The Protect Our Communities Foundation v. City of San Diego

Filed 5/26/26; Certified for Partial Publication 6/25/26 (order attached) COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA THE PROTECT OUR COMMUNITIES D083588 FOUNDATION, Plaintiff and Appellant, (Super. Ct. No. 37-2021- v. 00029833-CU-WM-CTL) CITY OF SAN DIEGO, Defendant and Appellant; SAN DIEGO GAS & ELECTRIC COMPANY, Real Party in Interest and Appellant. APPEAL from orders of the Superior Court of San Diego County, Katherine A. Bacal, Judge. Affirmed. Shute, Mihaly & Weinberger, Winter King; Malinda R. Dickenson for Plaintiff and Appellant The Protect Our Communities Foundation. Mara W. Elliott and Heather Ferbert, City Attorneys, M. Travis Phelps, Assistant City Attorney, and Matthew Zollman, Deputy City Attorney, for Defendant and Appellant City of San Diego.  Gibson, Dunn & Crutcher, David A. Battaglia, Maurice Suh, James L. Zelenay, Jr., Peter S. Modlin, Blaine H. Evanson and Zachary C. Freund for Real Party in Interest and Appellant. I. INTRODUCTION The Protect Our Communities Foundation (POCF) 1 challenges the City of San Diego’s (the City) award of gas and electric franchises (the franchises) to real party in interest San Diego Gas & Electric Company (SDG&E). POCF contends the City’s approval of the franchises and associated agreements violated the Constitution of the State of California, the San Diego City Charter (the Charter), and the California Environmental Quality Act (CEQA, Pub. Resources Code, § 21000 et seq.). Specifically, it argues the trial court erred: (1) by rejecting POCF’s claims that the City’s invitation to bid process violated the Charter’s requirements for open competition and public bidding; (2) in ruling that certain surcharges were not “taxes” subject to Proposition 26; and (3) by rejecting POCF’s claim that the City was required to conduct an environmental review under CEQA. The City and SDG&E cross-appeal the trial court’s grant of a writ of mandate severing from the franchise agreements provisions requiring that any decision to void the franchises before the end of their term be approved by a two-thirds majority of the San Diego City Council (City Council), instead of a bare majority. As we explain below, we first conclude that POCF did not meet its burden to prove that the City violated the Charter’s requirements for 1 According to its petition, POCF is a nonprofit public benefit corporation and “represents the interests of San Diego and Southern California residential ratepayers in proceedings before the California Public Utilities Commission and other California agencies and in the courts.” 2 competitive bidding for the franchises. Accordingly, the trial court properly denied POCF’s third cause of action for a writ of mandate directing the City to void its approvals of the franchise ordinances. We further hold that the four challenged surcharges that are embedded in the franchise ordinances fall within an exemption to the requirements of Proposition 26 and are therefore not unconstitutional taxes; that the plain language of the Charter precludes the franchise ordinances’ requirement that a two-thirds vote of the City Council would be necessary to terminate the franchises; and that the award of the franchises did not constitute a project for purposes of CEQA, and therefore the City properly concluded that CEQA did not apply to the award of these franchises. The orders are affirmed. II. FACTUAL AND PROCEDURAL BACKGROUND 2 In 1920, SDG&E entered gas and electric franchise agreements with the City and became the City’s provider of gas and electricity for a 50-year term. In 1970, SDG&E entered new agreements with the City for another 50-year term, ending in 2020. In September 2020, in anticipation of the expiration of those franchise agreements, then-Mayor Kevin Faulconer issued an invitation to bid for new gas and electric franchise agreements, inviting any qualified company to bid. In December 2020, the City Council opened the bids and SDG&E was revealed to be the sole bidder. The City’s new mayor, Todd Gloria, reviewed SDG&E’s bids, declared them nonresponsive “based on the exceptions contained to the material terms,” and cancelled the initial bidding process. The City extended the then-existing franchises for 135 days. In March 2021, Mayor Gloria issued new invitations for any qualified company to bid on the gas and electric franchises. These invitations to bid 2 This section provides a general background regarding the litigation. The facts related to the specific claims at issue in this appeal will be discussed in section III, post. 3 provided 20-year terms for both the gas and electric franchises but divided those terms into an initial term of ten years followed by a ten-year conditional extension. In April 2021, the City Council unsealed the bids and SDG&E was once again the sole bidder for both franchises. After negotiations, the City and SDG&E agreed on the terms of the franchise agreements, which were then put before the City Council for approval. The City and SDG&E also reached agreement on the terms of an energy cooperation agreement, an administrative memorandum of understanding (MOU), and an undergrounding MOU. Thereafter, the City concluded that awarding the franchises to SDG&E constituted “a fiscal and administrative activity of a government that will not result in a direct or indirect physical change in the environment,” and thus “is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).” 