Judge James C. Chalfant, Case Number: 23STCP01475, Date: 2024-03-07 Tentative Ruling

Respondents City of Los Angeles (“City”), Los Angeles City Council (“City Council”), Los Angeles City Planning Department (“Planning”), Planning Director Vince Bertoni (“Bertoni”), Los Angeles Department of Building and Safety (“LADBS”), and LADBS General Manager Osama Younan (“Younan”) (collectively, “City”) demur to all five causes of action of the First Amended Petition (“FAP”) filed by Petitioner 737-747 N Western Opportunity Owner LLC (“NWOO”).

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

Petitioner NWOO filed the Petition on May 4, 2023. The operative pleading is the FAP, filed on November 15, 2023, against City, the Los Angeles County Assessor’s Office (“Assessor”), and Jeff Prang in his capacity as Assessor (“Prang”), naming Neutra Jardinette on Marathon QOZ, LLC (“Neutra”) as Real Party-in-Interest. The FAP alleges claims for mandamus based on a historical property contract, relief under CCP section 526a, mandamus based on California Constitution art.[1] XIII sections 1 and 8, and two counts of declaratory relief. The FAP alleges in pertinent part as follows.

NWOO owns real property directly across an alley from the Jardinette Apartments at 5128 W. Marathon St., Los Angeles, CA (“Jardinette Property”). FAP, ¶10. NWOO has paid taxes on real estate in the City within a year of filing this action. FAP, ¶10.

The unlawful conduct at issue pertains in part to the Jardinette Property, the historical property contract that the Jardinette Property owner and the City entered into on December 16, 2017 (“Jardinette Contract”), and the City’s failure to comply with the California Constitution and state and local laws. FAP, ¶2.

Richard J. Neutra (“Neutra”) and Rudolph M. Schindler (“Schindler”) designed and built the four-story Jardinette Property in 1928. FAP, ¶22. It has long been recognized for its outstanding design and historical significance. FAP, ¶22. In 1986, the Jardinette Property was listed on the National Register of Historic Places. FAP, ¶23. In 1988, the City designated the Jardinette Property as Historic-Cultural Monument No. 390. FAP, ¶23.

The Mills Act allows local governments to enter into contracts with owners of qualified historical properties who actively participate in the restoration and maintenance of their historical properties and receive property tax relief. FAP, ¶25. In 1996, the City adopted its Mills Act Historical Property Program (“Mills Act Program” or “Program”), Los Angeles Administrative Code (“LAAC”) sections 19.140, et seq. FAP, ¶26. LAAC section 19.140 allows the City Council to contract with an owner or agent of the owner of any qualified historical property, as defined in the Mills Act, provided the contract meets the requirements of sections 50281 and 50282. FAP, ¶26. Pursuant to Article 1.9 of the California Revenue and Taxation Code (“R&T Code”), the County Assessor may reassess historical properties that are so “restricted” in a way that may lower their property taxes. FAP, ¶26.

In 2017, then Jardinette Property owner CIP Jardinette Holding, LLC (“CIP”) applied to the City for a reduction in property taxes under the Mills Act and the LAAC. FAP, ¶27. The application included a May 15, 2017 Historic Structure Report identifying the Jardinette Property as an International Style multi-family dwelling designed by Neutra and Schindler in 1928. FAP, ¶29.

On July 11, 2017, Chattel Inc. (“Chattel”), a historic preservation consultant under contract with the City, reviewed the owner’s application and conducted an onsite inspection. FAP, ¶31. On August 17, the City’s Cultural Heritage Commission (“CHC”) recommended approval of the application, and the City Council did so. FAP, ¶¶ 32-33.

On December 16, 2017, CIP and the City entered into the Jardinette Contract. FAP, ¶34, Ex. 1. The Jardinette Contract declared the Jardinette Property as a Historic Cultural Monument. FAP, ¶34, Ex. 1. It required maintenance of the Jardinette Property in a “superior manner” without dilapidated buildings, walls, or windows. FAP, ¶35, Ex. 1. CIP also was required to restore and rehabilitate the Jardinette Property according to the Jardinette Contract’s restoration plan (“Plan”). FAP, ¶34, Ex. 1. The Plan included renovation of the electrical, plumbing, window repair and replacement, seismic work, interior walls, roofing, flooring, doors, interior and exterior surfaces, hardscape, landscape, bathrooms, kitchens, lobby and fire escapes. FAP, ¶34, Ex. 1. The proposed completion year for each project was either 2018 or 2022. FAP, ¶34, Ex. 1.

Pursuant to the Jardinette Contract, the Assessor specially assessed the Jardinette Property and awarded the owner significant annual reduction in property taxes. FAP, ¶36. The Jardinette Property owner breached the Jardinette Contract in multiple ways, and the City had notice of this breach. FAP, ¶37. The owner failed to perform work in accordance with the Secretary of Interior Standards, maintain the Jardinette Property in superior condition, rehabilitate the Jardinette Property according to the Plan, meet the 2018 rehabilitation for such rehabilitation, and maintain the Jardinette Property’s historic character. FAP, ¶40.

On October 11, 2022, the City Council approved a motion noting that the Jardinette Property had significantly deteriorated and had active code enforcement for unpermitted construction work. FAP, ¶41, Ex. 2. A bolded statement in the City Council’s’ motion stated that the failure of a Mills Act property owner to preserve, rehabilitate and maintain the historical property is both a violation of the contract and a misappropriation of property tax dollars that could be allocated to greater community purposes. FAP, ¶41, Ex. 2. The motion directed Planning and LADBS to prepare a report in 30 days with recommendations about the Jardinette Property’s existing condition, whether it was meeting the obligations of the Jardinette Contract, and what enforcement or termination actions the City should take. FAP, ¶¶ 42-43, Ex. 2.

