California District Can Assess Rental Charge on Gross Income

A local government that leases commercial property and charges tenants a percentage of their gross income doesn’t levy an unlawful tax, a California appeals court ruled.

California’s Constitution prevents local governments from imposing taxes without voter approval, but exempts any rent or lease charge on government property.

Government lease or rent charges aren’t subject to the constitutional requirement that any local levy or fee be reasonably related to the government’s cost of providing services, the California Court of Appeal, Second Appellate District said Monday.

Other government fees the state exempts from voter approval must be reasonably related to the government’s ...