CALIFORNIA STATEWIDE
COMMUNITIES DEVELOPMENT
AUTHORITY v.ALL PERSONS INTERESTED IN THE
MATTER OF THE VALIDITY OF A
PURCHASE AGREEMENT
Filed 3/5/07
IN THE SUPREME COURT OF CALIFORNIA
CALIFORNIA STATEWIDE )
COMMUNITIES DEVELOPMENT )
AUTHORITY, )
)
) S124195
v. )
) Ct.App. 3 C042944, C042947, C042948
ALL PERSONS INTERESTED IN THE )
MATTER OF THE VALIDITY OF A ) Sacramento County
PURCHASE AGREEMENT, ) Super. Ct. Nos. 02AS03351,
__________________________________ )
STORY CONTINUED FROM PART II
In Riles, to determine the constitutional validity of the textbook lending program, we first considered whether it only indirectly benefit[ed] parochial schools. (Riles, supra, 29 Cal.3d at p. 809.) The trial had concluded that the program had a clearly secular . . . purpose and that the benefit it provided the schools, though substantial, [was] only indirect and incidental. (Id.at p. 800.) We disagreed, holding that the benefit sectarian schools received from the program could not be characterized as . . . only indirect, remote, and incidental. (Id. at p. 809.) In reaching this conclusion, we focused principally on the inseparability of the benefit to the pupil and the school, and the impossibility of characterizing the advantage to one as remote and to the other as direct. (Id.at p. 810.) We explained: The books are supplied for use in the school, and we are unable to perceive any significant distinction from a constitutional standpoint whether they are loaned to the students for use in the school, or to the school for use by the students. In either circumstance, both the child and the school benefit. The United States Supreme Court has recognized as much in characterizing textbook loan programs as a form of financial assistance to the school even though the loan is nominally made to the student. There is no rational reason for concluding that the school benefits only indirectly or remotely from the loan if the child is the nominal recipient, for it is an undeniable fact that books are a critical element in enabling the school to carry out its essential mission to teach the students. (Ibid., fn. omitted.)
We next explained in Riles that our conclusion that the benefit was neither indirect nor remote [did] not end our inquiry, because not all aid that directly benefits sectarian schools is prohibited (e.g., providing fire protection), and not all aid that indirectly benefits sectarian schools is valid (e.g., reimbursement for the purchase of religious articles by students in public and nonpublic schools). (Riles, supra, 29 Cal.3d at p. 811.) Ultimately, we explained, the programs validity under article XVI, section 5, turned on whether the character of the benefit [the program] provided . . . result[ed] in the support of any sectarian . . . school. (Riles, supra, 29 Cal.3d at p. 811.) We concluded that the program did result in such support, and was therefore invalid, because textbooks have a central place in the educational mission of a school and the benefit being provided advance[d] the schools educational function. (Id. at p. 811.) In this respect, we explained, the [textbook lending] program [was] distinguishable from generalized services government might provide to schools in common with others [citation], such as fire and police protection, the maintenance of roads and sidewalks, and similar public services. These services, unlike education, have no doctrinal content, and they do not advance the essential objective of the sectarian school, which is the education of the child. (Id. at pp. 811-812.)
Finally, we held in Riles that the textbook lending program was invalid under article XVI, section 5, even if the schools used the books only for secular instruction. (Riles, supra, 29 Cal.3d at p. 812.) We reasoned that article XVI, section 5, do[es] not confine [its] prohibition against financing sectarian schools in whole or in part to support for their religious teaching function, as distinguished from secular instruction. (Riles, supra, 29 Cal.3d at p. 812.) We also explained that [j]urisdictions with similar constitutional provisions [had] also refuse[d] to make such a distinction (ibid.), and we quoted with approval the following discussion from a Nebraska Supreme Courts decision interpreting a provision virtually identical to article XVI, section 5: [T]he court must examine the character of the aided activity rather than the manner or the form in which aid is given. . . . [O]ne of the main purposes of the parent sending his child to a parochial school is to insure the early inculcation of religion. Assuming that textbooks promote the notion of an absolutely neutral and equal secular educational program, the reimbursement or the loan of textbooks to the students is for the purpose of augmenting the public school secular education with religious training. The state, by aiding the parents and the students by textbooks, secular though they may be, is providing a program for aiding the church and in advancing religious education. (Riles, supra, 29 Cal.3d at pp. 812-813, fn. 15.)
