U.S. Law Firm Group
State and Local Taxation Committee Meeting
September 30, 2003
SIGNIFICANT TAX LAW DEVELOPMENTS IN OREGON
2002–2003
JOHN H. G ADON
LORNE D AUENHAUER
L ANE P OWELL SPEARS L UBERSKY LLP
This outline is provided for informational purposes only and is not intended as legal advice or to
create an attorney-client relationship.
 2003 Lane Powell Spears Lubersky, LLP
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I.
LEGISLATIVE DEVELOPMENT HIGHLIGHTS
The 72nd Oregon Legislative session went down into the history books as the longest in
Oregon history, finally coming to an end on August 27, 2003. In addition, and in response to in
response to school funding cuts and other spending reductions previously made by the Oregon
Legislature, Oregon’s largest county (Multno mah) temporarily added a new county-wide income
tax and Oregon’s largest city (Portland) temporarily increased business licensing fees.
Legislative Changes
HB 2152: Oregon Budget Bill Increases Income Taxes and Makes Other Changes
At the very end of the Legislative session, HB 2152 was passed and immediately signed
into effect by Governor Kulongoski. Some of the more important tax provisions of HB 2152
include:
Personal Income Tax Increases:
Income Tax Surcharge. A surcharge on personal income taxes has been imposed
for tax years 2003 through 2005. The surcharge assessment is equal to a percentage of
taxpayers’ income tax liability. For taxpayers with federal adjusted gross income (“AGI”)
of $10,000 or more, the surcharge varies from 1% to 9% depend ing on their federal AGI.
The 9% surcharge applies to taxpayers with AGI of $120,000 or more, or $240,000 or
more for joint filers. The surcharge can extend into 2006 if certain economic funding
targets are not met.
Medical Expense Deduction Changes. The minimum age requirement for Oregon
medical expense deductions is gradually increased over the three period 2003 – 2005
from age 62 to 65. Additionally, the maximum allowable medical expense deduction is
reduced for taxpayers with federal AGI of at least $15,000, phasing out completely for
taxpayers with federal AGI of at least $50,000.
Corporate Income Tax Increases:
Minimum Corporate Tax Increase. Effective for tax years after 2002, the $10
minimum corporate income tax was replaced with a graduated tax, resulting in minimum
corporate income taxes of anywhere between $250 and $5,000, based on Oregon sales for
the tax year. Similarly, S corporations will be required to pay a minimum tax of $250 if
the S Corporation has Oregon sales of less than $1,000,000, or $500 if sales exceed
$1,000,000 for the tax year.
Other Corporate Income Tax Changes. Effective for tax years after 2002: (1) any
tax credit (except for farm-worker housing and lending credits and “affordable housing”
credits available to qualifying lenders) allowable against Oregon corporate excise taxes is
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reduced by 20%, and these reductions may be carried forward to a succeeding tax year
that begins after 2005 if that tax year is not more than three years from the date of the last
tax year in which the credit could otherwise be claimed; (2) the extraterritorial income
exclusion allowed against federal income taxes must be added back in computing Oregon
taxable income; and (3) the corporate dividend subtraction is reduced from 70% to 35%
of dividends (the corporate dividend subtraction sunsets beginning with tax years after
December 31, 2005).
Other Significant Changes:
SUV Deductions Disallowed. For both individuals and corporations, depreciation
and expense deductions taken under Code sections 168 and 179, respectively, for large
sport utility vehicles (SUVs) placed in service after 2002 must be added back in
computing Oregon taxable income.
Reduction in Early Payment Property Tax Discount. Under current law, the
discount for early payment of property taxes is 3%. This discount is halved to 1.5%,
effective for tax years beginning after June 30, 2004.
Extension of Cigarette Tax. A $0.10 per pack cigarette tax dedicated to the
Oregon Health Plan was extended to January 1, 2006. It had previously been scheduled to
expire on January 1, 2004.
HB 2186: Disconnection of State Tax Code from Internal Revenue Code
Prior to the just-ended Legislative session, Oregon’s definition of “taxable income” was
automatically tied to the definition of taxable income as found in the Internal Revenue Code of
1986, as amended (the “Code”). Accordingly, changes made to the Code’s definition of taxable
income automatically changed the definition of taxable income for Oregon income tax purposes.