3 Alternatively, it found the franchise agreements were exempt from CEQA under CEQA Guidelines section 15301, subdivision (b), which exempts existing utility facilities. In May 2021, the City Council voted and approved the proposed franchise agreements between the City and SDG&E. In June 2021, the City Council formally approved two resolutions that had been voted on at the May meeting. 4 The City Council adopted the franchise agreements—ordinance 3 “CEQA is implemented by an extensive series of administrative regulations promulgated by the Secretary of the Natural Resources Agency, ordinarily referred to as the ‘CEQA Guidelines.’ ” (Union of Medical Marijuana Patients, Inc. v. City of San Diego (2019) 7 Cal.5th 1171, 1184 (UMMP).) The CEQA Guidelines are codified at title 14 of the California Code of Regulations section 15000 et seq. 4 The first resolution, resolution No. 313554, included findings that the City Council had determined the franchise agreements and energy 4 Nos. 21327 and 21328—and awarded SDG&E the electric and gas franchises with the City. In November 2021, acting pursuant to express authority granted to the mayor by the City Council, the City and SDG&E executed the administrative MOU which established the general work requirements for SDG&E activities, including a requirement that SDG&E and its contractors comply with all applicable laws and City requirements. In March 2022, the City Council adopted by ordinance the undergrounding MOU between the City and SDG&E which established a protocol for the design, procurement, and construction necessary to convert SDG&E’s electrical facilities to underground facilities. In July 2021, POCF filed a verified petition for writ of mandate asserting four causes of action for alleged: (1) unlawful imposition of a special tax; (2) violations of competitive bidding mandates; (3) CEQA violations; and (4) impermissible delegation of police power. POCF requested an order voiding the City’s approval of the franchises and related agreements. The trial court bifurcated the first cause of action for alleged CEQA violations and issued an order on December 23, 2022 (the December Order), denying the petition as to POCF’s first cause of action. After a second hearing addressing the remaining causes of action, the trial court issued an order on October 10, 2023 (the October Order), denying the petition except with respect to one argument raised in support of POCF’s second cause of cooperation agreement were not subject to CEQA. The second resolution, resolution No. 313555, authorized the mayor to execute the energy cooperation agreement with SDG&E. 5 action (i.e., severing from the ordinances a two-thirds voting requirement). All parties appealed. 5 III. DISCUSSION A. THE CITY DID NOT VIOLATE ITS CHARTER’S COMPETITIVE BIDDING MANDATES 1. Additional Background In 2020, the City issued invitations to bid for new gas and electric franchises. SDG&E bid on both franchises. In December 2020, Mayor Gloria determined SDG&E’s bid to be unresponsive based on the exceptions to the material terms of the advertised franchises. Mayor Gloria canceled the then- pending invitations to bid and the City Council later entered into an agreement with SDG&E to extend the existing franchises to June 1, 2021. In March 2021, Mayor Gloria issued new invitations to bid for the gas and electric franchises. The solicitations stated that “[t]he franchise may be awarded by introduction and adoption of an ordinance substantially in the form specified as either Exhibit A or Exhibit B attached hereto.” The Exhibit A draft ordinance expressly stated that the grantee possessed a “certain franchise . . . acquired pursuant to section 19 of article XI of the Constitution of the State of California, as the section existed prior to its amendment on October 10, 1911.” As we discuss below, such a “certain franchise” is known as a “constitutional franchise.” The Exhibit B draft 5 We ordered the parties to submit briefing on whether the October Order was an appealable order. We later directed the appeal to proceed and allowed the parties to address appealability in their appellate briefing. All parties contend the October Order is appealable. We agree that the October Order, together with the December Order, are appealable as a final determination of the parties’ rights which left no issue for future consideration except the fact of compliance or noncompliance with the terms of the orders. (Dhillon v. John Muir Health (2017) 2 Cal.5th 1109, 1115.) 6 ordinance was “for bidders who do not possess such a ‘constitutional franchise’ for lighting.” 