not be contested in an 
action or proceeding unless the action or proceeding is 
commenced within 30 days after the resolution levying the 
assessment is adopted . . . .”  (Sts. & Hy. Code, § 36633.) 
3  
Both pleadings also allege two causes of action that 
petitioners did not pursue in proceedings below, and for that 
reason are no longer of concern to us.  The first such claim 
asserted that the assessments for the San Pedro and Downtown 
 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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6 
Petitioners allege in their pleadings that they exhausted 
their administrative remedies.  Respondents (the City of Los 
Angeles and the San Pedro Property Owners Alliance in the 
action brought by Mesa; the City and the Downtown Center 
Business Improvement District Management Corporation in the 
action brought by Hill and Olive) disagree, asserting a failure to 
exhaust in their answers.  At the hearing before the superior 
court on the petitions, the court opined that petitioners had 
satisfied whatever exhaustion requirement might apply to them 
by casting ballots against the BIDs.  Consistent with this view, 
the court’s order following the hearing did not discuss 
exhaustion.  The order instead reached the merits of petitioners’ 
claims, ultimately denying the petitions in full. 
The Court of Appeal saw the exhaustion issue differently.  
It declined to address petitioners’ claims on the merits because, 
the appellate court concluded, petitioners had failed to exhaust 
their extrajudicial remedies.  (Hill RHF Housing Partners, L.P. 
v. City of Los Angeles (2020) 51 Cal.App.5th 621, 627 (Hill 
RHF).)  Looking to our decision in Williams & Fickett v. County 
of Fresno (2017) 2 Cal.5th 1258 (Williams & Fickett) for 
guidance, the Court of Appeal reasoned that “[t]he PBID Law’s 
 
Center BIDs violate section 36632, subdivision (a) of the Streets 
and Highways Code, which provides in relevant part that 
assessments levied on real property pursuant to the PBID Law 
“shall be levied on the basis of the estimated benefit to the real 
property within the property and business improvement 
district.” Petitioners did not press this argument as a distinct 
theory in their briefing before the superior court or the Court of 
Appeal.  The second claim, which was dismissed prior to the trial 
court’s hearing on the petitions, sought declarations that the 
2013 settlement agreements, including their reimbursement 
provisions, applied to the BIDs as renewed. 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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detailed administrative procedural requirements ‘provide 
affirmative indications of the Legislature’s desire’ that agencies 
be allowed to consider in the first instance issues raised during 
[the BID approval] process.  [Citation.]  As in Williams & 
Fickett, we conclude that the procedure outlined in the PBID 
Law ‘bespeaks a legislative determination that the [City] 
should, in the first instance, pass on’ the questions Hill, Olive, 
and Mesa present in their petitions, ‘or decide that it need not 
do so.’ ”  (Hill RHF, at p. 632, quoting Williams & Fickett, at 
p. 1271.)   
The Court of Appeal determined that with this framework 
in place, petitioners could not be heard to raise their arguments 
in court without first having presented these objections at the 
appropriate public hearing.  (Hill RHF, supra, 51 Cal.App.5th 
at pp. 627, 634.)  In reaching this result, the Court of Appeal 
rejected petitioners’ assertion that they had exhausted their 
administrative remedies by voting against the BIDs.  The court 
explained, “[e]xhaustion of administrative remedies in this 
context requires nothing more of a property owner than 
submitting a ballot opposing the assessment and presenting to 
the agency at the designated public hearing the specific reasons 
for its objection to the establishment of a BID in a manner the 
agency can consider and either incorporate into its decision or 
decline to act on.”  (Id., at p. 634, italics added.) 
We granted review.    
II.  DISCUSSION 
The discussion below begins by surveying the relevant 
provisions of Proposition 218, the PBID Law, and the 
Implementation Act.  The analysis then turns to the exhaustion 
doctrine, explicating this rule before considering whether 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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petitioners had to present their specific objections to the BIDs 
at the appropriate public hearings for these arguments to later 
be heard on the merits in court.  We conclude that petitioners 
were not required to take this step before instituting these 
actions.   
A. Constitutional and Statutory Framework 
1. Proposition 218 
We have in prior decisions described the origins and aims 
of Proposition 218.  This measure, “approved by voters in 1996, 
is one of a series of voter initiatives restricting the ability of 
state and local governments to impose taxes and fees.  
[Citation.]  The first of these measures was Proposition 13, 
adopted in 1978, which limited ad valorem property taxes to 
1 percent of a property’s assessed valuation and limited annual 
increases in valuation to 2 percent without a change in 
ownership.  [Citations.]  To prevent local governments from 
increasing special taxes to offset restrictions on ad valorem 
property taxes, Proposition 13 prohibited counties, cities, and 
special districts from imposing special taxes without a two-
thirds vote of the electorate.  [Citations.]  But local governments 
were able to circumvent Proposition 13’s limitations by relying 
on Knox v. City of Orland (1992) 4 Cal.4th 132, 141 . . . , which 
held a ‘special assessment’ was not a ‘special tax’ within the 
meaning of Proposition 13.  [Citation.]  Consequently, without 
voter approval, local governments were able to increase rates for 
services by labeling them fees, charges, or assessments rather 
than taxes.  [Citation.]  [¶]  To address these and related 
concerns, voters approved Proposition 218, known as the ‘Right 
to Vote on Taxes Act,’ which added articles XIII C and XIII D to 
the California Constitution.  [Citation.]  Article XIII C concerns 
voter approval for many types of local taxes other than property 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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taxes.  Article XIII D addresses property-based taxes and fees.  
[¶]  Article XIII D allows only four types of local property taxes: 
(1) an ad valorem tax, (2) a special tax, (3) an assessment, and 
(4) a property-related fee.  (Art. XIII D, § 3, subd. (a).)  
Proposition 218 supplements Proposition 13’s limitations on ad 
valorem and special taxes by placing similar restrictions on 
assessments and property-related fees.”  (Plantier v. Ramona 
Municipal Water Dist. (2019) 7 Cal.5th 372, 380–381, fn. omitted 
(Plantier).)   
Section 4 of Proposition 218 (art. XIII D, § 4) is specifically 
concerned with assessments.  
Regarding these levies, 
Proposition 218 “was designed to: constrain local governments’ 
ability to impose assessments; place extensive requirements on 
local governments charging assessments; shift the burden of 
demonstrating assessments’ legality to local government; make 
it easier for taxpayers to win lawsuits; and limit the methods by 
which local governments exact revenue from taxpayers without 
their consent.”  (Silicon Valley Taxpayers’ Assn., Inc. v. Santa 
Clara County Open Space Authority (2008) 44 Cal.4th 431, 448 
(Silicon Valley Taxpayers’ Assn.).)   
Proposition 218 has both substantive and procedural 
ramifications for assessments.  Substantively, it “restricts 
government’s ability to impose assessments in several 
important ways.  First, it tightens the definition of the two key 
findings necessary to support an assessment: special benefit and 
proportionality.  An assessment can be imposed only for a 
‘special benefit’ conferred on a particular property.  (Art. XIII D, 
§§ 2, subd. (b), 4, subd. (a).)  A special benefit is ‘a particular and 
distinct benefit over and above general benefits conferred on 
real property located in the district or to the public at large.’  
(Art. XIII D, § 2, subd. (i).)  The definition specifically provides 
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that ‘[g]eneral enhancement of property value does not 
constitute “special benefit.” ’  (Ibid.)  Further, an assessment on 
any given parcel must be in proportion to the special benefit 
conferred on that parcel: ‘No assessment shall be imposed on 
any parcel which exceeds the reasonable cost of the proportional 
special benefit conferred on that parcel.’  (Art. XIII D, § 4, 
subd. (a).)  . . .  Because only special benefits are assessable, and 
public improvements often provide both general benefits to the 
community and special benefits to a particular property, the 
assessing agency must first ‘separate the general benefits from 
the special benefits conferred on a parcel’ and impose the 
assessment only for the special benefits.  ([Ibid.].)”  (Silicon 
Valley Taxpayers’ Assn., supra, 44 Cal.4th at p. 443.)4 
Procedurally, all assessments captured by Proposition 218 
“shall be supported by a detailed engineer’s report prepared by 
a registered,” state-certified professional engineer.  (Art. XIII D, 
§ 4, subd. (b).)  Also, before an assessment is imposed, “[t]he 
amount of the proposed assessment for each identified parcel 
shall be calculated and the record owner of each parcel shall be 
given written notice by mail of the proposed assessment, the 
total amount thereof chargeable to the entire district, the 
amount chargeable to the owner’s particular parcel, the 
duration of the payments, the reason for the assessment and the 
basis upon which the amount of the proposed assessment was 
calculated, together with the date, time, and location of a public 
hearing on the proposed assessment.”  (Id., subd. (c).)  This 
hearing is to occur “not less than 45 days after mailing the notice 
 