On October 14, 2022, NWOO sent LADBS photographs showing the Jardinette Property had fallen into great disrepair in breach of the Jardinette Contract’s provisions. FAP, ¶44, Ex. 3. The City failed and refused to address the Jardinette Property’s disrepair and violations of the Jardinette Contract. FAP, ¶45. On November 1, NWOO reiterated that its prior photographs showed that any work proceeding on the Jardinette Property was not conducted in accordance with the Jardinette Contract or applicable law. FAP, ¶46.

On February 9, 2023, NWOO served California Public Records Act (“CPRA”) requests on Planning, LADBS, the City Attorney and Los Angeles Police Department for records pertaining to the City Council’s October 2022 motion. FAP, ¶47. None of the produced documents suggests that the City took any action in compliance with the motion. FAP, ¶48. The City staff completely ignored the City Council’s action. FAP, ¶¶ 48-49.

Five years have passed since the City entered into the Jardinette Contract. FAP, ¶87. The City has failed to inspect the Jardinette Property to ensure compliance, as required by sections 50281 and 50282. FAP, ¶88.

This case also concerns the City’s general violations of Mills Act historical properties throughout the City. FAP, ¶2. The City has a longstanding policy and practice of ignoring requirements of the Mills Act, Government Code[2] section 50280 et seq., including the requirement that it conduct certain inspections. FAP, ¶4.

In 2020, the City engaged Chattel to review the Mills Act Program. FAP, ¶51. In June 2022, the City released a report titled “Mills Act Program Assessment and Equity Analysis” (“Mills Report”). FAP, ¶51. The Mills Report concluded that the Program fails to meet state law inspection requirements. FAP, ¶52. State law requires compliance inspections every five years for each property, yet the City completes 25% of the required inspections annually. FAP, ¶¶ 53, 110. Only two City staff members administer the 948 properties in the Program on a part-time basis. FAP, ¶52.

Based on the Mills Report, NWOO believes the City has a policy and practice to ignore or violate Mills Act inspection and other requirements. FAP, ¶54. It has demonstrated a pattern and practice that constitutes an overarching, quasi-legislative policy in that refuses to comply with mandatory duties under the Mills Act and other applicable laws. FAP, ¶54. It has a mandatory duty under section 50284 to cancel or enforce Historic Property contracts where the City Council determines the owner has breached any condition of the contract but has failed to do so. FAP, ¶110.

The City’s failure to comply with the Mills Act has bestowed onto Neutra and other owners of other historical properties illegal and wrongful tax reductions that have harmed, and will continue to harm, the public. FAP, ¶55. These violations of art. XIII, sections 1 and 8, the Mills Act, and LAAC sections 19.140 et seq., are a waste of, or a form of injury to, public funds. FAP., ¶¶ 100, 112.

For the Jardinette Property, NWOO seeks a writ of mandate, and declaratory relief, compelling the City to (1) inspect the Jardinette Property’s interior and exterior to determine Jardinette Contract compliance, (2) cause preparation of a written report of the results of the inspection with compliance determinations for all conditions in the Jardinette Contract; and (3) either cancel the Jardinette Contract or bring legal action to enforce it upon a determination of non-compliance. FAP ¶79, Prayer, ¶¶ 1, 3.

NWOO also seeks injunctive relief under CCP section 526a (1) prohibiting the assessment of the Jardinette Property for taxation at a reduced rate, (2) compelling the City to restore the non-Mills Act taxation rate, and (3) compelling the recovery and disgorgement of all improperly reduced taxes on the Jardinette Property and related penalties. FAP Prayer, ¶2.

NWOO further seeks a writ of mandate and declaration compelling the City to comply with art. XIII, section 8 and the Mills Act with respect to all historical properties and its obligation under historical property contracts to inspect them every five years to determine and compel compliance. FAP ¶80, Prayer, ¶¶ 4-5. The declaration should state that (a) under art. XIII, sections 1 and 8 and the Mills Act, the City can only tax historical properties at a lower rate when the property is “enforceably restricted” and (b) its current policy violates duties under the Mills Act, art. XIII, sections 1 and 8, and art. XI, section 7. FAP Prayer, ¶5.

On November 15, 2023, NWOO filed and served the FAP on all Respondents and Neutra. Also on November 15, 2023, NWOO dismissed the FAP against the Assessor and Prang.

Unless otherwise provided by the California Constitution or federal law, all property is taxable and shall be assessed at the same percentage of fair market value. art. XIII, §1(a). To promote the preservation of property of historical significance, the California Constitution authorizes the Legislature to define such property and provide that, when the land is enforceably restricted in a manner specified by the Legislture to a specified use, it shall be valued for property tax purposes only on a basis that is consistent with its restrictions and uses. art. XIII, §8.

The R&T Code defines “enforceably restricted” for purposes of art. XIII, section 8 as property that is subject to a historical property contract executed pursuant to the Mills Act. R&T Code §439. Similarly, “restricted historical property” refers to property defined as qualified historical property under the Mills Act that is subject to a historical property contract. R&T Code §439.1. No property shall be valued pursuant to R&T Code section 439 et seq. unless such an enforceable restriction is signed, accepted, and recorded on or before the lien date for the fiscal year in which the valuation would apply. R&T Code §439.4.

