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1 DENNIS J. HERRERA, State Bar #139669
City Attorney
2 SCOTT M. REIBER, State Bar #245418 ELECTRONICALLY
Chief Tax Attorney F I L E D
3 PETER J. KEITH, State Bar #206482 Superior Court of California,
County of San Francisco
Chief Attorney, Neighborhood
4 and Residential Safety Division 10/28/2019
1390 Market Street, Sixth Floor Clerk of the Court
BY: RONNIE OTERO
5 San Francisco, California 94102-5408 Deputy Clerk
Telephone: (415) 554-3908
6 Facsimile: (415) 437-4644
E-Mail: peter.keith@sfcityatty.org
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Attorneys for Plaintiff and Petitioner
8 CITY AND COUNTY OF SAN FRANCISCO
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SAN FRANCISCO
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UNLIMITED JURISDICTION
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CITY AND COUNTY OF SAN Case No. CPF-14-513434
13 FRANCISCO, acting by and through its Office
of Treasurer and Tax Collector, DECLARATION OF PETER J. KEITH IN
14 SUPPORT OF PLAINTIFF AND PETITIONER
Plaintiff and Petitioner, CITY AND COUNTY OF SAN FRANCISCO’S
15 OPPOSITION TO DEFENDANTS’ AND
vs. RESPONDENTS’ APPLICATION FOR
16 COMPLEX DESIGNATION; EXHIBITS A-C
REGENTS OF THE UNIVERSITY OF
17 CALIFORNIA; JOHN PLOTTS, in his official Place: Dept. 304
capacity as the Senior Vice Chancellor of
18 Finance & Administration at University of Date Action Filed: January 14, 2014
California San Francisco; BOARD OF Remittitur Issued: July 31, 2019
19 DIRECTORS OF HASTINGS COLLEGE OF
THE LAW; DAVID SEWARD, in his official
20 capacity as Chief Financial Officer at
University of California Hastings College of
21 the Law; THE BOARD OF TRUSTEES OF
THE CALIFORNIA STATE UNIVERSITY;
22 RONALD CORTEZ, in his official capacity as
the Vice President and CFO for Administration
23 and Finance at San Francisco State University;
and DOES 1 - 35,
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Defendants and Respondents.
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I, PETER J. KEITH, declare as follows:
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DECL KEITH ISO OPP DEF APPL COMPLEX DESIG, CASE CPF-14-513434 n:\taxlit\li2019\140765\01401328.docx
1 1. I am an attorney duly sworn to practice law in the State of California. I am over the age
2 of eighteen. I have personal knowledge of the following facts except for those stated on information
3 and belief. As to those facts, I believe them to be true. If called upon to testify, I could and would
4 testify competently to the contents of this declaration.
5 2. I have been practicing law as a Deputy City Attorney in the San Francisco City
6 Attorney’s Office since September 2000. In the present case, the City Attorney’s Office is counsel of
7 record for Plaintiff-Petitioner City and County of San Francisco, and I have been the Deputy City
8 Attorney primarily responsible for the case. I argued the case in Superior Court, the Court of Appeal,
9 and the California Supreme Court.
10 3. Attached hereto as Exhibit A is a true and correct copy of the decision of the California
11 Supreme Court in City & County of San Francisco v. Regents of the Univ. of Cal., et al., Case No.
12 S242835, filed on June 20, 2019.
13 4. A declaration from the Regents’ finance officer Kevin Cox stated that as of FY 2013 –
14 before the UCSF Mission Bay campus added another thousand-plus parking spots – UCSF parking
15 revenue exceeded $17 million. A true and correct copy of excerpts from his declaration, with markings
16 in the margin to indicate the relevant testimony, is attached as Exhibit B.