4  
For purposes of Proposition 218, an “agency” means “any 
county, city, city and county, including a charter city or county, 
any special district, or any other local or regional governmental 
entity.”  (Art. XIII C, § 1, subd. (b); art. XIII D, § 2, subd. (a).) 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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of the proposed assessment to record owners of each identified 
parcel.”  (Id., subd. (e).)  “Each notice shall also include, in a 
conspicuous place thereon, a summary of the procedures 
applicable to the completion, return, and tabulation of” a ballot 
that is to be provided to the parcel owner, on which “the owner 
may indicate his or her name, reasonable identification of the 
parcel, and his or her support or opposition to the proposed 
assessment.”  (Id., subds. (c), (d).)  At the public hearing on an 
assessment, “the agency shall consider all protests against the 
proposed assessment and tabulate the ballots.”  (Id., subd. (e).)  
An assessment shall not be imposed by an agency if there is a 
majority protest, which “exists if, upon the conclusion of the 
hearing, ballots submitted in opposition to the assessment 
exceed the ballots submitted in favor of the assessment.”  (Ibid.)  
“In tabulating the ballots, the ballots shall be weighted 
according to the proportional financial obligation of the affected 
property.”  (Ibid.)  
Proposition 218 also includes a provision addressing 
judicial review of assessments.  “[T]o make it more difficult for 
an assessment to be validated in a court proceeding” (Silicon 
Valley Taxpayers’ Assn., supra, 44 Cal.4th at p. 445), the 
measure provides that “[i]n any legal action contesting the 
validity of any assessment, the burden shall be on the agency to 
demonstrate that the property or properties in question receive 
a special benefit over and above the benefits conferred on the 
public at large and that the amount of any contested assessment 
is proportional to, and no greater than, the benefits conferred on 
the property or properties in question.”  (Art. XIII D, § 4, subd. 
(f).)  We have determined that, consistent with the proposition’s 
stated intent that its provisions “shall be liberally construed to 
effectuate its purposes of limiting local government revenue and 
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enhancing taxpayer consent” (Ballot Pamp., Gen. Elec. (Nov. 5, 
1996) text of Prop. 218, § 5, p. 109) and other indicia of the 
measure’s purpose found within relevant ballot materials (e.g., 
id., analysis of Prop. 218 by Legis. Analyst, p. 73 [“This measure 
would constrain local governments’ ability to impose fees, 
assessments, and taxes”]), “courts should exercise their 
independent judgment in reviewing whether assessments that 
local agencies impose violate article XIII D” (Silicon Valley 
Taxpayers’ Assn., at p. 450), instead of a deferential standard of 
review. 
2. The PBID Law and Implementation Act 
The 
PBID 
Law 
provides 
a 
framework 
for 
the 
establishment and operation of BIDs in this state.  The statute 
reflects and furthers the Legislature’s view that “[i]t is of 
particular local benefit to allow business districts to fund 
business related improvements, maintenance, and activities 
through the levy of assessments upon the businesses or real 
property that receive benefits from those improvements.”  (Sts. 
& Hy. Code, § 36601, subd. (c).)  The “activities” contemplated 
by the PBID Law include, but are not limited to, the 
“[p]romotion of public events” and tourism within a district, 
“[f]urnishing of music in any public place,” “[m]arketing and 
economic development,” and “[p]roviding security, sanitation, 
graffiti removal, street and sidewalk cleaning, and other 
municipal services supplemental to those normally provided by 
the municipality.”  (Sts. & Hy. Code, § 36606, subds. (a), (b), (d), 
(e).)  The “improvements” referenced by the law include, but 
again are not limited to, parking facilities, benches and kiosks, 
trash receptacles and public restrooms, lighting and heating 
facilities, decorations, parks, fountains, and planting areas.  
(Sts. & Hy. Code, § 36610.)  
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The process set out in the PBID Law for creating a BID 
begins with the submission of a written petition signed by 
property or business owners in the proposed district who would 
pay more than 50 percent of the assessments to be levied.  (Sts. 
& Hy. Code, § 36621, subd. (a).)  This petition must include a 
summary of the proposed BID’s management district plan and 
an advisement explaining how the complete plan can be 
obtained.  (Id., subd. (b).)  The full management district plan 
must contain information such as a description of the proposed 
BID’s boundaries (Sts. & Hy. Code, § 36622, subd. (c)); the 
improvements, maintenance, and activities to be performed 
through the BID (id., subd. (d)); the total amount proposed to be 
expended for these services for each year of the BID’s operations 
(id., subd. (e)); “[t]he proposed source or sources of financing [of 
the BID], including the proposed method and basis of levying 
the assessment in sufficient detail to allow each property or 
business owner to calculate the amount of the assessment to be 
levied against his or her property or business” (id., subd. (f)); 
and “[a] list of the properties or businesses to be assessed, 
including the assessor’s parcel numbers for properties to be 
assessed, and a statement of the method or methods by which 
the expenses of a district will be imposed upon benefited real 
property or businesses, in proportion to the benefit received by 
the property or business, to defray the cost thereof” (id., subd. 
(k)(1)), among other details.   
Upon receipt of this petition, a city council may adopt a 
resolution expressing an intention to form a BID.  (Sts. & Hy. 
Code, § 36621, subd. (a).)  This resolution is to contain 
information concerning the BID proposal that is sufficient to 
“enable an owner to generally identify the nature and extent of 
the improvements, maintenance, and activities [of the BID], and 
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the location and extent of the proposed district.”  (Id., subd. 
(c)(1).)   
The PBID Law provides for a noticed hearing on a BID 
proposal, the time and place of which are to be provided in the 
resolution described above.  (Sts. & Hy. Code, § 36621, subd. 
(c)(2).)  Section 36623, subdivision (a) of this statute provides 
that when a BID proposal involves a new or increased property 
assessment, the prehearing and hearing procedures set out in 
the Implementation Act (Gov. Code, § 53753) come into play.  
Many of these procedures elaborate upon Proposition 218’s 
specifications, including the Implementation Act’s requirement 
of individualized advanced notice to those who would be subject 
to a proposed assessment and its description of the information 
and instructions this notice and the accompanying ballot are to 
provide.  (Gov. Code, § 53753, subds. (b), (c).)  Section 53753, 
subdivision (d) of the Government Code states further that at 
the public hearing on a proposed assessment, “the agency shall 
consider all objections or protests, if any, to the proposed 
assessment.  At the public hearing, any person shall be 
permitted to present written or oral testimony.  The public 
hearing may be continued from time to time.”   
The PBID Law explains what is to follow: “At the 
conclusion of the public hearing to establish the district, the city 
council may adopt, revise, change, reduce, or modify the 
proposed assessment or the type or types of improvements, 
maintenance, and activities to be funded with the revenues from 
the assessments.  Proposed assessments may only be revised by 
reducing any or all of them.  At the public hearing, the city 
council may only make changes in, to, or from the boundaries of 
the proposed property and business improvement district that 
will exclude territory that will not benefit from the proposed 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
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15 
improvements, maintenance, and activities.”  (Sts. & Hy. Code, 
§ 36624.)  “If the city council, following the public hearing, 
decides to establish a proposed property and business 
improvement district, the city council shall adopt a resolution of 
formation that shall include, but is not limited to” (Sts. & Hy. 
Code, § 36625, subd. (a)) information such as “[a] brief 
description of the proposed improvements, maintenance, and 
activities, the amount of the proposed assessment, a statement 
as to whether the assessment will be levied on property, 
businesses, or both within the district, a statement on whether 
bonds will be issued, and a description of the exterior boundaries 
of the proposed district” (id., subd. (a)(1)).  The city must also 
render “[a] determination regarding any protests received,” and 
“shall not establish the district or levy assessments if a majority 
protest was received.”  (Id., subd. (a)(4).) 
B. Exhaustion of Remedies 
1. General Principles 
As a general rule, “ ‘a party must exhaust administrative 
remedies before resorting to the courts.  [Citations.]  Under this 
rule, an administrative remedy is exhausted only upon 
“termination of all available, nonduplicative administrative 
review procedures.” ’ ”  (Plantier, supra, 7 Cal.5th at p. 382.)  An 
exhaustion rule is perhaps most closely associated with quasi-
adjudicative actions taken by administrative agencies, but the 
doctrine is not strictly limited to that context.5   
 