“Qualified historical property” is privately owned property which is not exempt from property taxation and is either (a) listed in the National Register of Historic Places or located in a registered historic district, or (b) listed in any state, city, county, or city and county official register of historical or architecturally significant sites, places, or landmarks. §50280.1. Upon an owner or agent’s application, the legislative body of a city, county, or city and county may contract with the owner or agent to restrict the use of the property in a manner which the legislative body deems reasonable to carry out the purposes of the Mills Act and R&T Code section 439 et seq. §50280. The contract shall meet the requirements of sections 50281 and 50282. §50280.

Where applicable, the contract with the owner of qualified historical property shall provide for (1) preservation of the property and its restoration or rehabilitation, where necessary, to conform to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, the United States Secretary of the Interior’s Standards for Rehabilitation, and the State Historical Building Code; and (2) inspection of the interior and exterior of the premises by the city, county, or city and county, prior to a new agreement, and every five years thereafter, to determine the owner’s compliance with the contract. §50281(b).

The term of the contract shall be for a minimum of ten years. §50281(a). Each contract shall provide that a year shall be automatically added on the anniversary date of the contract, or on such other date specified in the contract, unless notice of non-renewal is given. Each contract shall provide that after five years, and every five years thereafter, the city, county, or city and county shall inspect the interior and exterior of the premises to determine the owner’s continued compliance with the contract. §50282(a).

If the legislative body determines that the owner has breached any of the conditions of the contract or has allowed the property to deteriorate to the point that it no longer meets the standards for a qualified historical property, the legislative body shall either (a) cancel the contract via the procedures in sections 50285 and 50286 or (b) bring any action in court necessary to enforce a contract, including an action for specific performance or an injunction. §50284. No contract shall be cancelled until the legislative body has given notice of, and held, a public hearing. §50285. If the contract is cancelled, the owner shall pay a cancellation fee equal to 12 ½ % of the current fair market value of the property. §50286.

As an alternative to cancellation of the contract, a landowner that is a party thereto may bring any action in court necessary to enforce a contract, including by specific performance or injunction. §50287.

Demurrers are permitted in administrative mandate proceedings. CCP §§1108, 1109. A demurrer tests the legal sufficiency of the pleading alone and will be sustained where the pleading is defective on its face.

Where pleadings are defective, a party may raise the defect by way of a demurrer or motion to strike or by motion for judgment on the pleadings. CCP §430.30(a); Coyne v. Krempels, (1950) 36 Cal.2d 257. The party against whom a complaint or cross-complaint has been filed may object by demurrer or answer to the pleading. CCP §430.10. A demurrer is timely filed within the 30-day period after service of the complaint. CCP §430.40; Skrbina v. Fleming Companies, (1996) 45 Cal.App.4th 1353, 1364.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain; (g) In an action founded on a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP sections 411.35 or 411.36. CCP §430.10.

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. CCP §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318. The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94), but it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. Garcetti v. Superior Court, (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339. The question of plaintiff’s ability to prove the allegations of the complaint or the possible difficulty in making such proof does not concern the reviewing court. Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26, 47.

The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403. This rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, (“Vance”) (1995) 36 Cal.App.4th 698, 709.

For all demurrers filed after January 1, 2016, the demurring party must meet and confer in person or by telephone with the party who filed the pleading for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. CCP §430.31(a). As part of the meet and confer process, the demurring party must identify all of the specific causes of action that it believes are subject to demurrer and provide legal support for the claimed deficiencies. CCP §430.31(a)(1). The party who filed the pleading must in turn provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency. Id. The demurring party is responsible for filing and serving a declaration that the meet and confer requirement has been met. CCP §430.31(a)(3).

“[A] demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” State ex rel. Metz v. CCC Information Services, Inc., (2007) 149 Cal.App.4th 402, 413.

If a demurrer is sustained, the court may grant leave to amend the pleading upon any terms as may be just and shall fix the time within which the amendment or amended pleading shall be filed. CCP §472a(c). However, in response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. CCP §430.41(e)(1).

The 1972 version of section 50284 only allowed a legislative body to cancel a contract if it determined the Mills Act property owner breached any of the conditions of the contract or allowed the property to deteriorate to the point that it no longer met the standards for a qualified historical property. RJN Ex. E. The 2012 version allows the legislative body to either cancel the contract per sections 50285 and 50286 or bring any action in court needed to enforce it. RJN Ex. C.

The 1972 version of section 50287 allowed “the county, city, or any landowner” to bring any action in court necessary to enforce the contract. RJN Ex. F. The 2012 version only allowed “a landowner that is a party to the contract” to bring such an action. RJN Ex. D.

On December 4, 2023, the City sent NWOO a letter stating the reasons why City would demur to the FAP. Kaiulani Decl., ¶4, Ex. I. The parties met and conferred via telephone on December 8, 2023, but could not reach an agreement. Kaiulani Decl., ¶¶ 4, 6. The City has fulfilled its meet and confer requirement.

Respondent City demurs to the FAP on the basis that (1) a landowner not a party to a Mills Act contract cannot bring an action to compel its enforcement, (2) the City has no ministerial duty regarding the Mills Act Program, (3) mandamus to control Mills Act Program expenditures violates the separation of powers doctrine, and (4) any causes of action concerning the Jardinette Property are moot.

NWOO explains that the FAP’s first and fourth causes of action respectively seek traditional mandamus for the City’s failure to comply with art. XIII, section 8 and the Mills Act for the Jardinette Property and as a pattern and practice for 950 historic properties receiving tax breaks. The second cause of action is a taxpayer suit under CCP section 526a based on the City’s failure to ensure that the public is not deprived of full tax collections and historic preservation obligations by the owners of the Jardinette Property. The third and fifth causes of action respectively seek declaratory judgment and injunction on the ground that the City has violated, and will continue to violate, the Mills Act for the Jardinette Property and approximately 950 historic properties receiving tax breaks.

