City of Cathedral City v. County of Riverside

Introduction

City of Cathedral City (City) filed a petition for writ of mandate requesting the trial court to compel County of Riverside (County) to pay to City the documentary transfer taxes collected by County, with respect to the sale or transfer of real property within the city limits of City, from and after November 16, 1981, the date on which City adopted its documentary transfer tax ordinance. The trial court denied City’s petition and City appealed.

Issue

This is a case of constitutional interpretation. The sole issue is whether Proposition 13 (Cal. Const., art. XIII A, § 4) prohibits cities incorporated after its effective date, July 1, 1978, from sharing in documentary transfer tax revenues collected by a county pursuant to Revenue and Taxation Code section 11911. We conclude that it does not.

Facts

City was incorporated on November 16, 1981. On that date, the city council of City adopted ordinance number 2, omnibus in nature, establishing City’s municipal code, creating its administration, and providing for its revenue and finances. One section of the newly adopted municipal code, chapter 3.22, provided for the imposition of a real property documentary…