5  
A quasi-adjudicative or quasi-judicial act by a nonjudicial 
entity has been described as an act that “ ‘involve[s] the 
determination and application of facts peculiar to an individual 
case,’ ” whereas a legislative or quasi-legislative act “ ‘involve[s] 
the adoption of rules of general application on the basis of broad 
 
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Some statutes expressly require the exhaustion of an 
extrajudicial procedure as a prerequisite to presenting a claim 
in court.  (E.g., Gov. Code, § 65009, subd. (b)(1) [exhaustion 
requirement for challenges to zoning decisions]; Pub. Resources 
Code, § 21177, subd. (a) [exhaustion requirement under the 
California Environmental Quality Act]; Sts. & Hy. Code, § 5366 
[exhaustion requirement under the Improvement Act of 1911]; 
cf. Lubbers, Fail to Comment at Your Own Risk: Does Issue 
Exhaustion Have a Place in Judicial Review of Rules? (2018) 
70 Admin. L.Rev. 109, 114–118 (Lubbers) [listing federal 
statutes requiring exhaustion].)   
In appropriate circumstances, we also have inferred an 
exhaustion requirement in statutory and regulatory schemes 
that do not contain any express command that available 
administrative procedures be engaged before relief may be 
sought in court.  (E.g., Flores v. Los Angeles Turf Club (1961) 
55 Cal.2d 736, 746–747 (Flores).)  In deciding whether to draw 
such an inference, we give due consideration to the extrajudicial 
procedures involved and to whether recognition of an exhaustion 
requirement “would comport with the statutory scheme and 
advance the general purposes served by the exhaustion rule.”  
 
public policy.’ ”  (Nasha v. City of Los Angeles (2004) 
125 Cal.App.4th 470, 482; see also San Diego Bldg. Contractors 
Assn. v. City Council (1974) 13 Cal.3d 205, 212 & fn. 5 
[discussing legislative and adjudicative acts, and providing 
examples of both]; Howard v. County of San Diego (2010) 
184 Cal.App.4th 
1422, 
1431–1432 
(Howard) 
[describing 
“[l]egislative actions” as “political in nature, ‘declar[ing] a public 
purpose and mak[ing] provisions for the ways and means of its 
accomplishment,’ ” as contrasted with “administrative or 
adjudicative actions,” which “apply law that already exists to 
determine ‘specific rights based upon specific facts ascertained 
from evidence adduced at a hearing’ ”].)   
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
17 
(Williams & Fickett, supra, 2 Cal.5th at p. 1274; see also Flores, 
at pp. 746–747.)  This analysis also must recognize that when 
the Legislature has provided for an adequate remedy, “absent a 
clear indication of legislative intent, we should refrain from 
inferring a statutory exemption from our settled rule requiring 
exhaustion of administrative remedies.”  (Campbell v. Regents 
of University of California (2005) 35 Cal.4th 311, 333 
(Campbell).) 
Several rationales exist for requiring exhaustion of an 
available administrative remedy even in the absence of an 
explicit directive that this process be completed prior to the 
commencement of a judicial proceeding.  Requiring initial resort 
to an administrative procedure in such situations can be 
understood as vindicating legislative intent to provide another 
avenue for resolving disputes, which might be frustrated if that 
mechanism could be routinely avoided.  The exhaustion doctrine 
also recognizes and gives due respect to the autonomy of the 
executive and legislative branches, and can secure the benefit of 
agency expertise, mitigate damages, relieve burdens that might 
otherwise be imposed on the court system, and promote the 
development of a robust record conducive to meaningful judicial 
review.  (See Plantier, supra, 7 Cal.5th at p. 383; Williams & 
Fickett, supra, 2 Cal.5th at p. 1268; Farmers Ins. Exchange v. 
Superior Court (1992) 2 Cal.4th 377, 391; Rojo v. Kliger (1990) 
52 Cal.3d 65, 86 (Rojo); Westlake Community Hosp. v. Superior 
Court (1976) 17 Cal.3d 465, 476 (Westlake Community Hosp.).)  
Additionally, absent an exhaustion rule, a litigant might have 
an incentive to “sandbag” — in other words, to “avoid securing 
an agency decision that might later be afforded deference” by 
sidestepping an available administrative remedy.  (Plantier, at 
p. 383.)  
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
18 
In concluding that petitioners’ votes against the BIDs 
were insufficient to preserve their arguments regarding the 
invalidity of the assessments (Hill RHF, supra, 51 Cal.App.5th 
at p. 634), the Court of Appeal applied a branch of the 
exhaustion doctrine known as issue exhaustion.  Issue 
exhaustion means that “[a]dministrative agencies must be given 
the opportunity to reach a reasoned and final conclusion on each 
and every issue upon which they have jurisdiction to act before 
those issues are raised in a judicial forum.”  (Sierra Club v. San 
Joaquin Local Agency Formation Com. (1999) 21 Cal.4th 489, 
510, italics added (Sierra Club).)  This doctrine bears some 
resemblance to the judicial rule that an argument that was not 
presented to a lower tribunal will not be entertained by a 
reviewing court.  (See Sims v. Apfel (2000) 530 U.S. 103, 108–
109 (plur. opn. of Thomas, J.).)  When it applies, an issue 
exhaustion requirement advances the general purposes of the 
exhaustion rule by, among other things, discouraging the 
presentation 
of 
skimpy 
“ ‘skeleton’ ” 
arguments 
to 
an 
administrative agency.  (Dare v. Bd. of Medical Examiners 
(1943) 21 Cal.2d 790, 799.)   
There are important limits to the exhaustion doctrine.  
Among them, we have declined to impose an exhaustion 
requirement when a purported administrative remedy did not 
incorporate “clearly defined machinery for the submission, 
evaluation and resolution of complaints by aggrieved parties.”  
(Rosenfield, supra, 65 Cal.2d at p. 566; see also Endler v. 
Schutzbank (1968) 68 Cal.2d 162, 168.)  In other words, unless 
there is clear legislative direction to the contrary, 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.  (But cf. 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
19 
Campbell, supra, 35 Cal.4th at pp. 323, 333 [requiring 
exhaustion notwithstanding the unavailability of money 
damages 
through 
an 
administrative 
remedy]; 
Westlake 
Community Hosp., supra, 17 Cal.3d at p. 476.)  When the 
relevant extrajudicial procedures are so clearly wanting, the 
exhaustion rule does not come into play because it has been 
determined there is no genuine remedy to exhaust.   
There are also several true exceptions to the exhaustion 
rule.  (Williams & Fickett, supra, 2 Cal.5th at p. 1274.)  We have 
described these exceptions as “flexible.”  (Campbell, supra, 
35 Cal.4th at p. 322; see also Sail’er Inn, Inc. v. Kirby (1971) 
5 Cal.3d 1, 7 [declining to require exhaustion due to 
“extraordinary circumstances”].)  One exception applies when 
the claimed remedy might involve “clearly defined machinery 
for the submission, evaluation and resolution” of at least some 
“complaints by aggrieved parties” (Rosenfield, supra, 65 Cal.2d 
at p. 566), but these procedures are deemed inadequate in 
relation to the specific claim or claims being advanced in a 
particular case.  (See Plantier, supra, 7 Cal.5th at pp. 384, 387.)  
This analytical path is narrower than a finding of categorical 
deficiency.  A court may regard a given extrajudicial procedure 
as insufficient to justify application of the exhaustion rule in a 
particular case, or class of cases, without going further and 
determining whether the process can ever be regarded as an 
administrative remedy.  Our recent decision in Plantier, which 
will be discussed in the next portion of this opinion, provides an 
example of this approach.  (Plantier, at pp. 383–387.) 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
20 
2. The Exhaustion Doctrine and Opportunities to 
Comment 
Our prior case law has noted exhaustion issues similar to 
the question presented here, only to leave them for another day.  
In a matter decided prior to Proposition 218, we assumed for 
sake of argument that a judicial action challenging a property 
assessment as invalid under Proposition 13 was not foreclosed 
by the petitioners’ failure to raise their objections at an earlier 
public hearing convened by the city (the exhaustion issue not 
having been addressed by the courts below).  (Knox v. City of 
Orland (1992) 4 Cal.4th 132, 148 & fn. 22 (Knox), superseded by 
constitutional amendment as noted in Silicon Valley Taxpayers’ 
Assn., supra, 44 Cal.4th at p. 446.)  More recently, in Plantier, 
supra, 7 Cal.5th 372, we assumed for purposes of our analysis 
that a local water district’s rate hearing under section 6 of 
Proposition 218 (art. XIII D, § 6) was an administrative remedy, 
because that was how the parties and the lower courts had 
framed the issue presented for our review.  (Plantier, at pp. 383–
384.)  But in determining in Plantier that a courtroom challenge 
to the methodology through which user fees were calculated by 
a water district was not barred by the exhaustion doctrine for 
failure to raise this objection at a public hearing convened to 
consider only a proposed increase in existing rates (id., at 
pp. 384–387), we made it clear that we were not deciding the 
“broader question of whether, when, and under what 
circumstances a public comment process may be considered an 
administrative remedy”  (id., at p. 384).6 
 