The City argues NWOO has no standing under the Mills Act to compel the City’s compliance with the Jardinette Contract. The FAP identifies NWOO as the owner of property across an alley from the Jardinette Property. FAP, ¶10. NWOO does not and cannot assert that it owns the Jardinette Property or is a party to the Jardinette Contract. Mot. at 13-15.

The Mills Act provides that, if a legislative body determines that the owner of qualified historical property has breached any of the conditions of the contract or has allowed the property to deteriorate to the point that it no longer meets the standards for a qualified historical property, the legislative body shall either (a) cancel the contract via the procedures in sections 50285 and 50286 or (b) bring any action in court necessary to enforce a contract, including an action for specific performance or an injunction. §50284. As an alternative to cancellation of the contract, a landowner that is a party thereto may bring any action in court necessary to enforce a contract, including by specific performance or injunction. §50287.

A ministerial duty is one a public officer is required to perform in a prescribed manner in obedience to the mandate of legal authority and without regard to his own judgment or opinion concerning such act's propriety or impropriety, when a given state of facts exists. Lockyer v. City and Cnty. of San Francisco, (2004), 33 Cal. 4th 1055, 1082. Ellena v. Department of Insurance, (2014) 230 Cal.App.4th 198, 205. It is “essentially automatic based on whether certain fixed standards and objective measures have been met.” Sustainability of Parks, Recycling & Wildlife Legal Defense Fund v. County of Solano Dept. of Resource Mgmt., (2008) 167 Cal.App.4th 1350, 1359. In contrast, a discretionary act involves the exercise of judgment by a public officer. County of Los Angeles v. City of Los Angeles, (2013) 214 Cal.App.4th 643, 653-54. Whether a statute imposes a ministerial duty for which mandamus is available, or a mere obligation to perform a discretionary function, is a question of statutory interpretation. AIDS Healthcare Foundation v. Los Angeles County Dept. of Public Health, (2011) 197 Cal.App.4th 693, 701.

Mandamus will not lie to compel the exercise of a public agency’s discretion in a particular manner.¿ American Federation of State, County and Municipal Employees v. Metropolitan Water District of Southern California, (“AFSCME”) (2005) 126 Cal.App.4th 247, 261.¿ However, it is available to compel an agency to exercise discretion where it has not done so (Los Angeles County Employees Assn. v. County of Los Angeles, (1973) 33 Cal.App.3d 1, 8), and to correct an abuse of discretion actually exercised.¿ Manjares v. Newton, (1966) 64 Cal.2d 365, 370-71.¿ In making this determination, the court may not substitute its judgment for that of the agency, whose decision must be upheld if reasonable minds may disagree as to its wisdom.¿ Id. at 371.¿ A writ will lie where the agency’s discretion can be exercised only in one way.¿ Hurtado v. Superior Court, (1974) 11 Cal.3d 574, 579.¿ Courts exercise limited review out of deference to the constitutional separation of powers, the presumed expertise of executive agencies acting within the scope of their authority, and the presumption that agencies have complied with their official duties. Schwartz v. Poizner, (2010) 187 Cal.App.4^th 592, 598. The court should also presume that officials have complied with official duties in conducting any investigation. Evid. Code §664. Id.

According to the City, it does not have a duty to enforce a Mills Act contract upon the insistence of NWOO, which is a third-party landowner, or to operate under the schedule NWOO elects. The City argues that its duties under the Mills Act are discretionary, not ministerial. The enforcement provisions only apply after the City has determined that a Mills Act contract has been breached or that the owner has allowed the property to deteriorate so that it no longer qualifies as an historical property. Once this determination is made, the City has the discretion to either cancel the contract or bring an enforcement action against the property owner. Given that the City must schedule the inspection of Mills Act properties, and those inspections will differ depending on the nature of the property, the City further has discretion in the scheduling and handling of those inspections. The timing of the City’s enforcement of Mills Act contracts is a non-justiciable issue and “[a] citizen’s mere dissatisfaction with the performance of either the legislative or executive branches, or disagreement with their policies does not constitute a justiciable controversy.” Zetterberg v. State Dept. of Public Health, (1974) 43 Cal.App.3d 66576, 662-65 (taxpayer could not challenge Department of Public Health’s and CARB’s failure to address air pollution). Dem. at 16, 18; Reply at 5.

The City points out that section 50284 permits it to take action when it determines that a property owner is in breach of its Mills Act contract or the Mills Act property has deteriorated to the point that it no longer meets the standards for an historical property. Section 50287 permits an enforcement action by a landowner that is a party to a Mills Act contract, but it does not permit a third-party landowner to take action. Dem. at 14.

The inability of a third-party landowner such as NWOO to file an enforcement action for a Mills Act contract is underscored by the legislative history of sections 50284 and 50287. The 1972 version of section 50284 did not allow a legislative body to bring enforcement actions. A legislative body could only cancel a contract if it determined that the Mills Act property owner breached any of the conditions of the contract or allowed the property to deteriorate to the point that it no longer met the standards for a qualified historical property. RJN Ex. E. The 1972 version of section 50287 allowed “the county, city, or any landowner” to bring any action in court necessary to enforce the contract. RJN Ex. F.

The 2012 version of section 50284 allows a legislative body to either cancel the contract per sections 50285 and 50286 or bring any action needed to enforce it. RJN Ex. C. The 2012 version deleted authorization for any landowner to bring an action and only allows “a landowner that is a party to the contract” to bring an action to enforce the contract. RJN Ex. D. See People v. Tingcungo, (2015) 237 Cal.App.4th 249, 256 (deletion of text in statutory amendment means that statute “should not be construed to include the omitted portion”).

