Opinion ID: 1975227
Heading Depth: 1
Heading Rank: 5

Heading: is the proposed initiative a proper subject?

Text: The trial court concluded that the proposed initiative would violate the equal protection guarantee inherent in the Fifth Amendment but rejected the opponents' other arguments. We reverse the equal protection ruling, but otherwise affirm the trial court's decision. [19]
The parties do not dispute that the Taxpayers' Act is a piece of economic legislation. Such legislation that does not employ suspect classifications or impinge on fundamental rights must be upheld against equal protection attack when the legislative means are rationally related to a legitimate governmental purpose. Hodel v. Indiana, 452 U.S. 314, 331, 101 S.Ct. 2376, 2386, 69 L.Ed.2d 40 (1981) (citations omitted). The Taxpayers' Act does not involve a suspect classification or any fundamental right. It is thus entitled to a presumption of rationality that can only be overcome by a clear showing of arbitrariness and irrationality. Id. at 331-332, 101 S.Ct. at 2386-2387. We hold that the opponents did not overcome that presumption, and that the trial court therefore erred in invalidating the initiative on equal protection grounds. In deciding whether a challenged classification is rationally related to a legitimate governmental purpose, we must answer two questions: (1) Does the challenged legislation have a legitimate purpose? and (2) Was it reasonable for the lawmakers [or, in this case, the proponents of the initiative] to believe that use of the challenged classification would promote that purpose? Western & Southern Life Insurance Co. v. State Board of Equalization, 451 U.S. 648, 668, 101 S.Ct. 2070, 2082, 68 L.Ed.2d 514 (1981) (citations omitted). [20] If any reasonable basis for the initiative can be identified, we must reject the equal protection challenge, for it has long been settled that a classification, though discriminatory, is not arbitrary nor violative of the Equal Protection Clause ... if any state of facts reasonably can be conceived that would sustain it. Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 528, 79 S.Ct. 437, 441, 3 L.Ed.2d 480 (1959) (citations omitted); accord, e.g., McGowan v. Maryland, 366 U.S. 420, 426, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393 (1961). The fit between the classification's objective and its impact need not be perfect. If the classification has some `reasonable basis,' it does not offend the Constitution simply because the classification `is not made with mathematical nicety or because in practice it results in some inequality.' Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970) (citation omitted). In short, anyone who challenges a discriminatory classification, other than one which is inherently suspect ( e.g., one based on race or religion), has a high hurdle to overcome in arguing that the classification is not at all related to a legitimate state purpose or jeopardizes the exercise of a fundamental right. In the realm of tax classifications, the Supreme Court has held that the equal protection guarantee applies only to taxation which in fact bears unequally on persons or property of the same class. Charleston Federal Savings & Loan Ass'n v. Alderson, 324 U.S. 182, 190, 65 S.Ct. 624, 629, 89 L.Ed. 857 (1945) (citations omitted). The Court has upheld the division of taxpayers into different classes and the assignment of different tax burdens to those classes, so long as those divisions and burdens are reasonable. Allegheny Pittsburgh Coal Co. v. County Commission, 488 U.S. 336, 344, 109 S.Ct. 633, 638, 102 L.Ed.2d 688 (1989), citing Allied Stores, supra, 358 U.S. at 526-527, 79 S.Ct. at 440-441. So long as the classification of taxpayers is neither capricious nor arbitrary, and rests upon some reasonable consideration of difference or policy, it will survive an equal protection challenge. Brown-Forman Co. v. Kentucky, 217 U.S. 563, 573, 30 S.Ct. 578, 579, 54 L.Ed. 883 (1910); accord, e.g., Nordlinger v. Hahn, ___ U.S. ___, ___, 112 S.Ct. 2326, 2332, 120 L.Ed.2d 1 (1992). Mr. Hessey argues that his proposed initiative passes this test because it treats all taxpayers within Class 4 and Class 5 equally. He asserts that since the initiative's classification is not arbitrary, it satisfies the equal protection guarantee. The opponents, of course, claim that the initiative is unconstitutionally arbitrary. The trial court agreed with the opponents that the proposed initiative was arbitrary and irrational, and therefore unconstitutional. More specifically, the court concluded that the Taxpayers' Act was unconstitutional because there was no rational basis for making assessment appeals involving Class 4 and Class 5 properties, but not Class 1, 2, or 3 properties, [21] subject to public participation in the appeal process. Even allowing that there might be some justification for public involvement with respect to Class 4namely, to ensure that the taxation of all property in the District of Columbia is based on its fair market valuethe court ruled that the inclusion of Class 5 properties with Class 4 properties was arbitrary. The court also held that Mr. Hessey had not supported his claim of increased complexity in determining fair market value of Class 4 and Class 5 properties, and therefore that there was no rational basis for treating them differently from properties in Classes 1, 2, and 3. In reviewing the trial