6  
It is also not firmly established how issue exhaustion 
relates to the opportunity to comment on proposed regulations 
that are subject to the provisions of the Administrative 
 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
21 
Outside of the assessment context, some decisions by the 
Courts of Appeal have rejected arguments that an issue or 
objection had to be articulated during a public comment session 
to be preserved for presentation in a subsequent judicial 
proceeding.  The respondent in Lindelli v. Town of San Anselmo 
(2003) 111 Cal.App.4th 1099 (Lindelli), for example, asserted 
that the petitioners had failed to exhaust their administrative 
remedies because they did not raise their objection to a proposed 
municipal contract at the city council’s public hearing on the 
agreement.  (Id., at p. 1105.)  The Court of Appeal determined 
that the exhaustion doctrine did not apply to the circumstances 
before it, concluding instead that “[t]he opportunity to 
participate in a public hearing prior to a legislative action does 
not constitute an administrative remedy subject to exhaustion.”  
(Ibid.)  In regarding the opportunity to offer public comment 
before lawmakers as an insufficient premise for inferring an 
exhaustion requirement, the Lindelli court emphasized that the 
“city council was not required to do anything in response to [this] 
participation.”  (Id., at p. 1106; see also Howard, supra, 
 
Procedure Act (Gov. Code, § 11340 et seq.).  (See Gov. Code, 
§§ 11346.5, subd. (a)(15), (17), 11346.8, 11346.9, subd. (a)(3); 
Coastside Fishing Club v. California Fish & Game Com. (2013) 
215 Cal.App.4th 397, 415 [“We have found no authority for the 
proposition that the public comment and response-to-comment 
requirements of the [Administrative Procedure Act] constitute 
an administrative remedy that must be exhausted before 
challenging the validity of an administrative regulation in a 
judicial action or proceeding”]; Asimow et al., Cal. Practice 
Guide: Administrative Law (The Rutter Group 2020) ¶ 15.540; 
cf. Lubbers, supra, 70 Admin. L.Rev. at pp. 136–142, 144–149 
[discussing the application of the issue exhaustion doctrine in 
challenges to federal regulations brought in federal court].)  We 
express no opinion here regarding this distinct issue. 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
22 
184 Cal.App.4th at p. 1432; Hoffman Street, LLC v. City of West 
Hollywood (2009) 179 Cal.App.4th 754, 769, fn. 8; City of 
Coachella v. Riverside County Airport Land Use Com. (1989) 
210 Cal.App.3d 
1277, 
1287 
(City 
of 
Coachella) 
[“An 
administrative remedy is provided only in those instances where 
the administrative body is required to actually accept, evaluate 
and resolve disputes or complaints”].)   
C. Issue Exhaustion Does Not Apply Here 
This matter concerns an assessment rather than a fee, but 
otherwise picks up where our decision in Plantier left off.  
Although Plantier involved a related exhaustion issue, its 
analysis is not determinative of the outcome here.  There was a 
clear misfit between the procedure in Plantier and the 
arguments being advanced by the petitioner in that case.  Here, 
it seems possible that had the City Council heard petitioners’ 
objections to the BIDs at the appropriate public hearings, that 
body could have removed their properties from the districts, 
decided not to renew the BIDs, maintained the arrangements 
provided for in the 2013 settlement agreements, or otherwise 
afforded petitioners relief that might have averted these 
proceedings.  Our analysis therefore must proceed on a 
somewhat different plane from the one on which Plantier was 
decided. 
1. Provision of an Opportunity to Comment on a BID 
Does Not Convey an Issue Exhaustion Requirement  
We begin our assessment of the constitutional and 
statutory scheme by recognizing that the relevant provisions of 
Proposition 218 and the surrounding statutes do not explicitly 
limit judicial actions to issues previously presented to an agency 
in the same way that certain other laws do.  But, again, the 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
23 
absence of such language is not determinative of the exhaustion 
question.  If there is a viable remedy, we may infer an 
exhaustion requirement not appearing on the face of a statute 
upon appropriate consideration of whether such an inference 
“would comport with the statutory scheme and advance the 
general purposes served by the exhaustion rule.”  (Williams & 
Fickett, supra, 2 Cal.5th at p. 1274.)  
We therefore focus, first, upon the basic nature of the 
purported remedy — a noticed opportunity to participate in a 
public comment session concerning a proposed legislative act 
under consideration by local officials.  If this chance to comment 
amounts to “clearly defined machinery for the submission, 
evaluation and resolution of complaints” (Rosenfield, supra, 
65 Cal.2d at p. 566), it could convey (as the Court of Appeal 
below found) an implied intent that objections be presented to 
the relevant agency before they can be advanced in court.  But 
as we will explain, it is difficult to assign such significance to the 
modest “machinery” (ibid.) that is involved here.  
The “machinery” associated with the public comment 
process before us is not as suggestive of a scheme purposed for 
“the submission, evaluation and resolution of complaints” 
(Rosenfield, supra, 65 Cal.2d at p. 566) as were the procedures 
in prior cases in which we have recognized an intent to require 
exhaustion.  In Williams & Fickett, supra, 2 Cal.5th 1258, for 
example, the assessment appeal process could include an 
evidentiary hearing, exchanges of information between the 
taxpayer and the government, examinations under oath, and 
the collection and introduction of evidence.  (Id., at p. 1269, 
citing Rev. & Tax. Code, §§ 1603, 1605.4, 1605.6, 1606, 1607, 
1609, 1609.4, 1609.5, 1610.2.)  These relatively robust 
procedures, together with another aspect of the statutory 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
24 
scheme (to wit, an administrative stipulation process) 
communicating an expectation that claims such as the ones we 
addressed had to be presented to the administrative body in the 
first instance, supported our conclusion that an exhaustion 
requirement was intended.  (Williams & Fickett, 2 Cal.5th at pp. 
1269–1272; see also Flores, supra, 55 Cal.2d at p. 746 [inferring 
an intent to require exhaustion from a “pervasive . . . system of 
administrative procedure”]; San Joaquin etc. Irr. Co. v. 
Stanislaus (1908) 155 Cal. 21, 26–29 [inferring an exhaustion 
requirement from a statutory petition process that, when 
initiated, would trigger renewed ratemaking].)  The full array of 
procedures involved in Williams & Fickett may not all be 
necessary to find that a remedy exists and must be exhausted 
prior to suit.  But the significant gap between the procedures 
involved here and those present in Williams & Fickett and other 
cases in which an exhaustion requirement has been inferred 
provides an indication that the public comment process we are 
concerned with was not intended to give rise to a broad issue 
exhaustion requirement, and should not be regarded as having 
that effect.   
Perhaps most notably, a public comment session 
concerning a proposed legislative act, without more, is not 
obviously geared toward the “resolution” of objections such as 
those raised by petitioners.  (Rosenfield, supra, 65 Cal.2d at 
p. 566.)  In arguing the opposite, respondents assert that the 
requirement within Proposition 218 that an agency consider all 
“protests” (art. XIII D, § 4, subd. (e)) provides sufficient 
assurance that objections to BIDs will be resolved through the 
application of agency expertise.  Their argument proceeds from 
the position that although the proposition refers only to 
“protests,” the consideration requirement naturally extends to 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
25 
objections that may be articulated at the hearing, too, as more 
clearly captured by Implementation Act’s specification that at 
the hearing on a BID, “any person shall be permitted to present 
written or oral testimony” and the agency “shall consider all 
objections or protests, if any, to the proposed assessment.”  (Gov. 
Code, § 53753, subd. (d).)    
As a threshold matter, we agree with respondents’ 
interpretation of section 4 of Proposition 218 and section 53753, 
subdivision (d) of the Government Code as requiring 
consideration of both protest votes and any oral and written 
objections presented at the hearing on an assessment.  This 
construction is in harmony with our interpretation of section 6 
of Proposition 218 in Plantier, supra, 7 Cal.5th 372.  There, we 
determined that “[t]he requirement to ‘consider all protests’ (art. 
XIII D, § 6, subd. (a)(2)) at a Proposition 218 hearing compels an 
agency to not only receive written protests and hear oral ones, 
but to take all protests into account when deciding whether to 
approve the proposed fee, even if the written protesters do not 
constitute a majority.”  (Plantier, at p. 386.)   
Yet even if respondents are correct in this one respect, that 
does not settle the more fundamental question of whether the 
process here had to be exhausted through the presentation of 
specific objections at the appropriate public hearing.  On this 
issue, we find it significant that a requirement that objections 
be considered, by itself, places no legal obligation upon an 
agency to actually respond to whatever comments it might 
receive.  (See Lindelli, supra, 111 Cal.App.4th at p. 1106; City of 
Coachella, supra, 210 Cal.App.3d at p. 1287.)  And as we 
explained in Plantier, supra, 7 Cal.5th at page 386, “nothing in 
Proposition 218 or the legislation implementing it defines what 
level of consideration must be given” to these protests.  (Italics 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
26 
added.)  If anything, Proposition 218’s specification that protests 
are to be considered “[a]t the public hearing” (art. XIII D, § 4, 
subd. (e)) suggests that the voters did not expect especially 
careful parsing of any detailed critiques that might be presented 
in that setting.  (See Plantier, at p. 386.)  Lacking more, the 
requirement within the constitutional and statutory scheme 
that objections to a BID be considered by an agency at the 
appropriate 
hearing 
does 
not 
involve 
“clearly 
defined 
machinery” conducive to the “resolution of complaints” 
(Rosenfield, supra, 65 Cal.2d at p. 566) comparable to that 
which has in other instances provided a sufficient basis for 
recognizing an exhaustion requirement.7 
Nor is there good reason to infer that the electorate and 
lawmakers regarded the noticed opportunity to participate in a 
public comment session regarding a proposed BID as a 
procedure that must be exhausted, notwithstanding this 
 