The City concludes, and the court agrees, that the language of the Mills Act, as shown by its legislative history, does not permit a third-party landowner such as NWOO to file a lawsuit to enforce a Mills Act contract. Dem. at 15.

NWOO argues that the FAP does not seek to enforce Mills Act contracts. Rather, it seeks to compel the City to comply with its obligation to perform the mandatory five-year inspection of Mills Act properties required by both art. XIII, section 8 and the Mills Act. Opp. at 13-14.

The FAP alleges that, when the City engaged Chattel to review the Mills Act Program, its report concluded the Program fails to meet state law inspection requirements. FAP, ¶¶ 50-52. Only two City staff members administer the program on a part-time basis for 948 properties. FAP, ¶52. State law requires compliance inspections every five years for each property, yet the City completes only 25% of the required inspections annually. FAP, ¶¶ 53, 110. NWOO asserts that this failure will continue without mandamus or declaratory relief. Opp. at 15-16.

Unless otherwise provided by the California Constitution or federal law, all property is taxable and shall be assessed at the same percentage of fair market value. art. XIII, §1(a). To promote the preservation of property of historical significance, the California Constitution authorizes the Legislature to define such property and provide that, when the land is enforceably restricted in a manner specified by the Legislature to a specified use, it shall be valued for property tax purposes only on a basis that is consistent with its restrictions and uses. art. XIII, §8. The R&T Code defines “enforceably restricted” for purposes of art. XIII, section 8 as property that is subject to a historical property contract executed pursuant to the Mills Act. R&T Code §439.

NWOO notes that the Mills Act was passed in 1972 but was declared unconstitutional because it violated art. XIII, section 1(a). In 1976, the voters passed Prop. 7, now art. XIII, section 8, which amended the Constitution and permitted the Legislature to define property of historical significance. Prop. 7 stated that, when property is enforceably restricted in a manner specified by the Legislature, it shall be valued for property tax purposes on a basis consistent with its restrictions and uses. Prop. 7 permitted the Mills Act to become law and it includes Prop. 7’s “enforceably restricted” standards in sections 50280 and 50281. Opp. at 9.

NWOO argues that the reduced property taxes for Mills Act properties are authorized only through the art. III, section 8 exception to the general requirement of art. XIII, section 1(a) that all property shall be assessed at the same percentage of fair market value. The Mills Act requires the City to inspect the subject historic properties at least every five years to determine the owner’s compliance with the Mills Act, and then authorizes discretionary enforcement under section 50284. The property tax reduction benefit in the Mills Act is only available for properties restored and maintained as required by art. XIII, section 8 and the Mills Act. Opp. at 14.

The City’s refusal to conduct inspections for 75% of Mills Act properties and refusal to enforce or cancel Mills Act contracts violates art. XIII, section 8 and the Mills Act. While courts generally accord administrative agency boards and officers with discretion, such boards and officers may not refuse to act, or act with unfettered discretion and mandamus may issue to compel the exercise of discretion and to do so under a proper interpretation of law. California Assn. of Sanitation Agencies v. State Water Control Board, (2012) 208 Cal.App.4th 1438, 1461-62. Similarly, declaratory relief is available to challenge an administrative agency’s policy of ignoring or violating applicable laws and regulations. Californians for Native Salmon etc. Assn. v. Department of Forestry, (1990) 221 Cal.App.3d 1419, 1426-30. Opp. at 15-16.

NWOO acknowledges that no appellate case interprets the relationship between art. XIII, section 8 and the Mills Act. NWOO relies on Lewis v. City of Hayward, (“Lewis”) (1986) 177 Cal.App.3d 103, where the court interpreted the constitutionality under art. XIII, section 8 of a provision of the Williamson Act, which permits a legislative body to enter into a contract with a landowner restricting the use of property to agriculture. Id. at 107. The provision at issue authorized the landowner a one-time opportunity to cancel the contract. Id. The petitioner argued that the so-called “window provision” permitted easy cancellation of the Williamson Act contract and rendered its restrictions illusory under art. XIII, section 8. Id. The trial court found that the window provision did not facially conflict with art. XIII, section 8 because the Legislature has the exclusive power to determine the manner of an enforceable restriction. Id.

The appellate court disagreed, holding that the window provision violated the “enforceable restrictions” requirement of art. XIII, section 8. The Constitution does not authorize the Legislature to define the term “enforceable restrictions” and, even if it did, art. XIII, section 8 does not permit a definition which renders such restrictions ineffective for land conservation purposes. Id. at 113. “To pass constitutional muster, a restriction must be enforceable in the face of imminent urban development, and may not be terminable merely because such development is desirable or profitable to the landowner.” Ibid. Because the provision at issue allowed termination of a Williamson Act contract merely because development is imminent -- and the land now will be more valuable -- without concern for the public’s interest in the policies underlying art. XIII, section 8 and the Williamson Act, it was unconstitutional. Id.

Based on Lewis, NWOO argues that the City’s inspections under section 50281 and 50282 are constitutionally required to assure that historic property is rehabilitated, restored, and maintained as promised for the public benefit. MWOO further argues that enforcement of a Mills Act contract is not a matter of legislative discretion; it is mandatory and must be determined with concern for the public’s interest in the policies underlying art. XIII, section and the Mills Act. See Lewis, supra, 177 Cal.App.3d at 113. Opp. at 15.