Applying Riles and its analytical framework to this case, I conclude that the proposed bond financings at issue here are invalid under article XVI, section 5. In terms of their religious orientation, the schools at issue here are similar in important respects to the schools at issue in Riles; as the trial court found, [r]eligion is both mandatory and integral to every aspect of student life at the schools and the schools both restrict[] admission of students by religious criteria and discriminate[] on the basis of religion in hiring faculty. Indeed, religion is even more integral to the schools here than it was to the schools in Riles; whereas the trial court in Riles found unproven allegations that the schools there conduct[ed] their operations to fulfill religious purposes or blend[ed] secular and sectarian instruction (Riles, supra, 29 Cal.3d at pp. 800-801), the trial court here found that the schools are organized primarily or exclusively for religious purposes and integrate[] [r]eligion . . . into classroom instruction. Moreover, the benefit to the schools in this case is every bit as direct as, and is probably far more substantial than, the benefit at issue in Riles. As explained above, in finding that the benefit of the textbook lending program was neither indirect nor remote, we emphasized in Riles that the program provided a form of financial assistance to the school[s] and that textbooks were a critical element in enabling the school[s] to carry out [their] essential mission to teach the students. (Riles, supra, 29 Cal.3d at pp. 811, 810.) Here, the proposed bond program clearly would provide a form of financial assistance to the schools; it would enable them to borrow money at below-market rates and significantly lower the cost of constructing, improving, furnishing, and equipping their facilities. Moreover, the facilities the proposed bond program would enable the schools to build or improve, and the furnishings and equipment it would enable them to buy, are critical elements in enabling them to carry out their essential mission to teach students. In this regard, the character of the benefit the proposed bond financings would provide would impermissibly result in the support of sectarian schools by advanc[ing] their educational function. (Riles, supra, 29 Cal.3d at p. 811.) Finally, the schools promise not to use any facility, place or building financed or refinanced with a portion of the bond proceeds for sectarian instruction or as a place for religious worship or in connection with any part of the programs of any school or department of divinity does not render the proposed bond financings constitutionally valid because, as Riles established, article XVI, section 5, do[es] not confine [its] prohibition against financing sectarian schools in whole or in part to support for their religious teaching function, as distinguished from secular instruction. (Riles, supra, 29 Cal.3d at p. 812.) Thus, under Riles, the proposed bond financings here violate article XVI, section 5.[1]
Several years before we decided Riles, in Priest, we discussed the scope of article XVI, section 5s materially identical predecessor, California Constitution former article XIII, section 24, in connection with a statutory bond financing program that was similar in certain respects to the bond financing program now before us. The case arose when the State Treasurer, because of concerns about the statutory programs constitutionality, refused to perform her duties regarding an approved bond financing. (Priest, supra, 12 Cal.3d at p. 598.) Regarding former article XIII, section 24, we began by explaining generally: This section has been said to constitute the definitive statement of the principle of government impartiality in the field of religion. [Citation.] An examination of the debates of the constitutional convention which drafted the Constitution of 1879 indicates that the provision was intended to insure the separation of church and state and to guarantee that the power, authority, and financial resources of the government shall never be devoted to the advancement or support of religious or sectarian purposes. [Citation.] Under this section, the fact that a statute has some identifiable secular objective will not immunize it from further analysis to ascertain whether it also has the direct, immediate, and substantial effect of advancing religion. . . . [] The section has never been interpreted, however, to require governmental hostility to religion, nor to prohibit a religious institution from receiving an indirect, remote, and incidental benefit from a statute which has a secular primary purpose. [Citation.] (Priest, supra, at pp. 604-605.)
After setting forth these general principles, we opined in Priest that the statutory bond program there at issue, although appear[ing] to approach state involvement with religion [citation], could not be said in the abstract to cross[] the forbidden line. (Priest, supra, 12 Cal.3d at p. 606.) We first explained that the statutory program clearly provide[d] a benefit by enabling schools to borrow money through the use of a state instrumentality at a cost below that of the marketplace. (Id. at p. 605.) We next noted, and deferred to, the Legislatures determination that the statutory program, in supporting the maintenance and improvement of facilities for higher education, [was] in the public interest [citations]. (Ibid.) Finally, we stated: The benefits of the [program] are granted to sectarian and nonsectarian colleges on an equal basis; . . . all aid for religious projects is strictly prohibited; and in no event is a financial burden imposed upon the state. In these circumstances the [statutory program] does not have a substantial effect of supporting religious activities. (Id. at p. 606.)