7  
As has been observed, the PBID Law provides that a city 
must make “[a] determination regarding any protests received” 
at the conclusion of the public hearing on a BID, and further 
specifies that “[t]he city shall not establish the district or levy 
assessments if a majority protest was received.”  (Sts. & Hy. 
Code, § 36625, subd. (a)(4).)  We read this provision, which was 
added to the PBID Law in response to Proposition 218 (Stats. 
1999, ch. 871, § 6, p. 6237) as requiring a finding concerning the 
existence or absence of a majority protest — the “protests” 
referred to in the subdivision’s first clause being the ballots that 
could sum to a majority protest, as referenced in the provision’s 
second clause — not a response to any specific objections that 
may be raised incident to the public hearing on a BID.  This 
language differs from the phrasing within Proposition 218 (art. 
XIII D, §§ 4, subd. (e), 6, subd. (a)(2)), in which the requirement 
that an agency “consider” all protests carries meaning above and 
beyond a tabulation requirement.  (See Plantier, supra, 
7 Cal.5th at pp. 385–386.) 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
27 
process’s limitations as an avenue for the “submission, 
evaluation and resolution of complaints.”  (Rosenfield, supra, 
65 Cal.2d at p. 566.)  Unlike the situation in Williams & Fickett, 
supra, 2 Cal.5th 1258, the constitutional and statutory scheme 
we address here includes nothing that implicitly conveys an 
expectation that exhaustion must occur.  Nor is there any 
shared understanding that the opportunity to appear before 
decisionmakers as an interested member of the public to praise 
and encourage — or critique and condemn — a proposed 
legislative act, a basic feature of representative democracy in 
this state (see, e.g., Gov. Code, § 54954.3), inherently carries a 
preclusive edge and must in the normal course be fully exploited 
in order to preserve objections for a later lawsuit.   
It follows from the above that we cannot readily infer an 
intent that the public comment process set out in Proposition 
218 and the relevant statutes should give rise to an issue 
exhaustion requirement.  If anything, the limited nature of the 
procedures involved here points toward the opposite conclusion:  
that objections to a BID proposal such as those raised by 
petitioners need not be articulated at the appropriate public 
hearing as a prerequisite to their becoming the subjects of suit.  
And if we were to assume this appraisal of the public comment 
process is not by itself determinative of the question before us, 
as will be explained next, the pertinent circumstances cement 
the outcome insofar as they provide no compelling policy 
arguments for imposing an issue exhaustion rule in this context. 
2. The 
Policy 
Rationales 
for 
Requiring 
Issue 
Exhaustion Are Not Compelling Here 
We now consider whether recognition of an issue 
exhaustion requirement here would “advance the general 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
28 
purposes served by the exhaustion rule.”  (Williams & Fickett, 
supra, 2 Cal.5th at p. 1274.)  We conclude that the limitations of 
the procedures we are concerned with, as well as other relevant 
circumstances, 
reduce 
the 
potency 
of 
various 
policy 
justifications for requiring exhaustion, so that these arguments 
carry less force than they have in other situations in which an 
exhaustion requirement has been inferred.   
Specifically, we have explained that exhaustion of an 
administrative remedy can promote the development of a record 
suitable for judicial review.  (E.g., Westlake Community Hosp., 
supra, 17 Cal.3d at p. 476.)  With or without public comments, 
however, as previously discussed the PBID Law requires the 
preparation of a comprehensive management district plan (Sts. 
& Hy. Code, § 36622) and Proposition 218 directs that all 
assessments covered by the initiative also “be supported by a 
detailed engineer’s report” (art. XIII D, § 4, subd. (b); see also 
Sts. & Hy. Code, § 36622, subd. (n)).  These documents may by 
themselves provide a substantial record for purposes of judicial 
review.  Meanwhile, the absence of any requirement that an 
agency actually respond to objections articulated at a public 
hearing on a BID proposal calls into question whether an 
exhaustion rule would routinely lead to better developed records 
and the application of agency expertise (see Rojo, supra, 
52 Cal.3d at p. 86; Westlake Community Hosp., at p. 476), and 
likely reduces the comment process’s effectiveness as a vehicle 
for resolving disputes short of judicial involvement (see 
Friendly, “Some Kind of Hearing” (1975) 123 U.Pa. L.Rev. 1267, 
1292 [discussing how statements of reasons may alleviate 
concerns regarding a decision or ruling]). 
Other circumstances relevant to these proceedings also 
function to blunt policy arguments that have in other situations 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
29 
supported recognition of an exhaustion requirement.  Although 
the exhaustion rule can serve to mitigate damages and 
disruption by requiring the prompt presentation of objections to 
an agency (Westlake Community Hosp., supra, 17 Cal.3d at 
p. 476), the 30-day deadline for challenging an assessment set 
out in section 36633 of the Streets and Highways Code, which 
petitioners complied with, can have a similar effect.  
Furthermore, when it is alleged that an agency has not met its 
burdens under section 4, subdivision (f) of the initiative (art. 
XIII D, § 4, subd. (f)), the application of an independent 
judgment standard of review to such claims (Silicon Valley 
Taxpayers’ Assn., supra, 44 Cal.4th at p. 450) mitigates the 
common concern that a litigant will avoid an administrative 
remedy so as not to elicit a factual finding that would receive 
deference upon judicial review.   
All this is not to say that a rule requiring the presentation 
of specific objections regarding a BID to an agency at the 
appropriate public hearing certainly would have no value 
whatsoever as applied to disputes such as those at bar.  As 
respondents argue, the precise articulation of concerns 
regarding a BID proposal at that juncture could lead to fixes, 
compromises, or explanations that might avoid, expedite, or 
enhance subsequent litigation.  But the exhaustion doctrine 
does not apply in every situation in which an abstract possibility 
exists that an objection lodged through some channel will alter 
or otherwise affect an agency action.  (See Sierra Club, supra, 
21 Cal.4th at p. 502 [exhaustion does not require a petition 
seeking reconsideration of a decision by an administrative 
agency, even though a petition might give an agency an 
opportunity to address a prior error]; Rosenfield, supra, 
65 Cal.2d at p. 566 [observing that an agency’s possession of 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
30 
ongoing supervisory or investigatory power does not on its own 
trigger an exhaustion requirement].)  Whatever likelihood there 
may be that an exhaustion requirement could avert litigation 
such as that before us, or have other useful consequences, it is 
more significant to the legal question we address that the overall 
array of benefits likely to flow from such a directive here is both 
more modest and more speculative than has ordinarily been the 
case in situations in which we have foreclosed a claim or lawsuit 
due to a party’s failure to exploit an extrajudicial remedy.   
3. Not 
Requiring 
Exhaustion 
Comports 
with 
Proposition 218 
Although this matter might be resolved on the basis of the 
foregoing considerations, we also observe that a conclusion that 
issue exhaustion does not apply here is in synch with our 
previously articulated understanding of Proposition 218’s aims.  
With the initiative having the goal of facilitating challenges to 
assessments, this would be odd terrain in which to expand the 
exhaustion doctrine by regarding a public comment process such 
as the one before us as an adequate remedy that must be 
exhausted prior to suit, especially when there are no especially 
compelling policy justifications for doing so.8 
As we explained in Silicon Valley Taxpayers’ Assn., supra, 
44 Cal.4th 431, “[i]n passing Proposition 218, the voters clearly 
sought to limit local government’s ability to exact revenue under 
the rubric of special assessments” (id., at p. 446), and toward 
this end, the proposition was intended to make it “more difficult 
 
8  
Given the other considerations behind our holding, we 
need not decide whether an exhaustion requirement of some 
kind could be reconciled with Proposition 218 under materially 
different circumstances.   
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
31 
for an assessment to be validated in a court proceeding” (id., at 
p. 445).  (See also id., at p. 448.)  And as previously described in 
this opinion, we held in Silicon Valley Taxpayers’ Assn. that to 
stay true to the proposition’s intent, courts must apply their 
independent judgment when determining whether an agency 
has met the burdens assigned to it by section 4, subdivision (f) 
of the initiative (art. XIII D, § 4, subd. (f)) — a substantially less 
deferential standard than the one we had applied in Knox, 
supra, 4 Cal.4th at pages 146–149.  (Silicon Valley Taxpayers’ 
Assn., at p. 450.)   
Having so construed the measure, it would be somewhat 
curious for us to now adopt an expansive view of issue 
exhaustion in this context.  Such a rule would resolve an issue 
we left open in Knox, supra, 4 Cal.4th at page 148 — a decision 
the proposition countermanded because of the deference it 
extended to assessment schemes — in a manner adverse to 
challenges to assessments covered by the initiative.  An 
insistence on issue exhaustion here could have important 
consequences, too.  We question the Court of Appeal’s 
downplaying of the burdens attendant to “submitting a ballot 
opposing the assessment and presenting to the agency at the 
designated public hearing the specific reasons for [an] objection 
to the establishment of a BID in a manner the agency can 
consider and either incorporate into its decision or decline to act 
on.”  (Hill RHF, supra, 51 Cal.App.5th at p. 634.)  The 
development and presentation of “specific reasons for [an] 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
32 
objection” (ibid.) at the appropriate hearing may be far easier 
said than done.9   
4. Conclusion 
To summarize, the opportunity to participate in a public 
comment session regarding a BID proposal does not involve 
procedures conducive to the “submission, evaluation,” and 
especially the “resolution” of disputes (Rosenfield, supra, 
65 Cal.2d at p. 566) comparable to those that are commonly 
found in administrative remedies that must be exhausted; the 
policy arguments for recognizing an exhaustion requirement do 
not carry great force here; and declining to require exhaustion 
creates 
no 
tension 
with 
our 
previously 
articulated 
understanding of Proposition 218’s goals.  The purported 
remedy here is just too thin, and the policy justifications for 
demanding exhaustion too weak, to insist that petitioners have 
presented their objections as public comments in order to secure 
their evaluation in court.  We therefore conclude that the Court 
of Appeal erred in rejecting petitioners’ appeal on the ground 
they had not exhausted their administrative remedies.  
 