6 In its third cause of action, POCF sought mandamus relief under Code of Civil Procedure section 1085, alleging the City violated competitive bidding mandates. POCF asserted the City had a ministerial duty under its charter to ensure all contracts were competitively bid. It argued that the City’s invitations to bid violated public bidding requirements by adopting a two- tiered system—one ordinance for companies with a “constitutional franchise,” and a separate ordinance for bidders lacking such a franchise. As a secondary argument, POCF also alleged that the invitations to bid violated public bidding requirements because, after the bids were unsealed, the ordinances adopted by the City modified the applicable criteria from those set forth in the ordinances attached as exhibits to the invitations to bid. POCF claimed the invitations to bid contravened Charter section 94, which requires that contracts for the “ ‘construction, reconstruction or repair’ ” of public infrastructure—including roads, buildings, and utilities— must follow competitive bidding procedures established by ordinance. Contracts not complying with this provision are deemed void and unenforceable against the City. (Charter, art. VII, § 94.) POCF also cited section 100 of the Charter which prohibits any City officer or employee from giving preferential treatment to a bidder by providing selective information or withholding it, or from misleading bidders regarding the required materials or supplies; and Charter section 103, which requires that the City Council’s grant of a franchise must be preceded by “ ‘an opportunity for free and open competition.’ ” 6 For ease of reference, we refer to Exhibit A bidders with a constitutional franchise as proceeding under “option A” and Exhibit B bidders as proceeding under “option B.” 7  POCF maintained that “[c]ompanies with a constitutional franchise would start out with a competitive advantage to those who do not possess a constitutional franchise, because a city can neither charge money for a constitutional franchise nor may it terminate a constitutional franchise without compensation by granting an exclusive franchise to a different entity.” It alleged that SDG&E did not in fact possess a constitutional franchise. Accordingly, it argued to the trial court that the City’s references to a constitutional franchise improperly favored SDG&E and discouraged other entities from bidding because it signaled to possible bidders that SDG&E held property rights that could not be extinguished except through eminent domain proceedings. POCF also argued that the City impermissibly provided SDG&E with veto authority over City policy. POCF claimed the City changed the structure of the administrative and undergrounding MOUs to give SDG&E veto power over the terms of agreements that had not yet been negotiated at the time the City approved the ordinances. POCF also noted SDG&E vetoed certain items in the invitations to bid, requiring that SDG&E: (1) comply with the City’s objective to reduce greenhouse gas emissions to the fullest extent practical, eliminating the word “fullest”; (2) implement the “City’s desire to accomplish the goals set forth in its Climate Action Plan dated December 2015, and any revised or successive climate plan,” eliminating the term “and any revised or successive climate plan”; (3) expand distributed energy resources; and (4) replace terms reflecting the City’s regulatory authority with an agreement “that a Superior Court judge or appellate court, not the City, will determine the contract terms for cost responsibility of all relocations of Grantee facilities necessitated by all City water projects from now until 2041.” 8  In response, SDG&E claimed it possessed a constitutional franchise because it had provided utility services in the City since before October 10, 1911. It argued there was no favoritism; the ordinances merely reflected the reality that SDG&E held a constitutional franchise in San Diego, whereas other potential bidders did not. It did not address POCF’s argument that the City impermissibly provided SDG&E with veto authority over City policy. The trial court acknowledged the parties’ dispute over whether SDG&E had a constitutional franchise but did not decide the issue. It concluded the City did not “tilt the playing field” in SDG&E’s favor by acknowledging that SDG&E may be differently situated if it had a constitutional franchise. It also rejected the argument that requiring non-SDG&E bidders to either pay to acquire SDG&E’s infrastructure or litigate with SDG&E created an uneven playing field. The court did not separately address each of POCF’s arguments claiming the City improperly changed requirements established in the invitations to bid after bids were submitted. But the court indicated it had fully considered the written and oral arguments of all parties and the evidence presented. Finding no evidence that any bidder was deterred from submitting a bid because of anti-competitive procedures, the court denied the petition for writ of mandate. 9 2. Analysis 7 POCF contends the City’s invitations to bid violated public bidding requirements because the City (1) improperly changed the requirements established in the invitations to bid after bids were submitted and (2) adopted a two-tiered system—one ordinance for companies with a constitutional franchise, and a separate ordinance for bidders lacking such a franchise. We provide the standards governing such claims, then address each in turn. A writ of mandate compels a government official or agency to perform a legally required duty. (Code Civ. Proc., § 1085.) Courts may use this remedy not only for ministerial actions, but also for legislative or quasi-legislative acts. (County of Los Angeles v. City of Los Angeles (2013) 214 Cal.App.4th 643, 653.) In considering whether to issue the writ, a trial court must determine whether the agency had a mandatory duty that can be directly enforced or a policy-based duty