Unlike the majority, which wholly embraces Priest without either analysis or hesitation, I believe there is good reason to question that decisions authority and persuasiveness. To begin with, as Priest itself noted, the school seeking bond financing in that case was not affiliated with any religious organization, and therefore [was] not directly concerned with a challenge to the [statutory programs] validity . . . under article XVI, section 5s predecessor. (Priest, supra, 12 Cal.3d at p. 598, fn. 5.) For this reason, in Rileswhich, like Priest, Justice Mosk authored for the courtwe explained that Priest was dictum insofar as it purported to address schools that were affiliated with any religious denomination. (Riles, supra, 29 Cal.3d at p. 806, fn. 10.) The majority ignores this statement in Riles in asserting that Priestheld that issuing revenue bonds to fund capital improvements at religiously affiliated colleges did not violate article XVI, section 5s predecessor. (Maj. opn., ante, at p. 11, italics added.)
Moreover, Priests assertion that article XVI, section 5s predecessor had not been interpreted to prohibit a religious institution from receiving an indirect, remote, and incidental benefit from a statute which has a secular primary purpose (Priest, supra, 12 Cal.3d at p. 605) rested on very shaky ground. In support of this assertion, Priest cited our decision in Lundberg v. County of Alameda (1956) 46 Cal.2d 644 (Lundberg), and discussed the Court of Appeals decision in Bowker v. Baker (1946) 73 Cal.App.2d 653. (Priest, supra, 12 Cal.3d at p. 605.) Lundberg does not in any way support Priests assertion; there, in rejecting a challenge to a tax exemption under another of article XVI, section 5s materially identical predecessors, we tersely explained: This section does not expressly mention tax exemptions, but, even if we assume that it prohibited them, it was superseded by the subsequent adoption of two other constitutional provisions. (Lundberg, supra, 46 Cal.2d at p. 653.) In Bowker, the Court of Appeal held that article XVI, section 5s predecessor did not prohibit a school district from incurring some slight added cost (Bowker, supra, at p. 657) to permit parochial school students to occupy empty seats on public school buses, reasoning that the direct benefit of this expense flow[ed] to the children . . . , with only an indirect benefit to the private parochial school . . . . (Id. at pp. 666-667.) Priest failed to mention Bowkers narrow reasoning in making the much broader claim that article XVI, section 5s predecessor did not prohibit a religious institution from receiving an indirect, remote, and incidental benefit from a statute which has a secular primary purpose. [Citation.] (Priest, supra, 12 Cal.3d at p. 605.) Moreover, in Riles, we rejected the child benefit theory on which Bowker was based, noting that it ha[d] been criticized by courts and commentators (Riles, supra, 29 Cal.3d at p. 807), had produced dissonant decisions that could not be harmonize[d] (id. at pp. 807, 808), and in most instances . . . leads to results which are logically indefensible. (Id. at p. 809.) Given these circumstances, it is little wonder that Riles, though written for the court by the same justice who wrote Priest, expressly declined to endorse or reaffirm either Priest or Bowker, and instead cast doubt on both by stating that because they were distinguishable, it was unnecessary to consider whether [they] were correctly decided. (Riles, supra, 29 Cal.3d at p. 813, fn. 16.)