9  
Respondents contend it would be consistent with the 
intent behind Proposition 218 to require exhaustion here.  
Respondents assert that enforcement of an exhaustion 
requirement would enhance public discussions of assessments 
and afford those who support a levy an expanded opportunity to 
address objections voiced at these hearings.  Without entirely 
gainsaying these objectives, as guideposts for discerning and 
implementing the electorate’s intent they do not carry the same 
weight as the proposition’s provisions and its goal of limiting 
assessments, as detailed in the main text.   
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
33 
D. Other Arguments Advanced by Respondents and 
Amici Curiae Do Not Justify an Exhaustion 
Requirement 
Respondents and their supporting amici curiae (the 
League of California Cities, the Association of California Water 
Agencies, the California State Association of Counties, and the 
California Special Districts Association) advance other reasons 
why issue exhaustion should apply here, but none of these 
arguments supplies a persuasive basis for adopting their 
position. 
Beginning with the text of Proposition 218 and the 
Implementation Act, respondents argue that it would give short 
shrift to the provisions therein that protests and objections may 
be raised and shall be “consider[ed]” (art. XIII D, § 4, subd. (e); 
Gov. Code, § 53753, subd. (d)) at the public hearing on a BID if 
objectors could just ignore the hearing and proceed directly to 
court if the BID is approved.  But our holding does not transform 
these provisions into nullities.  There are good reasons why 
property owners might raise their complaints at the appropriate 
hearings, and why agencies are bound to consider these 
objections when made, even if the articulation of issues at these 
forums is not an absolute prerequisite for their subsequent 
presentation in court.  As has been acknowledged, such 
engagement conceivably could secure protesters relief and 
resolve a brewing dispute, and for that reason and others might 
be encouraged and facilitated under the law even if exhaustion 
is not required.  Notably, some objections to a BID may not lend 
themselves to a courtroom challenge, meaning they may gain 
traction only at the public hearing.  Testimony that proposed 
assessments would be financially onerous to property owners, 
for instance, might persuade an agency to reject or revise a BID 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
34 
proposal even if these same arguments would not provide a 
viable basis for attacking the BID as unlawful.  
Next, respondents and their supporting amici curiae 
assert that an issue exhaustion requirement must apply here 
because that is the only way to adhere to the rule that judicial 
review is generally limited to the administrative record in 
mandate proceedings brought to challenge a quasi-legislative 
action by an agency.  (Western States Petroleum Assn. v. 
Superior Court (1995) 9 Cal.4th 559, 573 (Western States); Ford 
Dealers Assn. v. Department of Motor Vehicles (1982) 32 Cal.3d 
347, 365, fn. 11.)  If parties could sue upon unexhausted 
objections to an assessment, the argument goes, they would 
have to rely on facts outside the record to develop their claims, 
and the agency named as a respondent would have to do likewise 
to rebut these contentions.  
We do not find this argument persuasive.  There may be 
additional grounds upon which to critique respondents’ 
assertion (see Malott v. Summerland Sanitary Dist. (2020) 
55 Cal.App.5th 1102, 1110–1111 [allowing the plaintiff in an 
administrative mandamus challenge to an assessment under 
Proposition 218 to submit evidence not previously presented to 
the responsible agency]), but it suffices here to observe, first, 
that there is no necessary congruence between issue exhaustion 
and a rule limiting judicial review to evidence in the 
administrative record.  In Knox, supra, 4 Cal.4th at pages 147–
148, for example, we entertained arguments that were not 
known to have been presented to the respondent government 
entity, but in doing so, we considered only evidence found in the 
administrative record, as well as judicially noticeable facts.  
What is more, Western States, supra, 9 Cal.4th 559 addressed 
challenges to agency action as either unsupported by 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
35 
substantial evidence in the record, an abuse of discretion, or 
arbitrary and capricious; we concluded that to allow extra-
record evidence in support of such claims would be contrary to 
the deference associated with these standards of review.  (Id., at 
pp. 573, 574, 576.)  Under Proposition 218, in contrast, as we 
have already emphasized in this opinion the agency must 
“demonstrate that the property or properties in question receive 
a special benefit over and above the benefits conferred on the 
public at large and that the amount of any contested assessment 
is proportional to, and no greater than, the benefits conferred on 
the property or properties in question” (art. XIII D, § 4, subd. 
(f)), and courts are to exercise their independent judgment in 
determining whether this demonstration has been made 
(Silicon Valley Taxpayers’ Assn., supra, 44 Cal.4th at p. 450).  
The 
interest 
in 
extending 
due 
deference 
to 
agency 
determinations that informed the analysis in Western States 
does not carry the same weight with regard to these kinds of 
claims under the proposition. 
Respondents and amici curiae also rely upon cases in 
which the seizure of an opportunity to raise objections at a 
public hearing was regarded as necessary to preserve an issue 
for judicial review.  Those cases are distinguishable, however, 
with only three meriting significant discussion.  In Wallich’s 
Ranch Co. v. Kern County Citrus Pest Control Dist. (2001) 
87 Cal.App.4th 878 (Wallich’s Ranch), the Court of Appeal 
construed the Citrus Pest District Control Law (Food & Agr. 
Code, § 8401 et seq.; hereinafter referred to as the Pest Control 
Law), relevant provisions of which (1) allow for the presentation 
of protests against a pest district’s annual budget “or any item 
in it” at the hearing of the district’s board of directors at which 
the budget is presented for consideration and approval (id., 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
36 
§ 8564), and (2) specify that “[a]t the time set for hearing 