In response, the City argues that, unlike Lewis, this case does not involve art. XIII, section 8. Reply at 4. The City is incorrect. The FAP asserts that the City has allowed property owners to benefit from illegal and wrongful tax reductions,[4] which has harmed and will continue to harm the general public. FAP, ¶55. The requested relief includes a writ of mandate and declaration compelling the City to comply with art. XIII, section 8 and the Mills Act with respect to all historical properties. FAP ¶80, Prayer, ¶¶ 4-5.

The City then argues that the Mills Act inspection requirement is discretionary. Section 50281(b) provides only that “[w]here applicable” a Mills Act contract shall provide for (1) preservation of the property and its restoration or rehabilitation, and (2) inspection of the interior and exterior of the premises by the city every five years to determine the owner’s compliance with the contract. The City argues that the “where applicable” language in section 50281(b) gives it the discretion whether to include an inspection provision in a Mills Act contract. This means that the City has discretion for the extent, type, and schedule of Mills Act contract inspections. This makes sense because different historical properties – e.g., single family, multi-family, commercial, exterior only – may be the subject of an historical property contract and the City needs flexibility to tailor inspections and schedules. Dem. at 18; Reply at 5.

NWOO properly rebuts this argument. Opp. at 9, n. 1. Section 50281(b)’s “where applicable” language does not give the City discretion to decide if a five-year inspection is required. This is demonstrated by section 50282(a), which unconditionally provides: “Each contract shall also provide that after five years, and every five years thereafter, the city, county, or city and county shall inspect the interior and exterior of the premises to determine the owner’s continued compliance with the contract.” §50282(a). The “where applicable” language in section 50281(a) more appropriately should be interpreted as a condition precedent – that is, it refers to the situation where the property owner has met the threshold requirement of qualified historical property.

The City further argues that mandamus is not available to compel an agency’s means and timing of enforcement. Riggs v. City of Oxnard, (1984) 154 Cal.App.3d 526, 530 (city was not compelled too issue criminal citation for violation of zoning ordinance). The City argues that the word “shall” in section 50281(b)’s reference to five-year inspections does not make performance of a discretionary act mandatory. See California Assn. for Health Services at Home v. State Dept. of Health Services, (“Health Services”) (2007) 148 Cal.App.4th 696, 708 (where law stated that agency shall perform annual review of rates to ensure compliance with federal regulation, annual review was mandatory but compliance with federal regulation was not); Larson v. Redondo Beach, (1972) 27 Cal.App.3d 332, 337-38 (demurrer sustained where language in ordinances and leases did not mandate fair and reasonable boat slip rate). The City adds that its enforcement discretion under the Mills Act to impose or schedule inspections, as well as enforce the contract terms and elect remedies, is analogous to a city’s discretionary nuisance abatement authority that cannot be compelled by a private party’s mandamus action. Taliaferro v. Locke, (1960) 182 Cal.App.2d 752, 755-56, 757 (mandamus does not lie for matters of investigation and prosecution by district attorney). Dem. at 18-20.

The City distinguishes Lewis because it did not address a statute where the legislature intended to exclude a third-party landowner from enforcing a public agency contract. Moreover, the cancellation provision in Lewis directly contradicted the Williamson Act purpose to preserve open and agricultural spaces. Reply at 4.

The court agrees with the City. The City has a mandatory duty pursuant to Mills Act sections 50281(b) and 50282(a) to inspect the interior and exterior of a Mills Act property to determine the owner’s compliance with the contract.” This mandatory inspection duty is distinguishable from the City’s discretionary duties of determining that a Mills Act contract has been breached or that the owner has allowed the property to deteriorate so that it no longer qualifies as an historical property and deciding to either cancel the contract or bring an enforcement action against the property owner. The City also has discretion to schedule the timing of inspections so long as they occur every five years. This split between mandatory and discretionary statutory duties occurred in a case cited by the City, See Health Services, supra, 148 Cal.App.4th at 708, where an annual review was ministerial because it was statutorily mandated but compliance with the operative federal regulation was not.

Despite its ministerial nature, the City’s duty to perform mandatory inspections is not enforceable by a third party. Unlike Lewis, the City’s failure to inspect every five years does not directly contradict the purpose of art. XIII, section 8 and the Mills Act. Rather, any failure to inspect is a failure of contract and statutorily required performance, not a failure of the art. XIII, section 8 and Mills Act purpose that property be enforceably restricted. The Mills Act Program properties remain enforceably restricted whether or not the City complies with its inspection duty. Additionally, the City is correct that the Mills Act precludes a third party from enforcing Mills Act contracts.[5]

The City’s breach of its mandatory duty to inspect every five years is not enforceable by third parties under the Mills Act.

NWOO argues that the 2012 amendment to the Mills Act did not affect established rights to challenge illegal government actions through mandamus or taxpayer suit. Opp. at 13.

NWOO cites Common Cause v. Board of Supervisors (“Common Cause”), (1989) 49 Cal.3d 432, 439, in which the petitioners asserted taxpayer standing under CCP section 526a. The California Supreme Court found no need to assess taxpayer standing because there was a public interest exception for a mandamus claim to the general requirement that a petitioner have a personal beneficial interest in the proceeding. Id. at 439. When the question is one of public right, and the object of the mandamus is to procure the enforcement of a public duty, the relator need not show that he has any legal or special interest in the result. Id.