subject to judicial deference. (Ibid.) This determination is typically reviewed independently by the court because it involves interpreting the law. (Ibid.) A ministerial act is one the law specifically requires an official to perform in a prescribed manner, without discretion. (Ibid.) In contrast, discretionary acts involve judgment or choice. (Id. at pp. 653–654.) Ordinarily, a writ of mandate cannot control how discretion is exercised, but it may issue to correct an abuse of discretion. (Id. 7 After reviewing the record, we requested supplemental briefing from the parties regarding who had the burden of proving SDG&E had a constitutional franchise and whether the City had a good faith basis for believing SDG&E possessed a constitutional franchise. Assuming SDG&E did not have a constitutional franchise, we inquired whether the City acted arbitrarily and capriciously in setting up a bidding solicitation scheme that relied on that assumption and whether, to the extent the invitations to bid implied that some entity held a constitutional franchise, it was reasonable to assume this information would deter bidders. 10 at p. 654.) Courts do not substitute their judgment for that of the agency. (Ibid.) If reasonable people could differ about whether the agency’s decision was wise, the agency’s choice must stand. (Ibid.) A petitioner seeking mandate relief under Code of Civil Procedure section 1085 bears the burden of pleading and proving the facts establishing entitlement to relief. (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1153 (Cal. Correctional Peace Officers); Evid. Code, § 500 [“a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting”].) The definitional elements of a cause of action describe the minimum showing a petitioner must make to support a favorable judgment. (Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1205.) Accordingly, the petitioner must demonstrate the agency’s decision was legally unreasonable or invalid as a matter of law. (Mike Moore’s 24-Hour Towing v. City of San Diego (1996) 45 Cal.App.4th 1294, 1306 (Mike Moore’s).) Competitive bidding requires that bids conform to the stated specifications, and bids that fail to do so are ordinarily ineligible for acceptance. (Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal.App.4th 897, 904 (Ghilotti).) However, courts have long recognized that a bid may still be accepted if it substantially complies with the bidding requirements, even if it is not strictly responsive, so long as the deviation is inconsequential—that is, it did not affect the bid price or give the bidder an unfair advantage over others. (Ibid.) Whether a bid materially deviates from the specifications is a question of fact. (Id. at p. 906.) “A public entity’s ‘award of a contract, and all the acts leading up to the award, are legislative in character.’ ” (Mike Moore’s, supra, 45 Cal.App.4th at 11 p. 1303.) Judicial review under Code of Civil Procedure section 1085 is limited to whether the agency acted arbitrarily, capriciously, without evidentiary support, or in violation of public policy or procedural fairness. (Mike Moore’s, at p. 1303.) These are legal questions, reviewed de novo on appeal unless factual disputes are involved. In that case, findings supported by substantial evidence will be upheld. (Ibid.) a. Changed Bid Requirements POCF contends that the invitations to bid violated competitive bidding requirements because the ordinances ultimately adopted by the City differed from the draft ordinances attached as exhibits to the invitations to bid. It reprises its arguments concerning alleged post-bid changes to the MOUs, the Climate Action Plan, and distributed energy resources. We reject the City and SDG&E’s contention that POCF forfeited these arguments by not raising them in the trial court but agree the arguments lack merit. 8 With respect to the MOUs, POCF argues the City impermissibly allowed post-bid changes that converted the administrative MOU into a negotiated document and limited the City’s authority under the undergrounding MOU. POCF further asserts the City adopted ordinances that eliminated requirements contained in the exemplar ordinances attached to the invitations to bid, thereby misleading potential bidders and materially 8 POCF also argues on appeal that the renegotiated agreements changed: (1) the payment terms making it more difficult for the City to terminate the franchises; and (2) costs for liquidated damages and funding of employee bonuses favorable to SDG&E. POCF forfeited these arguments by failing to make them in the trial court. (Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 548.) 12 altering the competitive landscape after bids were unsealed. 