protests [regarding the budget], the board shall proceed to hear 
and pass upon all protests so made and its decision on the 
protests shall be final and conclusive” (id., § 8565).  Addressing 
a grower’s challenge to assessments imposed over a three-year 
span, which contributed to the district’s budget over this period, 
the court in Wallich’s Ranch determined that these objections 
should have been presented at the appropriate budget hearings, 
and the grower’s failure to so object barred it from later 
challenging the assessments in court.  (Wallich’s Ranch, at 
pp. 884–885.)   
The analysis in Wallich’s Ranch, supra, 87 Cal.App.4th 
878 relied upon the reasoning in People ex rel. Lockyer v. Sun 
Pacific Farming Co. (2000) 77 Cal.App.4th 619, 641–642 (Sun 
Pacific), in which the Court of Appeal upheld a trial court’s 
refusal to allow the defendant in a nuisance proceeding to 
introduce evidence regarding the efficacy of a Pest Control Law 
abatement program because the defendant had not previously 
challenged the program at the appropriate annual budget 
hearings.  Sun Pacific found the exhaustion rule applicable 
“[g]iven the public health and safety issues inherent in the Pest 
Control Law, in addition to the policy of resolving disputes 
expeditiously.”  (Id., at p. 641.)  This view was echoed by the 
Wallich’s Ranch court (Wallich’s Ranch, at p. 884), which also 
observed that raising appropriate objections to an assessment 
at the designated budget hearing gives a district “an opportunity 
to address the perceived problems and formulate a resolution” 
(id., at p. 885). 
In Plantier, supra, 7 Cal.5th 372, we found it unnecessary 
to decide whether Wallich’s Ranch was correctly decided 
because we regarded that case as distinguishable on several 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
37 
grounds.  (Plantier, at p. 389 & fn. 12.)  The same is true here.  
As we explained in Plantier, 7 Cal.5th at page 389, the statute 
addressed in Wallich’s Ranch and Sun Pacific differs from the 
statutory and constitutional scheme before us in that the Pest 
Control Law directs local boards to “pass upon” objections (Food 
& Agr. Code, § 8565), not just “consider” protests (art. XIII D, 
§ 4, subd. (e); Gov. Code, § 53753, subd. (d)).  Moreover, neither 
Sun Pacific nor Wallich’s Ranch considered whether the 
exhaustion requirement they read into the Pest Control Law 
comported with Proposition 218, or whether the opportunity to 
object under the Pest Control Law represented an adequate 
remedy under the standard announced in Rosenfield, supra, 
65 Cal.2d at page 566.  In light of the distinguishing 
characteristics of the statutory scheme addressed in Sun Pacific 
and Wallich’s Ranch and the limited analysis within those 
opinions, we need not determine the correctness of those 
decisions in order to conclude that exhaustion through the 
presentation of specific objections at the BID hearings was not 
required here. 
Finally, respondents also claim to find support for their 
position in Roth v. City of Los Angeles (1975) 53 Cal.App.3d 679 
(Roth), but that case is likewise distinguishable.  The plaintiffs 
in Roth owned certain real property in Los Angeles County.  (Id., 
at p. 682.)  They were notified by authorities that vegetation on 
their property violated the municipal code, and that if they did 
not 
clear 
the 
brush 
themselves, 
penalties 
and 
other 
consequences might result.  (Ibid.)  When the plaintiffs did not 
respond, the Los Angeles City Council passed an ordinance 
pursuant to Government Code sections 39561 through 39563, 
declaring that weeds on specified properties, including the 
plaintiffs’, constituted a public nuisance that the city intended 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
38 
to abate.  (Roth, at p. 682.)  Notice of this ordinance and an 
opportunity to object at an upcoming city council meeting was 
sent to the plaintiffs.  (Id., at p. 683.)  The plaintiffs did not 
attend the designated meeting, at which the city council was 
required by statute not only to “hear and consider all objections 
to the proposed removal” (Gov. Code, § 39568) but also to “[b]y 
motion or resolution at the conclusion of the hearing . . . allow 
or overrule any objections” (Gov. Code, § 39569) before 
proceeding further.  (Roth, at p. 683.)  At the conclusion of this 
hearing, the city council adopted another ordinance that ordered 
the abatement of the nuisance on the plaintiffs’ property.  (Ibid.)  
After being assessed for the costs of the abatement, the plaintiffs 
brought suit, alleging that the statutory procedure violated due 
process.  (Ibid.)   
The Court of Appeal in Roth, supra, 53 Cal.App.3d 679 
determined that the plaintiffs’ “failure to exhaust their 
administrative remedy through the city council hearing [was] 
fatal to their attack on the abatement procedure.”  (Id., at 
p. 692.)  Here again, we need not decide whether this conclusion 
was correctly drawn, because aspects of the Roth case function 
to distinguish it from the situation here.  In particular, the 
circumstances in Roth provided additional assurances that any 
objections to specific nuisance determinations would be 
evaluated and addressed by council members at the designated 
meeting.  This meeting was squarely attuned to and designed to 
address these individualized objections, rather than being 
concerned 
with 
a 
more 
fundamental 
policy 
decision.  
Furthermore, similar to the Pest Control Law’s specification 
that local boards are to “pass upon” protests (Food & Agr. Code, 
§ 8565), the instruction within the statutory scheme involved in 
Roth that lawmakers were to “allow or overrule any objections” 
HILL RHF HOUSING PARTNERS, L.P. v. CITY OF LOS ANGELES 
Opinion of the Court by Cantil-Sakauye, C. J. 
39 
(Gov. Code, § 39569) before ordering a nuisance abated 
encouraged the resolution of disputes through the hearing 
procedures and the development of an administrative record to 
a greater degree than can be said of the process involved here, 
which does not provide comparable direction to agencies. 
III.  DISPOSITION 
Petitioners did not have to articulate their objections to 
the BID assessment schemes at the public hearings before the 
City Council to subsequently present their arguments in these 
proceedings.  We reverse the judgment below and remand for 
further proceedings consistent with our decision. 
 