In Common Cause, the county cited the language of Elections Code section 304, which at the time directed Secretary of State to formulate regulations requiring counties to develop and implement voter outreach programs. Id. at 440. The Supreme Court found this statute did not limit the right of private citizens to sue to enforce the section. Id. To infer that limitation would contradict longstanding approval of citizen actions to require governmental officials to follow the law. Id. This approval was reflected in both the court’s expansive interpretation of taxpayer standing and the public interest exception to the requirement that a mandamus petitioner have a personal beneficial interest in the proceedings. Id. In the absence of an express limitation on citizen standing or indication of legislative intent to confer exclusive powers on the Attorney General, the Supreme Court declined to impose such a limitation on citizen actions to enforce Elections Code 302. Id.

As the City notes (Reply at 3-4), Common Cause does not significantly aid NWOO. Unlike that case, the 2012 amendments to the Mills Act are an indication of legislative intent that only a landowner who is a party to the Mills Act contract -- not any landowner -- to bring an action to enforce the contract. This change in statutory language reflects a legislative intent to bar landowners who are not a party to the Mills Act contract from bringing an enforcement action. Reply at 3-4. Public interest standing is not available in light of the express limitations of section 50287, as amended.[6]

If public interest standing could apply, its elements are: (1) whether the public duty is sharp and the public need weighty, (2) whether the policy supporting public interest standing is outweighed by competing considerations of a more urgent nature, and (3) whether the claim of public interest standing is driven by personal objectives rather than broad public concerns. SJJC Aviation Services, LLC v. City of San Jose, (“SJJC Aviation”) (2017) 12 Cal.App.5th 1043, 1058.

NWOO argues that the public interest at issue is taxes and preservation of historic property (i.e., public fisc and the environment). There is a constitutional mandate in art. XIII, section 8 to enforceably restrict the special tax exemption in the Mills Act. The Chattel report shows that the City has failed to conduct 75% of the required inspections of the approximately 950 historic properties with special tax benefits. The Jardinette Property is an example of the results of this failure. It is in deplorable condition and the owners have reaped tax benefits while the public has suffered the loss. Millions of dollars of property taxes have gone uncollected due to the City’s failures. NWOO concludes that the public duty is sharp and the public need is weighty. Opp. at 17.

The court agrees that the public interest is the City’s fair and equitable collection of property tax revenue. However, the duty involved is the City’s duty to inspect Mills Act properties every five years. The court does not agree that this public duty is sharp or the public need weighty. Public interest standing is an exception to the usual requirement that the petitioner have a beneficial interest in the agency action that is challenged. SJJC Aviation, supra, 12 Cal.App.5th at 1057. Reply at 4. The City’s inspection duty is only a precursor to its discretionary enforcement duties. The performance of this ministerial duty benefits no member of the public unless the City exercises that discretion. As a result, the public duty to inspect is not sharp and the public need for inspection is not weighty.

For the second factor, NWOO argues that the public policy is set forth in art. XIII, section 8 and is not outweighed by any competing policy. There is no policy allowing the City to provide tax breaks in violation of the Constitution and Mills Act. Opp. at 17. The court agrees.

For the third factor, NWOO owns the property directly across the alley and pays property taxes. FAP, ¶10. NWOO argues that its objective of rehabilitation of historic properties and fair taxation is shared by the interests of the public. Opp. at 17. Where the claim of public interest standing is driven by personal objectives rather than broad public concerns, the court may find the petitioner lacks such standing. SJJC Aviation, supra, 12 Cal.App.5th at 1057. NWOO’s personal stake in seeing the Jardinette Property rehabilitated is a personal objective that undermines its claim of public interest standing.

CCP section 526a provides as relevant: “An action to obtain a judgment, restraining and preventing any illegal expenditure of, waste of, or injury to, the estate, funds, or other property of a county, town, city or city and county of the state, may be maintained against any officer thereof, or any agent, or other person, acting in its behalf, either by a citizen resident therein, or by a corporation, who is assessed for and is liable to pay, or, within one year before the commencement of the action, has paid, a tax therein.”

A taxpayer may bring an action under CCP section 526a by establishing that (1) he or she is a taxpayer and (2) either an illegal expenditure or waste within the meaning of this section has occurred. Tobe v. City of Santa Ana, 1995) 9 Cal.4^th 1069, 1086; Connerly v. State Personnel Bd., (2001) 92 Cal.App.4^th 16, 29. “It is established that an action lies under section 526a not only to enjoin wasteful expenditures, but also to enforce the government’s duty to collect funds due to the State.” Myers v. Board of Equalization, (2015) 240 Cal.App.4th 722, 744 (mandamus to compel State to assess and collect tax on gross premiums received by two health insurance entities).

NWOO contends that it seeks to enforce the City’s mandatory duty to timely inspect and identify non-compliant Mills Act contract properties so that it can correct illegal tax benefits. This is distinct from the City’s separation of powers argument that the City has committed waste because it has not expended the resources to make Mills Act enforcement decisions. This case is not about how to spend money to inspect Mills Act properties; it is about a mandatory duty. Opp. at 21.