However, Code changes unrelated to the definition of taxable income did not necessarily
automatically change Oregon tax law. As a result, each and every “unrelated change” to the
Code required a “reconnect bill” to reconcile related Oregon tax law provisions to the Code as
amended. Accordingly, HB 2186 reconciled Oregon tax law with non-taxable- income-related
changes made to the Code as of December 31, 2002.
Moreover, HB 2186 also provided for the temporary disconnection of Oregon’s definition
of “taxable income” from the Code’s definition. This definitional change will last until 2006 and
does not apply to changes in the Code which apply to depreciation deductions, Code section 179
expenses or retirement plans.
Local (County and City) Changes
Multnomah County Resident Income Tax
Multnomah County residents passed Measure 26-48 on May 20, 2003, which established
a personal income tax, effective January 1, 2003, running through December 31, 2005. This tax
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is payable by Multnomah County residents and is 1.25% of Oregon taxable income after
deducting an exemption ($5,000 for joint filers and $2,500 for a single filer). If the Oregon
Legislature reduces base funding allocation for county schools, public safety, or human services
during the next three years, the county’s Board of Commissioners will consider immediate
termination of this tax. If the Oregon Legislature restores funding for county public schools,
public safety, or human services during the next three years, the county’s Board of
Commissioners will consider immediate reduction or termination of this tax.
City of Portland Business License Fee Increase (“School Funding Surcharge”)
City of Portland Ordinance #177340 was passed by the City Council effective April 18, 2003, to
provide bridge funding for local schools for four years or until the Oregon Legislature provides
adequate and stable school funding. This ordinance imposes a temporary Business License Fee to
provide assistance to Portland Public Schools. In addition to the regular 2.2% business license
fee rate, a surcharge was imposed on tax years beginning on or after January 1, 2002. As directed
by ordinance, the Bureau of Licenses has set this surcharge rate at 1% (for a total rate of 3.2%)
for the 2002 tax year (to raise $20 million). There is no minimum or maximum amount on the
surcharge. The 3.2% School Funding Surcharge is scheduled to remain in effect for four years
(2002 through 2005). However the ordinance does allow the surcharge to be assessed in
subsequent years, until the net $38 million is raised for school funding.
II.
CASELAW DEVELOPMENT HIGHLIGHTS
A.
PROCEDURAL ISSUES.
1.
Assessment Appeal Deadline Applies Equally to Residents and NonResidents.
Taylor v. Department of Revenue, No. 020016D (April 1, 2003).
The Oregon Department of Revenue issued a notice of assessment against an out-of-state
taxpayer and the taxpayer challenged the Department’s ability to assess taxes against him, citing
a lack of jurisdiction. ORS 305.265(15) and 305.280(2) provide, respectively, that appeals can be
taken to the tax court from any notice of assessment and that appeals to any such notice of
assessment “shall be filed within 90 days after the date of the notice.” The assessment notice was
issued February 2, 2001, but the taxpayer did not file an appeal with the Oregon tax court until
January 10, 2002.
Taxpayer alleged that the Department of Revenue must obtain jurisdiction over the
taxpayer before making a valid assessment and argued that the court was required to hear the
merits of his appeal that he was not a resident of Oregon because the Department lacked the
authority to impose an assessment. Essentially, taxpayer argued that a distinction should be made
based on whether the taxpayer is, or claims to be, a resident or non-resident of Oregon when
determining whether an appeal is timely.
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The court concluded that any such resident/non-resident distinction would result in an
arbitrary application of the law. The court held that the law requires the Department of Revenue
to follow certain statutory requirements when making assessments, and these statutory
requirements apply equally to anyone the Department of Revenue believes is subject to Oregon
income tax, irrespective of their status as Oregon residents. The law specifically provides that
any challenge to an assessment must be made within 90 days of the assessment. As the taxpayer
did not file a timely appeal to the assessment, the court refused to consider any challenge to the
assessment on the merits.
B.
CORPORATE INCOME TAX ISSUES.
1.
Gains from Sale of Foreign Subsidiaries Not Subject to Apportionment.
Nabisco Brands, Inc. v. Department of Revenue, No. 010119A (April 3, 2003) (appealed
to the Oregon Tax Court).
Gains from the sale of foreign subsidiaries, which did not engage in business in Oregon,
by a corporation were not subject to apportionment for Oregon corporate tax purposes because
neither the corporation nor its subsidiaries had a unitary business relationship and because capital
gains from the subsidiaries’ sale were not business income.