17 5. Following the Supreme Court’s decision, I and the San Francisco Tax Collector’s
18 Office reached out to the universities and their counsel and offered to work with them so the
19 universities could comply with their duties as stated by the Supreme Court, and commence collecting
20 and remitting parking tax. And to formally conclude the case, I requested on behalf of San Francisco
21 that the universities stipulate to entry of a judgment and issuance of the writ consistent with the
22 Supreme Court’s ruling. The universities declined to cooperate with San Francisco or to concede
23 defeat. Instead, they stated their intention to continue litigating the validity of the parking tax, with
24 both old arguments and new arguments against the tax that they failed to present in 2014. And in the
25 meantime, they would refuse to collect and remit the tax.
26 6. Given this stalemate, San Francisco filed in Department 302 a “Motion for Entry of
27 Amended Judgment after Remittitur from the California Supreme Court.” A true and correct copy of
28 the Notice of Motion and Points & Authorities is attached as Exhibit C to this Declaration.
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DECL KEITH ISO OPP DEF APPL COMPLEX DESIG, CASE CPF-14-513434 n:\taxlit\li2019\140765\01401328.docx
1 7. San Francisco originally set its motion for hearing in Department 302 on October 22.
2 However, when the universities' counsel requested a continuance to November 13, San Francisco
3 stipulated and Department 302 continued to the motion to that date.
4 I declare under penalty of perjury under the laws of the State of California that the foregoing is
5 true and correct: Executed this 28th of October 2019, at San Francisco, California.
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8 PETER J. KEITH
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DECL KEITH ISO OPP DEF APPL COMPLEX DESIG, CASE CPF-14-513434 n:\taxlit\li2019\140765\01401328.docx
1 INDEX TO EXHIBITS
2
Exhibit Description
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A California Supreme Court Opinion, City & County ofSan Francisco v. Regents of
4 the Univ. of Cal., et al., Case No. S242835 (June 20, 2019) ·
5 B Excerpts dated March 11, 2014, from Declaration of Kevin Cox in Support of
Respondent The Regents of the University of California's Memorandum of Points
6 and Authorities in Opposition to First Amended Verified Petition for Writ of
Mandate
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C Plaintiff City and County of San Francisco's Notice of Motion and Motion For
8 Entry of Amended Judgment After Remittitur From the California Supreme Court
dated September 25, 2019; Plaintiff City and County of San Francisco's
9 Memorandum of Points and Authorities In Support of Motion For Entry of
Amended Judgment After Remittitur From the California Supreme Court dated
10 September 24, 2019
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DECL KEITH ISO OPP DEF APPL COMPLEX DESIG, CASE CPF-14-513434 n:\taxlit\li2019\140765\01401328.docx
EXHIBIT A
IN THE SUPREME COURT OF
CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO,
Plaintiff and Appellant,
v.
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA et al.,
Defendants and Respondents.
S242835
First Appellate District, Division One
A144500
San Francisco City and County Superior Court
CPF-14-513-434
June 20, 2019
Justice Kruger authored the opinion of the court, in which
Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu,
Cuéllar, and Baker* concurred.
*
Associate Justice of the Court of Appeal, Second Appellate
District, Division Five, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF
THE UNIVERSITY OF CALIFORNIA
S242835
Opinion of the Court by Kruger, J.
The City and County of San Francisco (San Francisco) imposes
a tax on drivers who park their cars in paid parking lots. To enforce
the tax, the city requires parking lot operators to collect the tax from
drivers and remit the proceeds to the city. We granted review to
consider whether the California Constitution permits San Francisco
to apply this tax collection requirement to state universities that
operate paid parking lots in the city. We conclude the answer is yes.
I.
San Francisco is a consolidated city and county that has adopted
a charter for its own governance under article XI, section 3 of the
California Constitution. Exercising its constitutional power to
regulate its “municipal affairs” as a charter city (Cal. Const., art. XI,
§ 5, subd. (a)), in the early 1970’s San Francisco enacted a tax on the
cost of “rent” for any parking space at a parking lot or garage in the
city. (S.F. Bus. & Tax Regs. Code, art. 9, § 601.) Since 1980, the
parking tax rate has been set at 25%. (Id., § 602.5.)