The problem with NWOO’s argument is that the City’s only mandatory duty is to inspect. As the City argues (Dem. at 20-22; Reply at 6), the crux of NWOO’s claim is that the City has not made the prerequisite five-year inspections for enforcement of Mills Act contracts and recapture of taxes improperly received. A claim of waste under CCP section 526a requires more than “an alleged mistake of public officials in matters involving the exercise of judgment or wide discretion.” Sundance v. Municipal Court, (“Sundance”) (1986) 42 Cal.3d 1101, 1138-39. Taxpayer suits are authorized only if the government body has a duty to act and has refused to do so. If it has discretion and chooses not to act, the courts may not interfere with that decision.” Daily Journal v. County of Los Angeles, (2009) 172 Cal.App.4th 1550, 1557-58. The courts restrictively interpret the word “waste” in CCP section 526a actions to prevent claims for failure to maintain public property or to pursue a legal claim. See Mohler v. County of Santa Clara, (2023) 2023 WL 388770 (affirming sustaining of demurrer for waste claim that county failed to maintain airport); Silver v. Watson, (1972) 26 Cal.App.3d 905,910 (affirmed sustaining of demurrer for taxpayer’s suit to compel board of supervisors to sue for unpaid property taxes). Without the exercise of the City’s discretionary enforcement duties, there can be no waste through a failure to collect sufficient property taxes. NWOO does not have standing under CCP section 526a.[7]

The demurrer is sustained without leave to amend. Although NWOO seeks leave to amend, it fails to show how it could do so. An OSC re: dismissal is set for March 21, 2024 at 9:30 a.m.

[1] All references to “art.” Are to the California Constitution.

[2] All further citations are to the Government Code unless otherwise specified.

[3] The City requests judicial notice of (1) a link to an audio recording of the potion of the CHC meeting about the Property (RJN Ex. A); (2) Planning and LADBS’ report to the City Council on the Property’s status (RJN Ex. B); (3) sections 50284 and 50287, as enacted in 1972 and as effective January 1, 2012 (RJN Exs. C-F); (4) the contract between Planning and Historic Resources Group (“HRG”) for historic preservation studies, surveys, and related services (“HRG Contract”) (RJN Ex. G); and (5) a June 20, 2023 Revised Notice to Proceed Re: Mills Act Historical Property Contract Program; Inspection of Existing Contracts to Historic Resources Group (RJN Ex. H).

The request for RJN Exs. C-F is granted. Evid. Code §452(b). NWOO objects to judicial notice of RJN Exs. A-B and G-H. It cites Mangini v. R. J. Reynolds Tobacco Co., (1994) 7 Cal.4th 1057, 1063, which requires that judicially noticed matter must be relevant. RJN Obj. at 3. NWOO does not explain why these documents would be irrelevant as they concern the City’s Mills Act program, the Property, and the City’s treatment thereof. RJN Exs. A-B, G-H.

NWOO also asserts that, although a document’s existence can be judicially noticed, the truth of statements contained in the document and their proper interpretation are not subject to judicial notice. Tenet Healthsystem Desert, Inc. v. Blue Cross of California, (2016) 245 Cal.App.4th 821, 836. RJN Obj. at 3. The City cites People v. Dunlap, (“Dunlap”) (1993) 18 Cal. App. 4th 1468, 1477-82, to assert that records authored by public employees are routinely admitted in court proceedings to establish the facts articulated in the records. Reply at 7, n.1.

Dunlap only held that statutes requiring the recording and reporting of a person’s criminal history were judicially noticeable, which the trial court could combine with the presumption that official duty was regularly performed to find that rap sheet information was sufficiently trustworthy to be admissible. 18 Cal. App. 4th at 1478-80. Dunlap said nothing about judicial notice of the rap sheets themselves.

None of the audio (RJN Ex. A), the staff memorandum to the City Council (RJN Ex. B), the contract (RJN Ex. G), and the Notice to Proceed (RJN Ex. H) is an official agency act. The City’s staff memoranda (RJN Ex. B) would be subject to judicial notice if it were part of the legislative history of a City Council resolution or other legislative action, but the City makes no showing that it is. See Evans v. City of Berkeley, (2006) 38 Cal.4th 1, 7, n. 2. The requests for RJN A-B and G-H are denied. See Evid. Code §§ 452(c).

[4] NWOO cites a bulletin from the California Office of Historic Preservation to assert that the property tax reduction usually amounts to 40-60% of the taxes otherwise due. Opp. at 7. The City objects to this evidence as irrelevant because this does not reflect the tax benefit for Mills Act properties in Los Angeles. Reply at 3. NWOO did not request judicial notice of this bulletin and the court cannot use it as evidence on demurrer.

[5] Sections 50281 and 50282 only require that the contract between the City and property owner provides for five-year inspections; they do not expressly provide that the City has such a duty. Mandamus generally is not an appropriate remedy for enforcing a contractual obligation against an agency. 300 DeHaro Street Investors v. Department of Housing & Community Development, (2008) 161 Cal.App.4th 1240, 1254. This is because breach of contract is an adequate remedy at law, and the duty which mandamus enforces is not the contractual duty of the entity, but the official duty of its officer or board. Ibid. Moreover, a public agency is as free to breach a contract during performance, with accompanying liability for doing so, as a private contracting person or entity. Id. at 1254-55. See also Pomona Police Officers’ Assn. v. City of Pomona, (1997) 58 Cal.App.4th 578, 590. Since the City’s duties in a Mills Act contract are public duties, this argument has no traction, and the City does not make it anyway.

[6] NWOO also cites Health Services, supra, 148 Cal.App.4th at 706, which held that the absence of a privately enforceable right for damages under 42 U.S.C. section 1983 did not mean that mandamus, which is an equitable remedy, was unavailable to compel a state agency to act pursuant to law. So long as the petitioner was beneficially interested, mandamus was available to compel the agency to act. Id. Opp. at 13.

Health Services is distinguishable because, as with Common Cause, supra, 49 Cal.3d at 440, the Mills Act is not silent about a private enforceable right. Rather, the Legislature affirmatively amended the Mills Act to eliminate a private enforceable right for landowners.

[7] Although the parties argue mootness of the Jardinette claims (Dem. at 22-23; Opp. at 18-20), the court declined to judicially notice the evidence supporting the City’s argument and the issue need not be addressed.