court's decision, we accept Mr. Hessey's premise that an initiative is subject to the same equal protection standards that apply to laws passed by the Council. [22] We are satisfied, after examining the proposed Taxpayers' Act, that it meets the two-part test for evaluating the constitutionality of economic legislation articulated by the Supreme Court in Western & Southern Life Insurance Co., supra . Every taxpayer has a financial interest in seeing that every other taxpayer's taxable property is not under-assessed. Board of County Commissioners v. Buch, 190 Md. 394, 397, 58 A.2d 672, 675 (1948). The asserted purpose for Mr. Hessey's proposed initiative, according to his brief, is to ensure that owners of property in these two classes pay their fair share of taxes which can then be used for the delivery of much needed social and municipal services in the District. We agree with Mr. Hessey that this asserted purpose is consistent with that of the Council's own tax classification scheme. In the trial court Mr. Hessey relied in part on a report issued by a committee of the Council which showed that the District of Columbia derived considerably less revenue in tax year 1991 from taxes on Class 4 and Class 5 property after the BER's review process than the Council had anticipated. See COUNCIL OF THE DISTRICT OF COLUMBIA, COMMITTEE ON FINANCE AND REVENUE, REPORT ON BILL 8-609, REAL PROPERTY TAX RATES FOR TAX YEAR 1991 AMENDMENT ACT OF 1990, at 5 (1990). The discussion in this report of [t]he District's revenue decline as a result of appeals to the BER by Class 4 and Class 5 property owners provides a rational basis for grouping Classes 4 and 5 together and for not subjecting the other three classes of property to public involvement in the appeal process. Nothing more would be required to sustain the Hodel presumption of rationality if the Taxpayers' Act, differentiating between Classes 1, 2, and 3 and Classes 4 and 5, were enacted by the Council; hence nothing more is required to sustain the presumption when the Taxpayers' Act is proposed for enactment by initiative. The proposed initiative is also supported by another legitimate governmental interest. Opening the assessment appeal process to more taxpayers and creating an Office of the Public Advocate would serve the important goal of citizen involvement in government and would be an important step toward curing the public perception of unfairness in the current closed system. Mr. Hessey cites a report by the District's Office of Campaign Finance as authority for his assertion that the public feels that commercial property is taxed at an unfairly low rate: [T]he manner in which the BER appears to have conducted its business has seriously undermined the public's confidence in that agency. There is a strong public perception that underassessment of commercial properties has substantially reduced the financial resources available to the District government, particularly at a time when the city is facing an unprecedented financial crisis.... Therefore, we recommend ... public access to the hearing process.... DISTRICT OF COLUMBIA OFFICE OF CAMPAIGN FINANCE, FIRST COMPLIANCE REPORT, at 3 (April 16, 1991). This report officially recognizes that there is a public perception of unfairness in the assessment appeal process, even though that perception may or may not be founded in fact. The report concludes inter alia that public access to the hearing process would be rationally related to the goal of dispelling the public's mistrust. In short, the report identifies another legitimate purpose for the proposed initiative and demonstrates why the initiative would be rationally related to that purpose. Again, that is all that is needed to support the initiative under the Hodel presumption. [23] The fact that public access to assessment appeals would be limited to cases involving Class 4 and Class 5 properties does not diminish the rational basis of citizen involvement in the assessment process. The initiative's underinclusiveness i.e., the inclusion of some classes of property, but not all, in opening the appeal process to the publicdoes not make it unconstitutional. The State [is] not bound to deal alike with all these classes, or to strike at all evils at the same time or in the same way. Semler v. Oregon State Board of Dental Examiners, 294 U.S. 608, 610, 55 S.Ct. 570, 571, 79 L.Ed. 1086 (1935). Legislatures, and hence the people through direct legislation, may address problems in phases. [R]eform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1955); see also Bowen v. Owens, 476 U.S. 340, 346-348, 106 S.Ct. 1881, 1885-1886, 90 L.Ed.2d 316 (1986); City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 52-53, 106 S.Ct. 925, 931-932, 89 L.Ed.2d 29 (1986). The proposed initiative cannot be rejected on equal protection grounds because it stops short of addressing the entirety of a legitimate state interest. In sum, the trial court's conclusion that the proposed initiative violates the equal protection guarantee of the Fifth Amendment was erroneous because that conclusion was based on a limited view of the purpose of the initiative. The Supreme Court has created a heavy burden for challengers to economic legislation which does not depend on a suspect classification or implicate a fundamental right. Because the Hodel presumption of rationality has not been rebutted, we must reverse the trial court's constitutional holding.