The San Francisco parking tax is imposed on drivers. But like
many taxes of its kind, the parking tax is not paid directly to the city;
drivers instead pay the parking tax to the parking lot operator, along
with the parking fee the operator charges. The operator then collects
the taxes and remits them to the city. (S.F. Bus. & Tax Regs. Code,
art. 9, § 603.) To ensure it receives the proper amounts, San Francisco
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
requires operators to document the taxes they collect and holds them
liable for any underpayments.1
By its terms, the ordinance applies to public entities and private
ones alike, though it does excuse public entity operators from some of
the requirements imposed on private parking operators, such as
1
To be more specific: The ordinance generally requires the
operator to file quarterly tax returns that document the amount of the
parking tax to be remitted, and such other information as the city may
require. (S.F. Bus. & Tax Regs. Code, art. 6, § 6.7-2, subd. (c).) The
operator must also certify in writing, under penalty of perjury, that it
has utilized machines that record all parking transactions to the city’s
specifications. (Id., art. 9, § 607, subd. (b); id., art. 22, § 2203.)
If an operator does not collect the tax from drivers renting
parking space in its facilities, the operator becomes liable to the city
for the amount of the tax. (S.F. Bus. & Tax Regs. Code, art. 9, § 604,
subd. (a).) The city will excuse the operator from remitting tax on a
small percentage of lost or unaccounted-for tickets, but operators are
otherwise generally liable for the full value of the highest maximum
daily rate charged for any lost or unaccounted-for ticket. (Id., subd.
(b).) The city may consider “in its sole and absolute discretion”
whether an operator’s explanation for lost tickets or canceled
transactions is reasonable. (Id., subd. (c).)
The operators’ compliance with these requirements is backed by
the threat of more significant sanctions. Under San Francisco law,
operators must post a bond and obtain a certificate of authority in
order to operate a parking lot. (S.F. Bus. & Tax Regs. Code, art. 6,
§ 6.6-1.) If an operator violates any city rule or regulation related to
the parking tax, “including but not limited to any failure to timely
collect, report, pay, or remit any tax imposed by this Code, failure to
maintain accurate registration information, failure to sign any return
or pay any tax when due, or failure to timely respond to any request
for information,” then the operator’s certificate of authority may be
suspended or revoked. (Id., subd. (g).)
2
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
bonding and permitting requirements (S.F. Bus. & Tax Regs. Code,
art. 6, § 6.6-1, subd. (h)(2); S.F. Police Code, art. 17, § 1215, subd. (b)),
and requirements for installing devices to properly track parking
revenue and taxes (S.F. Bus. & Tax Regs. Code, art. 22, § 2202). But
public entities are still required to “collect, report, and remit” the
parking tax owed by drivers to the city (S.F. Bus. & Tax Regs. Code,
art. 6, § 6.8-1, subd. (b)). It is this requirement that has generated the
present controversy.
Defendants are the Regents of the University of California
(Regents), which oversees the University of California at San
Francisco (UCSF); the Board of Directors of Hastings College of the
Law (Hastings); and the Board of Trustees of the California State
University (CSU), which operates San Francisco State University
(SFSU) (collectively, the universities). All of the university
defendants own and operate private parking facilities in San
Francisco in order to serve the needs of their respective campuses.
Specifically, the Regents own and operate parking facilities at UCSF’s
educational and healthcare facilities for the use of faculty, staff,
students, researchers, visitors, and patients who receive care at the
clinics and hospitals on campus. UCSF uses its parking fee revenue
to fund, among other things, a shuttle bus service between its various
locations for students, faculty, and staff. Hastings operates a garage
near its law school, which is located in the Tenderloin neighborhood
of San Francisco. Hastings explains that it operates the garage at a
loss in order to maintain a safe and secure environment for its
students. CSU, for its part, operates nine parking lots on SFSU’s
campus, which is located in an urban environment where parking is
scarce.
