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October 24, 1990


Appeals from the Superior Court of the District of Columbia Hon. Emmet G. Sullivan and Hon. Curtis E. von Kann, Trial Judges

Rehearing Denied April 1, 1991. Rehearing En Banc Granted April 1, 1991. Vacated by Order of the Court April 1, 1991,

Rogers, Chief Judge, and Belson and Farrell, Associate Judges. Opinion for the court by Associate Judge Farrell. Concurring Opinion by Chief Judge Rogers.

The opinion of the court was delivered by: Farrell

In these consolidated expedited appeals, we reverse decisions of the Superior Court affirming the District of Columbia Board of Elections and Ethics' rejection of proposed housing initiatives that, in essence, would impose fees or tax surcharges on commercial real estate developers and mandate their deposit in trust funds devoted to specified housing development purposes. The Board of Elections and Ethics (the Board) concluded that the proposed measures contained provisions that amounted to "laws appropriating funds," which cannot be the subject of an initiative under D.C. Code § 1-281(a) (1987). *fn1 Appellants challenged this decision in Superior Court, D.C. Code § 1-1320(b)(3), (b) and in each case the court granted summary judgment in the Board's favor. We conclude, to the contrary, that the proposals are not attempts "to launch the appropriations process" within the meaning of Convention Center Referendum Comm. v. District of Columbia Bd. of Elections & Ethics, 441 A.2d 889 (D.C. 1981) (en banc) (Convention Center), and our subsequent decisions, and hence there is no reason to withhold the initiatives from the vote of the electorate. *fn2


Both initiatives *fn3 contain provisions to establish "link-age" between large commercial developments in the District of Columbia and the funding of programs for development of low and moderate income housing. In No. 90-680, the proposed measure, entitled the "Affordable Housing Act" initiative, would require developers who apply for building permits for commercial office developments of 50,000 square feet or more to agree to construct or rehabilitate housing for low or moderate income facilities or else contribute money to a fund for that purpose. The amount of housing to be built, or the contribution to be made in the alternative, would be determined by formulas set forth in the initiative. The funds contributed by the developer would be set aside in a housing trust fund established by the initiative, and monies in the fund would be used exclusively to increase the supply of housing affordable to low and moderate income families.

In No. 90-809, the proposed initiative would amend D.C. Code § 47-813 (1990) (establishing classes of property for taxation purposes) to impose a ten percent surcharge on commercial (Class 4) properties exceeding 50,000 square feet, and require that an amount equal to the revenues generated by the surcharge be deposited in the Housing Production Trust Fund established by the Council of the District of Columbia in 1988. D.C. Code §§ 45-3101 to -3104 (1990). That fund may be used for housing production purposes set forth in D.C. Code § 45-3102(b) or determined by the Department of Housing and Community Development to be consistent with those purposes.

In declining to place either initiative before the electorate, the Board did not conclude that the levy of fees as such from commercial developers (in the form either of an optional contribution in lieu of construction or of a tax surcharge) disqualified the measure as a proper subject of initiative. Instead it focused on the restrictions on use of the revenues imposed by the initiatives. In No. 90-680 the Board concluded:

We believe that by restricting the monies in the respective funds to a specific purpose, the discretion of the Council and the Mayor are nullified, and therefore these measures are an attempt to launch the appropriation process contrary to the holding in Convention Center. Simply put, these monies could not be used for other bona fide governmental functions, such as filling pot holes or funding recreational centers, which the Council and the Mayor, in their discretion, may deem to be in the best fiscal and budgetary interests of the District of Columbia.

We believe that creating a set aside of funds and limiting the use of those funds to a restrictive and limited purpose is not only an attempt to appropriate funds, but is tantamount to the conceptual self-actuating result that the Court in [District of Columbia Bd. of Elections & Ethics v.] Jones, 481 A.2d 456 (D.C. 1984), held was an unlawful appropriation of funds. If these initiatives merely created a fund without directing or limiting the spending of the monies, they might not constitute an unlawful appropriation.

In No. 90-809, the Board adopted its reasoning in No. 90-680, equating the proposal to raise revenues and place them in the existing Housing Production Trust Fund with the proposal to create a new fund with specified purposes, and characterizing both as "an attempt to launch the appropriation process by nullifying the Council's discretion." Unpersuaded by the argument that neither measure would require the Council to attempt (through the budget process) to spend any of the money raised, the Board stated: "To claim that the Council does not have to spend the monies at all begs the question. The pivotal fact is that if and when the Council elected to expend the monies generated by these measures, it would be limited under the express terms of this initiative, to appropriate funds for housing purposes only."


We conclude that the Board erred in both aspects of its reasoning: these proposed initiatives are not "an attempt to launch the appropriations process" within the meaning of Convention Center, and they are not "tantamount to the conceptual self-actuating result" that Jones held was an unlawful appropriation of funds. Neither initiative purports to require the Council to submit a budget request to Congress to appropriate any of the money that would be generated. All either does is impose limits on the use the Council may make of the funds in the event it seeks and obtains budgetary authority to spend them. Our decisions in Convention Center and succeeding cases demonstrate, in short, that these are not "laws appropriating funds" barred from the initiative process by D.C. Code § 1-281.

"Absent express or implied limitation, the power of the electorate to act by initiative is coextensive with the power of the legislature to adopt legislative measures. Convention Center, 441 A.2d at 897. While in view of "the significance and technicality of financial decisions, many states have excluded such matters from the initiative right" by statute or judicial interpretation, "the initiative right should be liberally construed," and only limitations expressed in the law or "'clearly and compellingly' implied" will serve to invalidate a proposed ...

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