CANTIL-SAKAUYE, C. J. 
 
We Concur: 
CORRIGAN, J. 
LIU, J. 
KRUGER, J. 
GROBAN, J. 
JENKINS, J. 
HALLER, J.* 
 
 
 
__________________________ 
* 
Associate Justice of the Court of Appeal, Fourth Appellate 
District, Division One, assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution.
 
 
See next page for addresses and telephone numbers for counsel who 
argued in Supreme Court. 
 
Name of Opinion  Hill RHF Housing Partners, L.P. v. City of Los 
Angeles 
__________________________________________________________  
 
Procedural Posture (see XX below) 
Original Appeal  
Original Proceeding 
Review Granted (published) XX 51 Cal.App.5th 621 
Review Granted (unpublished)  
Rehearing Granted 
__________________________________________________________  
 
Opinion No. S263734 
Date Filed:  December 20, 2021 
__________________________________________________________  
 
Court:  Superior  
County:  Los Angeles 
Judge:  Mitchell L. Beckloff 
__________________________________________________________   
 
Counsel: 
 
Reuben Raucher & Blum, Timothy D. Reuben, Stephen L. Raucher and 
Michael T. Gluk for Plaintiffs and Appellants. 
 
Eric J. Benink and Vincent D. Slavens for Benink & Slavens, LLP, as 
Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Jonathan M. Coupal, Timothy A. Bittle and Laura E. Dougherty for 
Howard Jarvis Taxpayers Association as Amicus Curiae on behalf of 
Plaintiffs and Appellants. 
 
Michael N. Feuer, City Attorney, Beverly A. Cook, Assistant City 
Attorney, and Daniel M. Whitley, Deputy City Attorney, for Defendant 
and Respondent City of Los Angeles. 
 
Colantuono, Highsmith & Whatley, Michael G. Colantuono, Holly O. 
Whatley and Pamela K. Graham for Defendants and Respondents 
 
 
Downtown Center Business Improvement District Management 
Corporation and San Pedro Property Owners Alliance. 
 
Burke, Williams & Sorensen, Kevin D. Siegel and Tamar M. Burke for 
League of California Cities, Association of California Water Agencies, 
California State Association of Counties and California Special 
Districts Association as Amici Curiae on behalf of Defendants and 
Respondents. 
 
 
 
 
Counsel who argued in Supreme Court (not intended for 
publication with opinion): 
 
Stephen L. Raucher 
Reuben Raucher & Blum 
12400 Wilshire Boulevard, Suite 800 
Los Angeles, CA 90025 
(310) 777-1990 
 
Holly O. Whatley 
Colantuono, Highsmith & Whatley 
790 E. Colorado Boulevard, Suite 850 
Pasadena, CA 91101 
(213) 542-5704