3
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
In 1983, San Francisco attempted to collect parking lot taxes from
UCSF, but the Regents asserted immunity and San Francisco
declined to pursue the matter. That was, for quite some time, the end
of the controversy. But in 2011, San Francisco reconsidered and
directed UCSF, Hastings, and SFSU to begin collecting and remitting
the parking tax. The universities refused. In response, San Francisco
filed a petition for a writ of mandate in the trial court to compel
compliance. San Francisco argued that it would be a minimal burden
for the universities to collect the parking tax along with whatever
parking fees they charge. San Francisco also offered to reimburse the
universities for their administrative costs in collecting and remitting
the taxes, as the trial court had ordered in another municipal tax
collection case, City of Modesto v. Modesto Irrigation Dist. (1973) 34
Cal.App.3d 504, 508–509 (City of Modesto). The trial court denied the
writ, concluding that the universities are exempt from compliance
with the parking tax ordinance. The trial court reasoned that this
result followed from the constitutional principles articulated and
applied in In re Means (1939) 14 Cal.2d 254 (Means) and Hall v. City
of Taft (1956) 47 Cal.2d 177 (Hall), which hold that a local government
may not regulate a state entity in its performance of governmental
functions unless the state consents to the regulation.
The Court of Appeal affirmed in a published opinion, agreeing
with the trial court that the Means-Hall doctrine exempts the state
agencies from collecting and remitting the parking tax. (City and
County of San Francisco v. Regents of University of California (2017)
11 Cal.App.5th 1107 (City and County of San Francisco).)
Justice Banke dissented. In her view, the state’s sovereignty is
“not impinged” (City and County of San Francisco, supra, 11
Cal.App.5th at p. 1149 (dis. opn. of Banke, J.)) by the “minimal
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
burden” (ibid.) of “collecting a general local tax imposed on third
parties, particularly where the costs of such are reimbursed” (id. at
p. 1146). She also observed that other authorities have, contrary to
the majority’s holding, concluded that a municipality may require a
state entity to collect a general tax imposed on third parties doing
business with the entity, at least where the municipality reimburses
the state entity for the costs of collection. (See City of Modesto, supra,
34 Cal.App.3d 504 [charter city could require state agency operating
as utility to collect utility user’s tax]; Eastern Mun. Water Dist. v. City
of Moreno Valley (1994) 31 Cal.App.4th 24, 26 (City of Moreno Valley)
[relying on City of Modesto to conclude general law city could require
state agency operating as utility to collect utility user’s tax]; accord,
65 Ops.Cal.Atty.Gen. 267 (1982) [relying on City of Modesto to
conclude municipality may require state agency to collect local
occupancy tax from private users of state conference center].) While
the law on the subject “has been far from a paragon of clarity,” she
argued, the majority’s decision left the law “in some disarray.” (City
and County of San Francisco, at p. 1124 (dis. opn. of Banke, J.).) She
called on this court to “state clearly whether or not a state entity can
be asked to collect a local tax imposed on third parties doing business
with the entity, particularly where ... the entity will be reimbursed
its costs of doing so.” (Ibid.)
Hearing the call, we granted review.
II.
