The City of Saratoga’s attempt to issue $2,000,000 in special assessment bonds has been halted by a court ruling that found the financial arrangement unconstitutional. The legal challenge was initiated by the West Valley Joint Community College District, which owns land within the city limits.
An alternative writ of mandate was issued directing the city clerk to explain why a peremptory writ should not force him to announce the sale of these bonds. The funds were intended to finance improvements under the Improvement Act of 1911 and the Municipal Improvement Act of 1913.
The assessment would have been secured by lands owned by the college district and repaid over ten years through a special tax levied under Section 6468 of the Streets and Highways Code.
The city clerk argued that the proceedings were void for several reasons. He contended that the college district was attempting to bypass debt limitations in Article XIII, Section 40 of the state Constitution by using another public entity to create an assessment district composed entirely of its own property.
Additionally, he asserted that the district could not evade maximum tax rate restrictions set by Sections 20751 and 20803 of the Education Code. The clerk also maintained that the city lacked sufficient interest in the property to construct improvements under Section 5101 of the Streets and Highways Code.
The court agreed with the city clerk’s primary argument regarding constitutional debt limits. It concluded that the assessment created a fixed obligation benefiting the college district rather than the city, payable through ad valorem taxes across all property within the district.
The ruling stated that while the Legislature can authorize tax rates exceeding its own limitations under proper circumstances, it cannot impose taxes to pay for obligations that violate constitutional restrictions.