These concerns aside, unlike the majority, I believe that the proposed bond financings in this case are invalid even under Priests dictum. As explained above, Priest stated that the purpose of article XVI, section 5, is to guarantee that the power, authority, and financial resources of the government shall never be devoted to the advancement or support of religious or sectarian purposes, and that even a statute with a secular objective is invalid if it has the direct, immediate, and substantial effect of advancing religion. (Priest, supra, 12 Cal.3d at p. 604.) For the reasons explained above, including and especially the trial courts factual findings regarding the nature of the schools here at issue, the proposed bond financings would have the direct, immediate and substantial effect of advancing religion and would contravene the constitutional provisions purpose, by devoting the governments power and authority to raise money at below-market interest rates through the issuance and sale of tax-exempt bonds to the support and advancement of religious or sectarian purposes. This conclusion is fully consistent with Priests view that the bond financing program there at issue was not, in the abstract (id. at p. 606), invalid given the particular circumstances in that case. (Id. at p. 598, fn. 5.) As noted above, one of those circumstances was that all aid for religious projects [was] strictly prohibited. (Id. at p. 606) The facts underlying this circumstance included not only statutory use limitations similar to the limitations in the restricted use covenants here at issue, but also the complete exclusion of schools that either restrict[ed] entry on . . . religious grounds or require[d] all students gaining admission to receive instruction in the tenets of a particular faith. (Priest, supra, 12 Cal.3d at p. 596.) In Riles, we specifically noted this exclusion in distinguishing Priest. (Riles, supra, 29 Cal.3d at pp. 806, 813, fn. 16.) Here, given the trial courts uncontested factual findings that [r]eligion is both mandatory and integral to every aspect of student life at the schools, and that the schools are organized primarily or exclusively for religious purposes, restrict[] admission of students by religious criteria, discriminate[] on the basis of religion in hiring faculty, and integrate[] [r]eligion . . . into classroom instruction, notwithstanding the restricted use covenants, the proposed bond financings would impermissibly provide aid for religious projects. Thus, even under Priests dictum, the proposed bond financing programs violate article XVI, section 5.[2]
In any event, Priest must be read in light of our subsequent decision in Riles. As explained above, the benefit the schools would receive in this case under the bond financing program would be direct as we interpreted that term in Riles. (Riles, supra, 29 Cal.3d at p. 810.) As also explained above, we held in Riles that the key question under article XVI, section 5, is not whether the benefit in question is direct or incidental to some public purposebecause not all direct benefits are invalid, and not all indirect benefits are permissiblebut is whether the character of the benefit . . . results in the support of any sectarian . . . school by advanc[ing] the schools essential objective . . . , which is the education of the child. (Riles, supra, 29 Cal.3d at pp. 811-812.) Notably, in Riles, notwithstanding the trial courts conclusion that the program ha[d] a clearly secular legislative purpose (id. at p. 800), we invalidated the textbook lending program because textbooks hav[e] a central place in the educational mission of a school and are an essential tool of education . . . [citation]. (Id. at p. 811.) Similarly, the classrooms, laboratories, residence and dining halls, and other facilities the schools here intend to build or improve with the bond proceeds, and the furnishings and equipment they intend to purchase with those proceeds, are also central to the schools educational mission and are essential tools of education.
The majority virtually ignores Riles, declaring in a footnote that it, unlike this case, involved direct public aid to parochial schools in the form of
textbooks provided at public expense. (Maj. opn., ante, at p. 15, fn. 7.) By contrast, the majority asserts, because no public funds are expended in connection with the proposed bond financings here (ibid.), only indirect assistance is at issue in this case. (Id., at p. 11.)
For several reasons, the majoritys stated basis for disregarding Riles is invalid. Initially, the majoritys view rests on its unsupported assertion that the proposed bond financings would involve no [expenditure of] public funds. (Maj. opn., ante, at p. 15, fn. 7.) As noted above, the bonds here will be issued and sold by a public entity: the Authority. The majority does not explain why the proceeds from the sales, which will be used at the schools, are not public funds. Nor does the majority explain why the interest on those proceeds, which also will be used at the schools, are not public funds. Moreover, although the majority asserts that the obligation to pay the bondholders falls to the recipient schools and that the payment obligation will not be secured by any public property (maj. opn., ante, at p. 8), as noted above, payment of the bondholders is, by statute and by agreement, a special obligation of the Authority, and the Authoritys payment obligation is secured by its right to receive from the schools payments to repurchase school property from the Authority. The majority simply glosses over these aspects of the proposed bond financings.[3]
More broadly, the majoritys focus on whether the benefit would involve a direct expenditure of public funds is inconsistent with the language of article XVI, section 5, and our interpretation of that language in both Riles and Priest. The majoritys analysis indicates that only an expenditure of public money may constitute a direct benefit. However, in Priest, we expressly rejected that view, explaining that the terms of the constitutional provision forbid granting anything to or in aid of sectarian purposes, and prohibit public help to support or sustain a sectarian-controlled school. The section thus forbids more than the appropriation or payment of public funds to support sectarian institutions. It bans any official involvement, whatever its form, which has the direct, immediate, and substantial effect of promoting religious purposes. (Priest, supra, 12 Cal.3d at p. 605, fn. 12.) For reasons already explained, the bond financings proposed here would have such an effect, by enabling the schools to obtain economic aid they would not otherwise be able to obtain without the governments direct participation. (Steele v. Industrial Development Bd. Of Metro. (6th Cir. 2002) 301 F.3d 401, 438 (dis. opn. of Clay, J.).) Even if, as the majority asserts, there would be no expenditure of public funds, that circumstance would not alter for one moment the fact that a direct economic benefit [would] accrue[] to [the schools] as a result of the governments active participation in arranging for a low-cost loan that [would] enable[] the [schools] to advance [their] sectarian mission. (Ibid.) Moreover, in Riles, as already noted, we held that even a so-called indirect benefit may violate article XVI, section 5, and that the key question is not whether the benefit in question is direct or incidental, but whether the character of the benefit . . . results in the support of any sectarian . . . school by advanc[ing] the schools essential objective . . . , which is the education of the child. (Riles, supra, 29 Cal.3d at pp. 811-812.) Thus, even the majoritys mistaken view that no direct public aid is at issue here (maj. opn., ante, at p. 15, fn. 7) does not justify its complete disregard of our unanimous decision in Riles.