In finding an absence of a unitary business relationship, the court reviewed the
relationship between the corporation and its subsidiaries for functional integration, centralized
management and economies of scale:
•
Functional Integration. No functional integration existed because there was no flow of
goods, capital resources or services between the corporation and its subsidiaries, based on
the following factors:
o
o
o
•
Flow of Goods. There was no flow of goods, as the subsidiaries were independent
businesses with existing markets and had their own brand names. Additionally,
there was insufficient use of the corporation’s logos, trademarks and brand names
to create a flow of value between the corporation and its subsidiaries.
Capital Resources. Insufficient capital resources, such as cash infusions, were
made to achieve functional integration.
Services. Services, such as related party transactions at less-than-prevailingmarket- value, were evidence of functional integration but insufficient to
demonstrate a unitary relationship.
Centralized Management. No centralized management existed because the subsidiaries
maintained their own management of day-to-day operations and almost all business
decisions; personnel transfers were infreque nt; authorization for a subsidiary to act on the
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corporation’s behalf indicated only the potential for a unitary relationship; and there were
no interlocking directorships between the corporation and the subsidiaries
•
Economies of Scale. Economies of scale did not exist because the subsidiaries remained
separate and distinct from the corporation (e.g., each maintained separate human resource
departments, transportation charges and bank accounts); negotiated and paid their own
accounting fees (with a firm that was also employed by the corporation); and maintained
separate (but compatible) distribution systems, even though the corporation shared
manufacturing technology and R&D results with the subsidiaries and the corporation had
the potential to establish employee benefit plans for the subsidiaries.
Finally, proceeds from the sales of the subsidiaries were not business income under ORS
317.705 because the corporation was not in the business of buying and selling companies.
Further, the gains were not generated by an asset whose acquisition, management and disposal
were an integrated part of the corporation’s business.
C.
PERSONAL INCOME TAX ISSUES.
1.
Efforts to Establish Residency in Washington Fail – Oregon Personal Income
Tax Liability Imposed as a Result.
Ott v. Department of Revenue, 16 OTR 102, (August 22, 2002).
Taxpayer who became an Oregon resident in 1992 was unable to establish that he had
subsequently changed his domicile to Washington and thus was liable for Oregon personal
income taxes for 1996, 1997 and 1998.
The taxpayer’s efforts to establish residence in Washington included working in
Washington, renting an apartment in Washington, obtaining a library card in Washington,
registering to vote in Washington, and joining several Washington-based associations.
Additionally, he received unemployment benefits from Washington when he was out of work.
The court decided that the taxpayer’s efforts were insufficient to establish a change in
domicile from Oregon under ORS 316.027(1)(a). Specifically, the court noted that the taxpayer
moved back and forth between Oregon and Washington due to job changes – but that his spouse
remained in Oregon, and the taxpayer always returned to the Oregon home he owned jointly with
his spouse. Additionally, all of taxpayer’s vehicles were registered in Oregon, he retained his
Oregon driver’s license, continued to vote in Oregon, registered and maintained several
businesses in Oregon, and his mailing address at all of his places of employment during 1996 –
1998 remained his Oregon address.
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2.
NOL Incurred Prior to Oregon Residency Denied Favorable Treatment
Lowe v. Department of Revenue, No. 020901A (November 7, 2002).
Prior to becoming an Oregon resident, taxpayers incurred a net operating loss (NOL) and
made an election to carry it forward. The NOL was not sourced in Oregon. After becoming
Oregon residents, they continued to claim the NOL and carry it on their federal and Oregon state
returns. The taxpayers were not permitted to claim a subtraction for NOL for Oregon state
income tax purposes.
The Department of Revenue argued that one who becomes an Oregon resident may not
deduct NOL incurred from a non-Oregon source during nonresident years. The Department of
Revenue issued assessments against the taxpayers for 1999 and 2000 tax years, and the taxpayers
appealed.
The court noted that this very same issue was twice decided against similarly situated
taxpayers and denied the taxpayers’ appeal on the basis of such precedent. The court affirmed
that a NOL carryforward, from a source other than Oregon, incurred at a time when the taxpayer
was not an Oregon resident, may not be applied against future taxable income for State income
tax purposes in subsequent years after the taxpayer acquires status as a resident.
3.
Settlement Payment to Former Employee Was Not Severance Pay.