The general problem in this case is familiar to any constitutional
system in which two governments exercise authority within the same
territory. The specific task before us is to determine the proper
allocation of authority between a local government and state agencies
under a constitution that confers substantial powers on each.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
Many of California’s local governments predate California’s
statehood, and the framers of the 1879 California Constitution
dedicated an entire article to the subject of their powers. From the
outset, the 1879 Constitution expressly recognized the police powers
of local government, and continues to do so today: As relevant here,
any city “may make and enforce within its limits all local, police,
sanitary, and other ordinances and regulations not in conflict with
general laws.” (Cal. Const., art. XI, § 7.) The 1879 Constitution also
permitted cities of a certain size to adopt charters for their own
government. (Weekes v. City of Oakland (1978) 21 Cal.3d 386, 399
(Weekes), citing Cal. Const., art. XI, §§ 6, 8 (1879).) In 1896, voters
approved a so-called “home rule” provision granting charter cities
“supremacy over local matters.” (Weekes, at p. 399.) This provision,
as presently written, permits charter cities to “make and enforce all
ordinances and regulations in respect to municipal affairs”; with
respect to such matters, the cities’ charters “supersede all laws
inconsistent therewith.” (Cal. Const., art. XI, § 5, subd. (a).)2
2
Charter counties also enjoy home rule authority. (See Cal.
Const., art. XI, §3 [County charters “shall supersede ... all laws
inconsistent therewith.”].) This authority, however, is more limited
than that of charter cities; the Constitution contains no provision
giving charter counties supreme authority over “ ‘county affairs.’ ”
(Dibb v. County of San Diego (1994) 8 Cal.4th 1200, 1207–1208.) San
Francisco, as California’s only consolidated city and county, enjoys the
greater degree of autonomy that comes with charter city status. (Cal.
Const., art. XI, § 6, subd. (b).)
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
This home rule authority includes the power to tax for local
purposes.3 The power to tax, we have explained, is the lifeblood of the
charter city; without it, “the municipality cannot exist, and the
municipality alone is directly concerned in its preservation.” (Ex parte
Braun (1903) 141 Cal. 204, 210.) It is this local taxation power that
San Francisco, a charter city, asserts here.
The universities in this case are agencies of the state
government whose powers and responsibilities are defined in the
Constitution, as well as in statutory law enacted by the Legislature.
The Constitution itself establishes the University of California,
vesting the Regents with “full powers of organization and
government” (Cal. Const., art. IX, § 9, subd. (a)), including “the legal
title and the management and disposition of the property of the
university and of property held for its benefit” (id., subd. (f)), and “all
the powers necessary or convenient for the effective administration of
[the University of California]” (ibid.). Hastings is statutorily
designated as the law department of the University of California (Ed.
Code, § 92201), and is charged with “afford[ing] facilities for the
acquisition of legal learning in all branches of the law” (id., § 92202).
The CSU system, too, finds explicit mention in the California
Constitution, which refers to the Legislature’s authority to create a
“state agency ... in the field of public higher education which is
charged with the management, administration, and control of the
3
By statute, the Legislature has conferred a parallel taxation
power on “general law” cities—that is, cities that have not adopted a
charter under article XI, section 3 of the California Constitution.
(Gov. Code, § 37100.5.) We do not consider today whether this power
is coincident with charter cities’ constitutional authority.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
State College System of California.” (Cal. Const., art. XX, § 23.)
Exercising that authority, the Legislature has conferred on CSU a
variety of powers, including the power “to acquire ... real property
and to construct, operate, and maintain motor vehicle parking
facilities and other transportation facilities thereon for state
university officers, employees, students, or other persons.” (Ed. Code,
§ 89701, subd. (a); see generally id., §§ 66600 et seq., 89000 et seq.)
The Board of Trustees may also prescribe the “terms and conditions
of the parking, ... including the payment of parking fees” (id.,
§ 89701, subd. (a)), which it has done through regulation (Cal. Code
Regs., tit. 5, § 42201).
San Francisco contends that its power to raise municipal
revenue through taxation permits it to apply its tax ordinance to paid
university parking lots within San Francisco borders, just as it applies
the ordinance to other paid parking lots operated by private entities.
The universities, on the other hand, argue that their status as
agencies of the sovereign state government, engaged in duties
assigned to them by state law and addressing matters of statewide
importance, places private parties’ use of their paid parking lots
beyond the reach of San Francisco’s revenue power. No provision of
the state Constitution expressly resolves this controversy; the parties
thus rely primarily on inferences from constitutional structure and
this court’s precedent resolving other types of intergovernmental
conflicts. To answer the question, we must disentangle two separate
threads of the inquiry. First, does San Francisco have the power to
tax drivers who use paid university parking lots? Second, if so, may
San Francisco enlist the universities’ help in collecting and remitting
the taxes?