The majoritys analysis is at odds with Riles in another important respect. As noted above, we unanimously held in Riles that the textbook lending program there at issue was invalid under article XVI, section 5, even if the books were used only for secular instruction. (Riles, supra, 29 Cal.3d at p. 812.) We explained that article XVI, section 5, do[es] not confine [its] prohibition against financing sectarian schools in whole or in part to support for their religious teaching function, as distinguished from secular instruction. (Ibid.) Thus, under Riles, where a government program provides a benefit that advance[s] the essential objective of [a] sectarian school, the schools ability to separate its religious and secular aspects and to use the benefit only for the latter does not save the programs constitutionality. (Ibid.) Contrary to Riles, the majoritys test resurrects the inquiry into a schools ability to separate its religious and secular aspects. Under that test, the constitutionality of aid given to a school that provide[s] a broad curriculum in secular subjects (maj. opn., ante, at p. 18), that includes a religious perspective in its curriculum (id. at p. 17), and that express[es] its religious viewpoint in [its] otherwise secular classes (id. at p. 3), depends in part on whether the school uses the aid for religious projects (id. at p. 14), whether its secular classes consist of information and coursework that is neutral with respect to religion (id. at p. 3), and whether classes taught in facilities financed with bond proceeds include[] as part of the instruction information or coursework that promotes or opposes a particular religion or religious beliefs. (Id. at p. 18) Under this analysis, the test of constitutionality depends on the extent to which a school separates its teaching of secular subjects from its teaching of religion. In this regard, the majoritys test is contrary to the language of article XVI, section 5, which, as we held in Riles, do[es] not confine [its] prohibition against financing sectarian schools in whole or in part to support for their religious teaching function, as distinguished from secular instruction. (Riles, supra, 29 Cal.3d at p. 812.)
Another problem with the majoritys newly minted testwhich has not been proposed by any party to this case and which is not based on the language of article XVI, section 5, or on any existing case lawis that it is hopelessly vague in several respects. The majority states that a proposed bond financing is constitutional only if, among other things, the benefited school offers a sufficiently broad curriculum in secular subjects . . . that [its] use of the educational facilities built or improved with the bond funding may be expected to promote the public interest in making secular education more available to California residents in general. (Maj. opn., ante, at p. 22.) This formulation leaves the readerand the trial court, which must apply the majoritys test on remandasking: How broad is sufficiently broad? The majority states that offering classes in only a few secular subjects is not enough (maj. opn., ante, at p. 18), but exactly how many is a fewtwo, three, four?[4] Do judges have discretion as to how many is a few, such that one judge may properly find that four secular subjects are not enough, while another may also properly find that four secular subjects are enough? Is any number more than a few, whatever that is, automatically enough to support the conclusion that the schools use of the educational facilities built or improved with the bond funding may be expected to promote the public interest in making secular education more available to California residents in general? (Maj. opn., ante, at p. 2.) The majority provides no guidance on these questions.
The majoritys test is also vague in directing trial courts to determine whether the academic content of a religious schools courses in secular subjects is typical of that provided in nonreligious schools. (Maj. opn., ante, at p. 19.) The majority fails to define what it means by the term academic content. The word
academic simply means of, belonging to, or associated with an academy or school. (Websters 3d New Internat. Dict. (2002) p. 9.) Thus, all content of a religious schools courses in secular subjects constitutes academic content. Presumably, the majority means something else by its use of the term, but the majority does not say what. Insofar as the majority is using the term to mean nonreligious content, the majoritys test is tautological; the nonreligious content of a religious schools course in a secular subject would seemingly have to be typical of the content provided in a nonreligious schools course in the same subject.