Wheeler v. Department of Revenue, No. 011241A (May 21, 2003) (appealed to the
Oregon Tax Court).
A non-resident received a substantial payment from his employer in 2000. The
Department of Reve nue contended that this payment was severance pay and, as such, the
payment constituted taxable Oregon income. However, the recipient was able to show that the
payment was made as part of an agreement not to sue his former employer, and thus was not
received as compensation for personal services rendered in Oregon.
In order to obtain the payment, the recipient signed an agreement to specifically “settle,
resolve and release any and all existing or potential claims, controversies, differences, disputes or
disagreements, known or unknown” that the taxpayer had (or may have had) against his former
employer. The court concluded that this “release” showed that the recipient was not being paid
the monies in 2000 as compensation for personal services rendered in Oregon. Instead, the
payment was received in exchange for agreeing not to sue the recipient’s then-current employer.
Since the recipient was a nonresident, Oregon had no nexus to tax the payment under these
circumstances.
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D.
PROPERTY TAX ISSUES.
1.
Prope rty Tax Exemptions Lost Where Property Not Used Exclusively for
Educational Purposes.
Pacific University v. Washington County Assessor, No. 021116D (April 24, 2003).
Property owned by a university and used to store wood was not exempt from Oregon
property tax under ORS 307.145 because it was not used exclusively for educational purposes.
The university’s property tax exemption application originally indicated the property
would be sued “to store our landscaping equipment and materials that the landscaping crew
need.” However, a county assessor examined the property and found no evidence that of the land
was being or ever had been used to store any such equipment.
The university responded that the property had actually been used to store wood taken
from trees located on the university’s campus: wood taken from dead trees or pruning and
maintenance of existing trees were placed on the property in question and made available free to
anyone who wanted it. Additionally, noting its students possess “minimal wood-chopping skills,”
the instructor of a service learning class entitled “Peace and Conflict Studies” submitted a letter
to the assessor on behalf of the university indicating that a principal activity of the class involved
chopping wood on the property for Navajo elders.
The tax court concluded that although the wood stored on the property was used by
students as part of an educational experience in wood chopping, the wood was also used for
other school sponsored events that did not have an educational purpose. The university’s
decision to permit anyone to take the wood, free of charge, did not satisfy the statutory
requirement of exclusive use by the university for an educational purpose.
2.
Omitted Property Cannot be Corrected as Clerical Error
Polanco v. Lane County Assessor, No. 021033C (April 1, 2003).
The retroactive correction of an Oregon property tax assessment to add a home that had
been constructed on the property was not a permissible correction of a “clerical error” because
the correction involved the use of appraisal judgment.
The property owners purchased a newly constructed home in May 1996. The County
assessor’s office inspected the property in June 1996. The appraiser, for reasons unknown, failed
to add the value of the home built on the property to the assessment and tax rolls; as a result,
only the land (and not the house) was valued and taxed.
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In 2001, the property owners inquired as to why their property taxes were so low. As a
result, the property owne r was told by the assessor’s office that the house was not “registered,”
the error was the property owner’s fault and that the property owner would have to pay
additional taxes for past- years as a result of the error. Subsequently, the assessor’s office added
the value of the home to the assessment and tax rolls for tax years 1997-98 through 2000-01,
inclusive. These changes were made pursuant to the clerical error provisions in ORS 311, which
authorizes corrections to assessments for clerical errors provided that (a) the error is in the
assessor’s records, (b) the error would have been corrected by the assessor as a matter of course
prior to certification of the roll if it had been discovered, and (c) the records contain the
information needed to make the correction.
The court ruled against the assessor’s office, citing ORS 311.205, which precludes the
correction of errors involving valuation judgment. Since the assessor had not previously assigned
a value to the home, the assessor’s office was required to exercise appraisal judgment.
Consequently, the correction made by the assessor’s office was not appropriate under the clerical
error provisions of ORS 311.
3.
Reliance on Third Party Advice Not Good Cause for Waiver of Late-Filing
Penalties
Cloverdale Enterprises v. Washington County Assessor, No. 021114B (May 8, 2003).
Relying primarily on the advice of its accountant, the taxpayer failed to file Oregon
personal property tax returns for five years. The assessor’s office assessed late-filing penalties
against the taxpayer.
