The California Court of Appeal, Fourth Appellate District, recently held that school district bond revenues could not be spent on stadium lighting where the bond proposition did not specifically list field lighting as part of the contemplated projects, in accordance with the requirements of Proposition 39. (Taxpayers for Accountable School Bond Spending v. San Diego Unified School Dist. (---Cal.Rptr.3d---, Cal.App. 4 Dist., April 25, 2013).
In July 2008, the San Diego Unified School District (“District”) Board of Education (“Board”) resolved to place a proposition on the November ballot seeking authorization for the District to sell $2.1 billion in bonds for construction and repair for school facilities throughout the District. Among the projects were two related to the stadium at Hoover High School (“Hoover”): one to renovate the bleachers and another to renovate the fields, track, and courts to be accessible to the disabled to comply with requirements of the Americans with Disabilities Act (“ADA”).
A local nonprofit citizens’ group, Taxpayers for Accountable School Bond Spending (“Taxpayers”) sued the District, alleging, among other things that the Hoover project was an illegal misuse of funds. The trial court dismissed the causes of action and Taxpayers appealed.
The Fourth District Court of Appeal reversed the trial court’s decision in part and determined that the District could not use bond proceeds for stadium lighting where that use was not listed in the project list for the bond measure.
Regarding the first cause of action, Taxpayers argued that the Hoover stadium lighting project was an illegal use of bond funds under California Constitution Article XIII A, section 1, subdivision (b)(3), also known as Proposition 39. Proposition 39 allows a school facility ballot measure to be passed with only 55 percent voter approval, rather than a two-thirds majority, provided the measure meets certain accountability requirements. One of the requirements is that the bond funds only be used for projects specifically listed in the bond’s ballot measure.
Taxpayers argued that field lighting was not included in the measure’s project list for Hoover, and so according to Proposition 39, it was not authorized for funding under the District’s bond measure. The appellate court examined the bond measure, which listed 26 projects for Hoover, including the bleacher renovation and the track and field upgrade for ADA compliance. The court noted that stadium lights were not listed in Hoover’s portion of the project list. However, field lighting was listed in a separate, more general section of the measure’s project list. That general section of the list authorized funding for supporting site improvements incidental to and necessary for specifically listed projects. The appellate court concluded that the erection of new stadium lights was not incidental to and necessary for bleacher renovation or the track and field ADA upgrades, and therefore, as Taxpayers argued, bond funding from the measure could not legally be used for the field lighting.
In addition, Taxpayers also challenged the District’s compliance with the California Environmental Quality Act (“CEQA”) arguing that the field lighting would create excessive impacts on neighboring homes as well as in other areas. Although the Court rejected certain of the Taxpayers’ arguments, the Court found there was evidence to support a finding of significant impact on parking and traffic leading the Court to conclude that the District’s mitigated negative declaration was inadequate and in so doing, the Court ordered the preparation of an environmental impact report. We will address the CEQA implications of this case in a separate Legal Alert.
What This Means To You
Although Proposition 39 allows a school bond measure to be passed with 55 percent voter approval, rather than a two-thirds majority, the Proposition contains certain additional accountability requirements that go beyond the requirements of a two-thirds majority bond measure. These requirements include “a list of the specific school facilities projects to be funded.” In this case, the Court of Appeal held that the District could not spend bond proceeds on a project that was not specifically listed in the District’s bond project list. Although the District articulated using the proceeds to “renovate/replace stadium bleachers” and “upgrade fields…for accessibility compliance,” it did not make clear its intention to also use the funds for improving lighting at the stadium for such upgrades and therefore could not use bond proceeds for this purpose. With respect to CEQA, this decision also highlights the importance of careful compliance in the area of project analysis, particularly for projects such as stadium renovation, that have the potential to significantly impact areas adjacent to a school.
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P. Addison Covert, Stacy L. Toledo or Meghan Covert Russell | 916.321.4500