The majoritys test is tautological in another sense. According to the majority, a school that includes a religious perspective in its curriculum may be the beneficiary of a bond financing only if two purportedly separate requirements are met: the school must offer a sufficiently broad curriculum in secular subjects (maj. opn., ante, at p. 22, italics added) and the information and coursework used to teach [those] secular subjects must be neutral with respect to religion. (Id., at p. 18.) In my view, a subject qualifies as secular, by definition, only if it consists of information and coursework that is neutral with respect to religion. In other words, any subject that qualifies as secular will necessarily consist of information and coursework that is neutral with respect to religion. Thus, these two separately stated requirements of the majoritys test are, in actuality, but one.
The majoritys test is also ambiguous in that it announces seemingly inconsistent standards. On the one hand, the majority states that a benefited school may not use the bond proceeds for religious projects, that is sectarian instruction or as a place for religious worship or in connection with any part of the programs of any school or department of divinity for the useful life of the Project. (Maj. opn., ante, at p. 14.) On the other hand, the majority states that it is constitutionally permissible for a religious school, in those same facilities, to express its religious viewpoints and perspectives in the course of teaching secular subjects. (Maj. opn., ante, at p. 3.) The majority fails to explain why a schools expression of its religious viewpoints and perspectives in secular classes does not constitute sectarian instruction, or why the building or improvement of a facility in which a school will express its religious viewpoints and perspectives does not constitute a religious project. In this regard, the majoritys analysis seems to be internally inconsistent; the first part of the majoritys four-part test appears to permit what the third part prohibits. More importantly, the majoritys analysis expressly permits the schools to impart their religious viewpoints and perspectives in secular courses, in classrooms built, improved, furnished and equipped with money raised by a public entitythe Authorityon the schools behalf through the Authoritys issuance and sale of bonds. In my view, this violates both the plain meaning and our judicial construction of article XVI, section 5.
A related ambiguity in the majoritys test is the distinction the majority appears to draw between religious instruction and the expression of religious viewpoints and perspectives. On the one hand, the majority declares that a religious school may not, in facilities financed with bond proceeds, teach a class that includes as part of the instruction information or coursework that promotes or opposes a particular religion or religious beliefs. (Maj. opn., ante, at p. 18.) On the other hand, the majority states, a school may express[] its religious viewpoint[s] in [its] otherwise secular classes. (Maj. opn., ante, at p. 3.) Thus, in the majoritys view, there is a difference between expressing a religious viewpoint, which is permissible, and includ[ing] as part of the instruction information or coursework that promotes or opposes a particular religion or religious beliefs, which is not permissible. (Maj. opn., ante, at p. 18.) Unfortunately, the majority fails to explain where the difference lies, or how a court is supposed to tell one from the other.
The majoritys test also gives rise to several other concerns. First, it appears to require significant and unworkable monitoring to determine whether the schools, in teaching secular courses, are impermissibly including information or coursework that promotes or opposes a particular religion or religious beliefs, or are merely expressing religious viewpoints and perspectives. In this regard, notwithstanding the majoritys claim to the contrary (maj. opn., ante, at p. 19), the majoritys test will require scrutiny of the schools day-to-day operations by the Authority and the courts.[5] Second, the majoritys test appears to be too narrow to address the constitutional concerns the proposed bond financings raise. Although the majority acknowledges concern that a school with a religious perspective may [impermissibly] use the facilities built or improved with the revenue bond proceeds to substantially further its religious mission, the test the majority announces to address this concern focuses only on what happens inside the schools classrooms. (Maj. opn., ante, at p. 18.) Notably, as already explained, the schools here intend to use the bond proceeds not just for classrooms, but also for dining and residence halls and an academic and student center complex. The majoritys analysis appears to ignore the extent to which the schools may use those facilities to further their religious mission.[6]
Finally, for several reasons, I disagree with the majoritys view that the proposed bond financings here are valid because they are in the nature of a tax policy rather than an aid program. (Maj. opn., ante, at p. 19, fn. 9.) First, the majoritys discussion rests on the untested and unwarranted assumption that anything that may be characterized as being in the nature of a tax policy because it somehow involves a tax exempt[ion] (ibid.) does not, for that reason, violate article XVI, section 5. Nothing supports this assumption; on the contrary, in Lundberg, in rejecting a constitutional challenge to a tax exemption for property used for school purposes and owned by religious entities, we relied on other constitutional provisions that expressly authorized the exemption and superseded any prohibition in article XVI, section 5s predecessor. (Lundberg, supra, 46 Cal.2d at p. 653.) The majority cites no constitutional provision that expressly authorizes the proposed bond financings in this case.[7] Second, the majoritys discussion rests on another untested and unwarranted assumption: that the terms tax policy and aid program (maj. opn., ante, at p. 19, fn. 9) are mutually exclusive, and that something that can be called a tax policy necessarily cannot also constitute an aid program. Third, I disagree with an express premise of the majoritys tax policy analysis: that enabling schools to borrow funds at below-market interest rates is merely an incidental result of providing private investors with a tax exemption. (Maj. opn., ante, at p. 21.) It is clear that enabling schools to borrow funds at below-market interest rates is both the intended result and primary purpose of the bond financing program. Indeed, there seems to be no other reason for the programs existence; plenty of other tax-exempt investments are available to private investors, and the only reason for providing this one is to enable the schools to finance construction and improvement projects at an interest rate lower than would be available through conventional private financing.