Citing erroneous reliance on the advice of the taxpayer’s accountant, the taxpayer
requested a 50% reduction in the late-filing penalties. ORS 305.296(6) allows waiver of latefiling penalties when there is good and sufficient cause. The taxpayer has the burden of showing
“good and sufficient cause,” defined in ORS 305.288(5)(b) generally as an extraordinary
circumstance beyond the taxpayer’s control and which specifically excludes “reliance on
misleading information provided by any person except an authorized tax official providing the
relevant misleading information.”
Noting that the primary cause of the non-filing was advice given by a third party, an
accountant unrelated to the assessor’s office, and, moreover, that the taxpayer’s failure to file
was repetitive and ongoing (covering five tax years), the court denied the taxpayer’s request for
reduction in late-filing penalties, concluding that the circumstances cited by the taxpayer were
neither extraordinary nor beyond the taxpayer’s control.
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4.
Art Museum Property Tax Exemptions Partially Lost Where Property Used
for Consignment Sales Gallery.
Contemporary
(May 7, 2003).
Crafts
Ass’n
v.
Multnomah
County
Assessor,
No.
021225D
A crafts organization that used its property to display contemporary crafts in exhibition
galleries, a permanent collection gallery and a sales gallery was denied an Oregon property tax
exemption for the sales gallery portion of the property. The use of a sales gallery for
consignment sales of crafts created by local artists came within the exclusion clause of the
exemption for art museums under ORS 307.130(1)(f), which specifically provides that the
exemption does not cover any portion of an art museum’s property that is used to sell works of
art or other items to the public. The fact that the sales gallery did not generate a profit was
immaterial.
5.
Assessments for Local Street Improvements Not Subject to Constitutional
Property Tax Limitations.
Martin v. City of Tigard, 335 Or. 444 (June 12, 2003).
The Oregon Supreme Court concluded that charges on property for a local street
improvement was not subject to the limitations on Oregon property tax under Article XI, section
11b of the Oregon Constitution because the charge constituted an assessment for local
improvement rather than a tax subject to these limitations.
Article XI, Section 11b, is a voter-adopted provision that sets dollar limits upon taxes that
governments can impose upon real property. Under this Article, the definition of “tax” excludes
assessments for “local improvements,” as defined in subsection 11b(2)(d). The taxpayer argued
that the local street improvement charge was subject to the constitutional limits because it did not
satisfy the constitutional definition of a “local improvement.”
The Court concluded that the “local street improvement” satisfied the constitutional
definition of a “local improvement” even though (1) the city would only permit the taxpayers to
pay the charge over a 10-year period if they waived all defects in the proceedings, (2) the city did
not assess other property that also allegedly receive a special benefit from the improvement, and
(3) the city included attorneys fees and litigation costs related to the project in its costs.
6.
No MAV Reduction for Voluntarily Removed Structures.
Chart Development Corporation v. Department of Revenue, ____ OTR ___, No. 4359
(July 15, 2003) (appealed to the Oregon Supreme Court).
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In a decision on remand from the Oregon Supreme Court for further consideration in light
of Flavorland Foods v. Washington County Assessor, 54 P.3d 582 (2002) (discussed in
Significant Tax Law Developments in Oregon, 2001-2002), the Oregon Tax Court has vacated
and remanded its previous decision in this case.
On remand, the Oregon Tax Court conc luded that the maximum assessed value (MAV)
of an Oregon property tax account was not reduced to reflect the removal of structures and
timber from the property because the removal did not constitute a casualty loss, fire or act of
God.
In early 1996, taxpayer purchased land containing timber and some buildings.
Subsequently, prior to July 1, 1997, the taxpayer razed one or more structures and removed a
quantity of timber from the property.
In 1997, Oregon voters passed Ballot Measure 50 which imposed an MAV on each
property and limited tax rates beginning with the 1997-98 tax year. The property at issue was
purchased during July 1, 1995 to July 1, 1997 – an interim period existing between the base year
for Measure 50 calculations and the first tax year in which Measure 50 was legally in force.
During this interim period, ORS 308.428(3) permits reduction of a property’s MAV only when it
is “destroyed or damaged due to fire or act of God.” Accordingly, the Washington County
Assessor adjusted the property’s Real Market Value (RMV) to reflect the removal – but refused
to adjust the MAV for the tax account, even though the property’s value had significantly
decreased prior to the date Measure 50 took effect because the diminution was not caused by
either fire or act of God, but instead as a result of the taxpayer’s own voluntary actions.