This court declared in Convention Center, supra, that the power of the electorate to act by initiative is coextensive with the legislative power: an initiative cannot extend to administrative matters. 441 A.2d at 907 (citation omitted). To comply with this rule, an initiative measure must propose a law; it cannot be sustained if it is administrative in nature, i.e., if it merely proposes to execute a law already in existence. An initiative will be deemed to be legislative in character if it clearly includes an action which adopts a policy affecting the public generally and sets in motion the effectuation of that policy. Woods v. Babcock, 88 U.S.App.D.C. 37, 39, 185 F.2d 508, 510 (1950), vacated as moot sub nom. City of Los Angeles v. Woods, 340 U.S. 908, 71 S.Ct. 294, 95 L.Ed. 657 (1951). By contrast, an initiative is administrative if it is merely by way of fact-finding in the course of effectuating a policy declared by the legislature, or is merely the formulation of rules and regulations for the purposes of such effectuation.... Id. We adopted this distinction in Convention Center, supra, 441 A.2d at 909 n. 37. The trial court, applying Woods and Convention Center, held that the proposed Taxpayers' Act was legislative in character because its provisions are all new laws and policies. The opponents challenge this conclusion, arguing that the portions of the initiative which open the assessment process to the public and compel the release of tax information conflict with the confidentiality policy expressed in D.C.Code §§ 47-820(d) and 47-821(d)(2) (1990). [24] They maintain that the confidentiality statutes represent a legislative policy which the proposed initiative seeks to modify administratively. The inconsistency between the proposed initiative and the confidentiality statutes does not make the proposed initiative administrative in character. To the contrary, that inconsistency demonstrates that the initiative seeks to establish a new legislative policy. The Council plainly has the power to do just that by enacting legislation which changes existing law. Since the initiative power is coextensive with the legislative power, the electorate, through the initiative process, may also enact such legislation. Thus the conflict between the proposed initiative and the two cited statutes does not invalidate the initiative. [25] The opponents argue alternatively that because these two statutes deal with a policy ... expressly committed to the regulatory and administrative power of the Mayor under D.C.Code § 47-820(f), and because the Taxpayers' Act would directly affect that policy, the initiative is not a proper subject under D.C.Code § 1-1320(b)(1). We hold that a proposed initiative's inconsistency with the current District of Columbia Code has no bearing on the question of whether the proposed initiative is a proper subject. Section 1-1320(b)(1) provides only that an initiative must be consistent with the District of Columbia Charter. Title 47 of the Code, dealing with Taxation and Fiscal Affairs, is not part of the Charter. Any conflict between the terms of the initiative and any statute not part of the Charter is therefore irrelevant to the proper subject inquiry. Even if we did consider the inconsistency between the Taxpayers' Act and the Code as relevant to the issue of whether the initiative is a proper subject, we would still reject the inconsistency claim in this case. The opponents argue that the proposed initiative is inconsistent with D.C.Code §§ 47-820(d) and 47-821(d)(2). They point to section 47-820(c), which authorizes the Council to adopt regulations concerning assessment of real property which shall be consistent with the provisions of this chapter, as authority for their assertion that the Council cannot violate the policy of confidentiality in tax assessments. Since the Taxpayers' Act would clearly conflict with that policy, the opponents contend that it would be beyond the power of the Council to enact and hence is not a proper subject of initiative. The opponents' argument rests on their assertion that the Council cannot enact a statute which would be inconsistent with the confidentiality provisions of Title 47. That assertion, however, is not correct. D.C.Code § 47-820(c) prevents the Council from adopting regulations affecting assessments which would conflict with the confidentiality policy. But that subsection does not, and could not, prevent the Council from changing the policy by enacting another statute. Thus the premise of the opponents' argument is simply wrong: section 47-820(c) does not preclude the Council from amending the confidentiality policy. Consequently, the proposed initiative, which would do just that, is not outside the realm of the Council'sand hence the electorate'slegislative authority.