The majoritys tax policy discussion suffers from a fourth flaw: it is based on an analysis we long ago criticized and rejected in Riles. There, as noted above, we explained that the child benefit theorywhich looks to whether a school is benefited only as an incidental result of a benefit provided directly to students has been criticized by courts and commentators (Riles, supra, 29 Cal.3d at p. 807), produces dissonant decisions that cannot be harmonize[d] (id. at pp. 807-808), and in most instances . . . leads to results which are logically indefensible. (Id. at p. 809.) The majority here adopts a close variant of that discredited theory, by reasoning that the schools benefit only incidentally from a tax benefit being provided directly to private investors. In my view, having rejected that approach 25 years ago in Riles, we should not adopt it now. In any event, just as [t]here [was] no rational reason in Riles for concluding that the schools there benefit[ed] only indirectly or remotely from the loan of textbooks to students (id. at p. 810), there is no rational reason here for concluding that the schools would benefit only indirectly or remotely from the tax advantages being made available to private investors. On the contrary, given the availability of other tax-free investments, the primary beneficiary of the proposed bond financings here would be the schools, which would save millions of dollars in financing costs.
In the end, this case seems relatively simple. By issuing and selling bonds, making the proceeds available to the schools, and accepting the special obligation to pay the bondholders, the Authoritya public entitywould be raising money on behalf of the schools at below-market interest rates that the schools could not obtain on their own. As the majority explains, the Authoritys purpose in taking these actions would be to encourage the development of the schools (maj. opn., ante, at p. 5) and to enhance[] their ability . . . to expand . . . . (Id. at p. 17.) By so interceding in the marketplace on the schools behalf, the Authority would save the schools millions of dollars in financing costs and would significantly enhance their ability to carry out their mission. Given the trial courts factual findings regarding that mission and the religious nature of these schools, even if no transfer of public funds is involved, the proposed bond financings violate article XVI, section 5s prohibition against grant[ing] anything to or in aid of any religious sect . . . or sectarian purpose, or help[ing] to support or sustain any school, college, university, hospital, or other institution controlled by any religious creed, church, or sectarian denomination whatever.
I emphasize that my conclusion does not reflect hostility to religion (maj. opn., ante, at p. 18) any more than did our unanimous holding in Riles that lending secular textbooks to religious schools violates article XVI, section 5, even if the schools use the textbooks only for secular instruction. Rather, my conclusion reflects my fealty to the will of the people as expressed first and foremost in the language of the California Constitution, and my view of the judiciarys limited role in applying that Constitution. The question before us is not whether, as a matter of policy, the [proposed bond financings are] wise or beneficial, but instead whether [they are] constitutional. We [must] determine the validity of the [proposed bond financings] by applying the relevant legal principles embodied in the California Constitution, the preeminent expression of California law enacted by the people. (Lungren, supra, 16 Cal.4th at p. 314.) Applying those constitutional principles, I conclude that the proposed bond financings here at issue are invalid under article XVI, section 5. I therefore dissent.
CHIN, J.
WE CONCUR:
WERDEGAR, J.
MORENO, J.
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion California Statewide Communities Development Authority v. All Persons Interested etc.
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Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 116 Cal.App.4th 877
Rehearing Granted
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Opinion No. S124195
Date Filed: March 5, 2007
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Court: Superior
County: Sacramento
Judge: Loren E. McMaster
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Attorneys for Appellant:
Orrick, Herrington & Sutcliffe, Norman C. Hile, Margaret Carew Toledo, Michael C. Weed, Eugene J. Carron, Megan V. Hamilton, Richard I. Hiscocks; and Gerald F. Uelmen for Plaintiff and Appellant.