As the structures and timber were voluntarily removed (and did not involve fire or an act
of God), the taxpayer was not entitled to a reduction in the MAV. The court also concluded that
the substantial loss in value did not constitute a “casualty,” which could potentially be read into
the constitution as requiring adjustment of the MAV. However, the taxpayer was granted leave
to pursue relief under the constitutional provisio n for taxpayers who remove or retire property
from service or use.
F.
OTHER TAXES.
1.
State Supreme Court Affirms That Tax on Telecast of Boxing Match Violates
First Amendment.
TVKO v. Howland, 335 Or. 527 (July 24, 2003).
Affirming the Oregon Tax Court decision reported on in Significant Tax Law
Developments in Oregon, 2002-2003, the Oregon Supreme Court has concluded that the
unconstitutionality of a tax imposed on the gross receipts of orders received from Oregon
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residents for the pay-per-view cable television broadcast of a boxing match held in New York
City was properly limited to out-of-state boxing events.
The taxpayer asked the Supreme Court to review two ancillary issues: (1) whether the tax
court improperly limited the declaratory relief it awarded the taxpayer and (2) whether the tax
court improperly denied the taxpayer’s motion for attorneys fees and costs.
Narrowness of Lower Court Decision Upheld. Because the taxpayer had never broadcast
a pay-per-view boxing match from Oregon, made plans to do so, or even contemplated doing so,
the Supreme Court concluded it was unnecessary for the tax court to rule on the constitutionality
of the tax as applied to in-state boxing events. “The fact that the plaintiff labeled and argued its
claim as a facial challenge to the statute did not prohibit the tax court from adjudicating only the
more narrow and actual constitutional controversy between the parties.”
Failure to Award Attorneys Fees and Costs Upheld. In upholding the lower court decision
to not award attorneys fees to the taxpayer, while acknowledging that other jurisdictions had
decided similar issues in favor of similarly situated taxpayers, the Court pointed out that those
decisions were not binding precedent. Accordingly, the existence of those decisions did not
establish that state officials acted unreasonably in the face of settled law. Moreover, the Court
noted, state officials “relied – as they were entitled to do – on the advice of the Attorney
General” in this matter. Consequently, the Court concluded that the taxpayer failed to show that
the state’s enforcement of the tax in this instance lacked a reasonable basis in law or fact – and,
consequently, that the tax court did not err when it denied taxpayer’s motion for attorneys fees
and costs.
Additionally, the taxpayer argued the tax court erred by declining to exercise its inherent
equitable authority to award the taxpayer equitable fees and costs because this case “vindicated
important First Amendment rights for all telecasters.” In denying the taxpayer’s claim, the Court
indicated that the taxpayer “has secured for itself a special (and substantial) pecuniary interest
not shared with the general public” and that such “self- interest nullified its claim to equitable
fees and costs.”
2.
Constitutionality of Municipal Corporation “System Development Charge”
Upheld.
Homebuilders Ass’n of Metropolitan Portland v. Tualatin Hills Park and Recreation
District, 185 Or. App. 729 (January 15, 2003).
An Oregon municipal corporation imposed a “system development charge” (SDC), a onetime fee imposed on new developments, the proceeds of which were used to offset financial costs
resulting from growth associated with new developments. The SDC was imposed on property
developers and was calculated by a formula based on the impact a development would have on
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the municipalities infrastructure. A group of Oregon real estate developers and a developer’s
association challenged the SDC. The developers argued that the SDC violated the Oregon
Constitutio n’s takings clause, the takings clause of the U.S. Constitution and substantive due
process under the Fourteenth Amendment of the U.S. Constitution.
The Oregon Court of Appeals determined that the SDC did not violate the Oregon
Constitution’s takings clause because the developers did not and could not allege that
conditioning the development of their real property on the payment of the SDC rendered the
property devoid of all economically viable use.
Similarly, the court concluded that the U.S. Constitution’s takings clause was not violated
because the SDC was a generally applicable development fee imposed on a broad range of
specific, legislatively determined subcategories of property through a scheme that left no
meaningful discretion either in the imposition or in the calculation of the fee.
Finally, the methodology used to create the proposition authorizing the SDC did not
violate the U.S. Constitution’s due process clause because the SDC was related to the
resolution’s stated objective of providing parks and recreational facilities. Moreover, the
developers did not provide any argument, analysis or information indicating that the SDC fee
was unreasonable or arbitrary.
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