D.C.Code § 1-1320(b)(1)(C) provides that a proposed initiative which authorizes, or would have the effect of authorizing, discrimination prohibited under Chapter 25 of this title cannot be a proper subject of initiative. Chapter 25 of title 1 of the Code contains the District of Columbia Human Rights Act. The opponents argue that the proposed initiative would violate that Act because it discriminates against the owners of Class 4 and Class 5 property, and that it is therefore not a proper subject of initiative under section 1-1320(b)(1). The trial court properly rejected this argument out of hand. The court analyzed the proposed initiative under three separate provisions of the Human Rights Act and correctly found that the initiative would violate none of the three. D.C.Code § 1-2515 prohibits unlawful discrimination in real estate transactions. The Human Rights Act defines transaction in real property as the exhibiting, listing, advertising, negotiating, agreeing to transfer or transferring, whether by sale, lease, sublease, rent, assignment, or other agreement, any interest in real property or improvements thereon.... D.C.Code § 1-2502(30) (1992). We agree with the trial court that the proposed initiative, which deals with tax assessment procedures, simply does not fit into the [statutory definition] of a transaction in real property. The trial court also correctly ruled that the proposed initiative is not barred by D.C.Code § 1-2532, which prohibits [a]ny practice which has the effect or consequence of violating any of the provisions of this chapter.... That section has been construed as banning discriminatory practices which bear disproportionately on members of a protected class. Gay Rights Coalition v. Georgetown University, 536 A.2d 1, 29 (D.C.1987) (en banc). Although the opponents contended that owners of income-producing property were a protected class, [26] the trial court disagreed. Even if the opponents were correct that owners of income-producing property were a protected class, the trial court held, and we agree, that the proposed initiative does not bear disproportionately on members of that class because Classes 2 and 3 also include income-producing property. Consequently, Class 4 and Class 5 property owners do not qualify as a protected class. [27] Finally, the opponents claim that the proposed initiative would violate D.C.Code § 1-2525(a) (1992), which makes it unlawful to coerce, threaten, retaliate against, or interfere with any person in the exercise or enjoyment of ... any right granted or protected under this chapter. [28] They argue that Mr. Hessey's proposed initiative is designed to retaliate against the owners of large office buildings as a result of their success in tax assessment appeals. They state in their brief, Mr. Hessey, and potentially others, do not like the idea that Class 4 and Class 5 owners successfully appeal their assessments, so in his initiative he attempts to create ways to interfere with their doing so and to retaliate against them for having done so in the past. The opponents assert that their right to be free from discrimination based on source of income [29] is threatened by the initiative's retaliatory purpose, and that the initiative is therefore barred by section 1-2525(a). D.C.Code § 1-2525(a) prohibits retaliation against any person in the exercise or enjoyment of any right protected under the Human Rights Act. One who claims retaliation under this section, therefore, must show prima facie that he or she has been discriminated against for engag[ing] in a protected activity, Goos v. National Ass'n of Realtors, 715 F.Supp. 2, 3 (D.D.C.1989), or for exercising or enjoying a protected right. The opponents in this case have made no such showing. They claim that the proposed initiative will result in discrimination against them based on source of income, but that claim is premature. They have not yet been injured by the Taxpayers' Act, and it is by no means certain that they ever will be. Even if public involvement in tax assessment appeals involving Class 4 and Class 5 properties leads to higher tax bills for the owners of such properties, the payment of additional taxes cannot be a cognizable injury if the tax is based on the value of the property. The initiative would only give the BER more information on which to base its assessments of Class 4 and Class 5 properties; it would not affect any property owner in any protected activity or in the exercise or enjoyment of any protected right. There is therefore nothing to which the opponents can tie their claim that the proposed initiative violates D.C.Code 1-2525. Their speculative charges about Mr. Hessey's motives for proposing the Taxpayers' Act are not substantiated, nor are they even relevant to the issue of whether the proposed initiative is a proper subject. For these reasons we reject the opponents' assertion that the proposed initiative violates the Human Rights Act.
There are two other matters which call for only brief discussion. First, the opponents argued in the trial court that the proposed initiative, if enacted, would negate or limit a budget act of the Council [30] by forcing it to appropriate funds for the new office of the Public Advocate. The trial court summarily rejected that argument, noting that the Taxpayers' Act merely authorized the creation of an OPA but did not purport to allocate funds for it. The opponents have not pressed the point on appeal. We deem it waived. Second, the opponents contend that the initiative's provision allowing the OPA to appoint a staff conflicts with the Mayor's exclusive authority over District of Columbia government personnel. Because this contention was not made in the trial court, we will not entertain it. This court, and appellate courts generally, consistently refuse to consider arguments made for the first time on appeal. E.g., Chase v. Gilbert, 499 A.2d 1203, 1209-1210 (D.C.1985); District of Columbia v. Air Florida, Inc., 243 U.S.App.D.C. 1, 8-9, 750 F.2d 1077, 1084-1085 (1984); Miller v. Avirom, 127 U.S.App.D.C. 367, 369-370, 384 F.2d 319, 321-322 (1967). Only in exceptional circumstances, where injustice might otherwise result, should an appellate court consider an issue not raised in the trial court. District of Columbia v. Air Florida, Inc., supra, 243 U.S.App.D.C. at 9, 750 F.2d at 1085; accord, e.g., Kentucky v. Stincer, 482 U.S. 730, 746 n. 22, 107 S.Ct. 2658, 2668 n. 22, 96 L.Ed.2d 631 (1987); Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 721, 85 L.Ed. 1037 (1941). We find no exceptional circumstances here. The opponents have had ample opportunity over the course of this already lengthy controversy to frame their challenges to the initiative. We will not consider this new argument, made for the first time after more than two years of litigation. [31]