Sidley Austin Brown & Wood, Jeffrey A. Berman, Mark E. Haddad, Gene C. Schaerr and Nicholas O. Miler for Asuza Pacific University, California Baptist University, Oaks Christian School, Loma Linda University, The Association of Independent California Colleges and Universities, Association of Christian Schools International, Seventh-Day Adventist Church State Council and The Assemblies of God Financial Services Group as Amici Curiae on behalf of Plaintiff and Appellant.
Center for Law & Religious Freedom, Gregory S. Baylor, Steven H. Aden, M. Casey Mattox and Samuel B. Casey for Council for Christian Colleges and Universities and Christian Legal Society as Amici Curiae on behalf of Plaintiff and Appellant.
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Attorneys for Respondent:
Bill Lockyer, Attorney General, Manuel M. Medeiros, State Solicitor General, James M. Humes, Chief Assistant Attorney General, Louis R. Mauro, Assistant Attorney General, Catherine Van Aken, Leslie R. Lopez and Zackery P. Morazzini, Deputy Attorneys General, for Respondents.
Jordan Budd, Elvie Cacciavillani; Margaret C. Crosby; and Peter Eliasberg for American Civil Liberties Union Foundation of San Diego and Imperial Counties, American Civil Liberties Union Foundation of Northern California, Inc., and ACLU Foundation of Southern California as Amici Curiae on behalf of Respondents.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Norman C. Hile
Orrick, Herrington & Sutcliffe
400 Capitol Mall, Suite 3000
Sacramento, CA 95814-4497
(916) 447-9200
Zackery P. Morazzini
Deputy Attorney General
1300 I Street
Sacramento, CA 94244-2550
(916) 327-0973
Publication Courtesy of San Diego County Legal Resource Directory.
Analysis and review provided by San Diego County Property line attorney.
[1] The restricted use covenants do not cure the constitutional infirmity for an additional reason: they fail to limit the schools use of the furnishings and equipment purchased with the bond proceeds. By their terms, they limit only the use of any facility, place or building financed or refinanced with a portion of the bond proceeds.
[2] The majority asserts that Priests dictum regarding the validity under the state Constitution of the statutory bond program as applied to religiously affiliated schools did not depend on those colleges giving no admissions preference to adherents of their own faiths. (Maj. opn., ante, at p. 13, fn. 6.) However, the majority cites nothing from Priest to support its assertion, and the majoritys unsupported assertion ignores both the factual context of Priest and our discussion of Priest in Riles. The majority also ignores the fact, as previously noted, that the restricted use covenants do not limit the schools use of the furnishings and equipment they purchase with the bond proceeds.
[3] The majority insists that the bondholders have no recourse for nonpayment against the Authority. (Maj. opn., ante, at p. 15.) However, the bondholders would appear to have recourse against the Authority insofar as the schools have made payments to the Authority to enable it to pay the bondholders. The majority also glosses over another aspect of the bond financing agreements: after the schools transfer their interest in school property to the Authority, the Authority will transfer its interest back to the schools. The majority does not explain why the latter transfer would not violate article XVI, section 5s prohibition against a public entitys making any grant or donation of . . . real estate . . . for any religious creed, church, or sectarian purpose whatever.
[4] The word few is defined as [a]n indefinitely small number of persons or things. (American Heritage Dict. (4th ed. 2000) p. 654, italics added.)
[5] Unlike the majority, I am not convinced that it will be sufficient merely to examine the schools course descriptions. (Maj. opn., ante, at p. 19.) There is no reason to suppose that the actual religious content of a purportedly secular course taught in a sectarian school will be accurately reflected in a formal course description.
[6] As the majoritys analysis implicitly recognizes, the restricted use covenants are not the answer to this problem. If they were, then there would be no need to determine whether the schools, notwithstanding the restricted use covenants, are impermissibly including in their teaching of secular subjects information or coursework that promotes or opposes a particular religion or religious beliefs.
[7] In finding that the proposed financings have a secular purpose, the majority relies on article IX, section 1 of the California Constitution, which directs the Legislature [to] encourage by all suitable means the promotion of intellectual, scientific, moral, and agricultural improvement. (See maj. opn., ante, at pp. 1, 15-17.) By its terms, that section is relevant to acts of the Legislature. (Cal. Const., art. IX, 1.) At issue here are proposed acts of the Authority, not the Legislature. Moreover, the section speaks only to the use of suitable means. (Ibid., italics added.) Means that violate other provisions of the state Constitution, such as article XVI, section 5, cannot be regarded as suitable. (Art. IX, 1.)
