Epstein v. Hollywood Entertainment District II Business Improvement District

104 Cal. Rptr. 2d 857, 87 Cal. App. 4th 862, 2001 Daily Journal DAR 2513, 2001 Cal. App. LEXIS 168
CourtCalifornia Court of Appeal
DecidedMarch 8, 2001
DocketB134256
StatusPublished
Cited by30 cases

This text of 104 Cal. Rptr. 2d 857 (Epstein v. Hollywood Entertainment District II Business Improvement District) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Epstein v. Hollywood Entertainment District II Business Improvement District, 104 Cal. Rptr. 2d 857, 87 Cal. App. 4th 862, 2001 Daily Journal DAR 2513, 2001 Cal. App. LEXIS 168 (Cal. Ct. App. 2001).

Opinion

Opinion

CROSKEY, J.

The Hollywood Entertainment District II Business Improvement District (BID II) is a special assessment district in the City of Los Angeles (City). The Hollywood Entertainment District Property Owners Association (the POA), a 26 United States Code section 501(c)(6) nonprofit corporation, administers the funds City raises through assessments on businesses within BID IPs boundaries. 1 The money is used to contract for such things, as security patrols, maintenance, street and alley cleaning, and a newsletter.

Aaron Epstein (plaintiff), who owns property zoned for business purposes within BID II, sued defendants to establish that the POA was required to comply with the Ralph M. Brown Act (the Brown Act or the Act) (Gov. Code, § 54950 et seq.) 2 by holding noticed, open meetings and posting its agenda in advance. His motion for a prehminary injunction was denied after the superior court concluded that the Brown Act did not apply because (1) the POA had not been created by City, and (2) the POA had preexisted the creation of BID II by at least two years.

Plaintiff filed timely notice of appeal. We reverse. The facts of this case come within the parameters of our holding in International Longshoremen’s & Warehousemen’s Union v. Los Angeles Export Terminal, Inc. (1999) 69 Cal.App.4th 287 [81 Cal.Rptr.2d 456] (International Longshoremen’s), because City “played a role in bringing” the POA “into existence.” The POA was not simply a preexisting corporation which just “happened” to be available to administer the funds for BID II. Instead, the record indicates that the POA was formed and structured in such a way as to take over administrative functions that normally would be handled by City.

*865 Factual and Procedural Background 3

The Property and Business Improvement District Law of 1994 (Sts. & Hy. Code, § 36600 et seq.) authorizes cities to establish property and business improvement districts (BID’s) in order to levy assessments on real property for certain purposes. Those purposes include acquiring, constructing, installing, or maintaining improvements (Sts. & Hy. Code, § 36606), which include such things as parks, street changes, ramps, sidewalks and pedestrian malls. (Sts. & Hy. Code, § 36610, subds. (f), (i), & (k).) A prerequisite to the creation of such a BID is a petition filed by property owners who will pay more than 50 percent of the total amount of assessments to be levied. (Sts. & Hy. Code, § 36621, subd. (a).)

On September 3, 1996, City adopted ordinance No. 171273 (the first Ordinance) to create the Hollywood Entertainment District Business Improvement District (BID I). The first Ordinance incorporated by reference a “Management District Plan,” which contained information required by Streets and Highways Code section 36622. 4 The Management District Plan included a “Proposed Annual Program,” which included security, maintenance, marketing, streetscape and administration components. It also included a section on “Governance,” which provided, in relevant part, “The Property and Business Improvement District programs will be governed by a non-profit association. Following is a partial summary of the management and operation of the proposed association.” (Italics added.) The section on Governance made it clear that the nonprofit association, which would govern BID I, was not yet in existence. 5

Articles of incorporation of the POA, the nonprofit association that did take over governance of BID I, were filed with the California Secretary of State on September 25, 1996. These articles of incorporation were dated September 5, 1996. The POA was a nonprofit mutual benefit corporation, whose specific and primary purpose was “to develop and restore the public areas of the historic core of Hollywood, California, in order to make it a more attractive and popular destination for tourists, shoppers, businesspeople and persons interested in culture and the arts.”

*866 On August 18, 1998, City adopted ordinance No. 172190 (the second Ordinance) to create BID II. The second Ordinance incorporated by reference a Management District Plan, which contained information required by Streets and Highways Code section 36622. The Management District Plan for BID II, which was entitled “Hollywood Entertainment District Property Business Improvement District Phase II,” included a copy of the petition used to form BID II, which referred to BID II as an “extension” of BID I. In fact, a comparison of the map of the proposed boundaries of BID II with the map of the proposed boundaries of BID I shows that BID II simply added approximately another 10 blocks down Hollywood Boulevard to the approximately five blocks down the length of the boulevard already covered by BID I.

The Management District Plan for BID II also included a “Program and Budget,” which included security, maintenance, marketing and promotion, and administration components. It also included a section on “Governance,” which provided, in relevant part, “The Property and Business Improvement District programs will be governed by the Hollywood Entertainment District Property Owners Association, a 501(c)(6) non-profit corporation which was formed in 1996 to govern Phase I. Following is a summary of the management and operation of the Association as it relates to Phase II.” (Italics added.) In addition, unlike the Management District Plan for BID I, the Management District Plan for BID II included the “Amended and Restated Bylaws” of the POA—which were quite detailed. And, although the POA was to manage and operate the BID, City, by law, retained the power to “modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications.” (Sts. & Hy. Code, § 36642.)

The POA’s monthly meetings were not open to the public, much to the distress of plaintiff, who owns property subject to assessment in favor of BID II. Furthermore, according to plaintiff, the POA’s bylaws allow it to do other things that would be prohibited by the Brown Act if it were applicable to the POA. For example, the bylaws allow meetings to take place anywhere, not solely within the POA’s jurisdiction, and to take place without posting notice 72 hours in advance.

Accordingly, on March 18, 1999, plaintiff filed a complaint for declaratory and injunctive relief against defendants, seeking, among other things, a declaration that the Brown Act does apply to the POA and that, in fact, the POA’s meetings are required to be open and noticed as required by the *867 Brown Act, and that any contracts let by the POA must comply with the competitive bidding requirements of City’s charter.

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104 Cal. Rptr. 2d 857, 87 Cal. App. 4th 862, 2001 Daily Journal DAR 2513, 2001 Cal. App. LEXIS 168, Counsel Stack Legal Research, https://law.counselstack.com/opinion/epstein-v-hollywood-entertainment-district-ii-business-improvement-calctapp-2001.