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
III.
We begin with the first issue, which goes to the substantive
validity of the parking tax. The answer follows from settled precedent.
As we have described it, the tax in question is not imposed on the state
universities or their property. It is, rather, imposed on private
parties—namely, drivers who use parking lots. This is a critical
distinction. Since the days of M’Culloch v. State of Maryland (1819)
17 U.S. 316, it has been understood that the law forbids one
government from imposing a tax on another. But it is also understood
that the law does not forbid a government from imposing a tax on
private third parties who happen to do business with another
government (provided, that is, the tax does not discriminate against
the parties because they are doing business with the government).
(E.g., Weekes, supra, 21 Cal.3d at p. 398, citing Graves v. N. Y. ex rel.
O’Keefe (1939) 306 U.S. 466, 486–487 (Graves).) The parking tax here,
which applies to drivers in precisely the same way regardless of
whether they use the university parking lot or a private parking lot
across the street, belongs to this second category of taxes. There is no
assertion here that the drivers here stand in the shoes of the
universities themselves. Principles of governmental tax immunity do
not bar the parking tax.
The universities do not take direct aim at this settled
understanding of the limits of governmental tax immunity or their
application to this case; the primary focus of their challenge to San
Francisco’s ordinance is, rather, the requirement that they play a role
in collecting and remitting the taxes. Nevertheless, the universities
raise a series of objections to San Francisco’s tax ordinance that can
only be understood as indirect challenges to San Francisco’s power to
impose the parking tax on the third parties who pay for use of
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
university parking lots. CSU, for example, contends that it should not
be required to collect the parking tax because parking is of particular
importance to the university and the tax threatens to interfere with
CSU’s educational mission by making parking more expensive. It
explains that parking for SFSU students, staff, and visitors is scarce;
adding a parking tax would make it difficult for CSU to ensure
parking remains affordable; and CSU would lose revenue if it reduced
its parking prices by the amount of the tax. The other universities
raise similar concerns about interference with their judgments about
how to provide affordable access to their facilities and the downstream
impact on their budgets; indeed, Hastings adds that it considers
parking so important that it already operates its garage at a loss.
Although the universities offer these arguments in service of
their arguments for avoiding collection of San Francisco’s parking tax,
their true target is plainly the tax itself. If San Francisco’s parking
tax ordinance interferes with their judgments about how best to
provide affordable access for guests and affiliates, it is because of San
Francisco’s chosen tax rate as applied to the third parties who park in
university lots, not because of the requirement that parking lot
operators collect these taxes along with other parking charges.
The answers to this set of objections, however, also follow from
settled precedent. Our cases have made clear that a particular private
activity may be a matter of particular concern to the state and
nonetheless subject to municipal taxation. Even when the state has
exclusive regulatory authority in a particular area, a local tax on the
conduct of the regulated activity, without more, is not an
impermissible “ ‘interference with state affairs.’ ” (In re Groves (1960)
54 Cal.2d 154, 157, quoting In re Galusha (1921) 184 Cal. 697
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
[municipality may tax attorney engaged in practice of law,
notwithstanding exclusive state regulation of legal practice].)
Our cases have also held that it is permissible for a municipality
to tax such private activities even though the tax imposes an indirect
economic burden on the state government. General taxes on
government employees and contractors are prime examples. In
Weekes, supra, 21 Cal.3d 386, for example, this court upheld the
application of a municipal occupation tax to state workers
notwithstanding the clear, if indirect, impact on the state’s choices
regarding employee compensation. Similarly, in City of Los Angeles
v. A.E.C. Los Angeles (1973) 33 Cal.App.3d 933 (A.E.C.