9 POCF also claims the trial court failed to rule on these issues and requests we direct entry of judgment in its favor on this cause of action. The record does not support POCF’s assertion that the trial court failed to address these claims. The court expressly denied mandate relief on the third cause of action after stating it had “fully considered” all written and oral arguments. Under the doctrine of implied findings, we presume the trial court made all factual determinations necessary to support its ruling, so long as substantial evidence supports those determinations. (Brewer v. Carter (2013) 218 Cal.App.4th 1312, 1320.) Accordingly, we presume the court found that the post-bid changes were not material, did not mislead bidders, did not confer an unfair advantage, and did not violate competitive bidding requirements or the City Charter. POCF’s substantive argument—that the adopted ordinances materially deviated from the bid specifications—fails on the merits. The invitations to bid expressly stated that the franchises “may be awarded by introduction and adoption of an ordinance substantially in the form specified as either Exhibit A or Exhibit B attached hereto.” By their plain terms, the invitations contemplated that the final ordinances would not be identical to the exemplar 9 Specifically, POCF noted the adopted ordinances eliminated terms in the invitations to bid: (1) requiring the franchisee to cooperate in good faith to attain the goals of the Climate Action Plan “ ‘and any revised or successive climate plan’ ” with the adopted ordinances eliminating the quoted language; (2) requiring that SDG&E eliminate greenhouse gases to the “ ‘fullest’ ” extent practical by deleting the quoted word; (3) requiring distributed energy systems permit excess energy be made available to other customers; (4) requiring SDG&E “ ‘not unreasonably oppose or obstruct’ ” mechanisms to support renewable energy by eliminating the quoted language; and (5) allowing the City to determine costs associated with relocated water projects and instead allowing courts to decide the issue. 13 ordinances, but only substantially similar. Competitive bidding law does not require absolute identity between bid specifications and the final contract particularly where, as here, the governing documents expressly allow for modification. (Ghilotti, supra, 45 Cal.App.4th at p. 904.) The invitations to bid further reserved the City’s right to negotiate changes to bid terms or to negotiate with the incumbent franchise holder to renew, extend, or replace the existing franchise. They also expressly contemplated post-bid negotiation of the energy cooperation agreement, directing bidders to submit narrative proposals addressing energy policy and identify desired terms and commitments. Bidders were specifically asked to describe any barriers to alignment with provisions of the exemplar ordinances, underscoring that deviations were anticipated and evaluated as part of the competitive process. Consistent with this framework, all proposals for the cooperation agreement were subject to acceptance, rejection, or modification by the mayor. SDG&E’s successful bids expressly requested negotiations over specific ordinance language, precisely as the invitations to bid contemplated. Against this record, POCF’s assertion that the City was bound to adopt the exemplar ordinances without deviation is untenable. Finally, POCF presented no evidence that any bidder was deterred from submitting a bid, misled as to the bidding requirements, or placed at a competitive disadvantage because of the challenged changes. Although two entities initially expressed interest in the franchises, neither ultimately submitted a bid, and POCF offered no evidence explaining why they declined to do so. In the absence of a showing that any deviation materially affected price, competition, or the fairness of the bidding process, competitive bidding law does not prohibit the City’s actions. What remains is nothing more than a disagreement with the City’s policy choices and its exercise of discretion— 14 matters that are legislative in character and entitled to substantial judicial deference. 10 (Mike Moore’s, supra, 45 Cal.App.4th at p. 1303.) In sum, POCF failed to carry its burden of proving that the City violated competitive bidding requirements or breached a ministerial duty enforceable by writ of mandate. The record demonstrates that the bidding process expressly contemplated negotiation and modification, that any post- bid changes were within the scope of the invitations to bid, and that no bidder was misled or disadvantaged. Because POCF did not establish that the City acted arbitrarily, capriciously, or in violation of law, the trial court properly denied mandate relief on these claims. b. Constitutional Franchise The trial court noted that the parties disagreed as to whether SDG&E possesses a constitutional franchise but did not resolve the dispute. The 10 POCF’s reliance on Baldwin-Lima-Hamilton Corp. v. Superior Court of San Francisco (1962) 208 Cal.App.2d 803, Konica Business Machines U.S.A., Inc. v. Regents of University of California (1988) 206 Cal.App.3d 449, Eel River Disposal and Resource Recovery, Inc. v. Humboldt (2013) 221 Cal.App.4th 209, DeSilva Gates Construction, LP v. Department of Transportation (2015) 242 Cal.App.4th 1409, and Valley Crest Landscape, Inc. v. City Council (1996) 41 Cal.App.4th 1432 is misplaced because each involved a losing bidder claiming prejudice as a result of the governmental defendant’s alleged failure to adhere to bid specifications. (Baldwin-Lima, at pp. 807–808, 822 [deviation from bid requirement that equipment be manufactured in the United States allowed winning bidder to beat plaintiff’s price]; Konica, at pp. 451, 453–454, 457 [acceptance of bid that deviated from listed performance specifications for copiers put bidders in unfair position of having to guess what would satisfy defendant’s needs]; Eel River, at pp. 214, 237 [changed criteria after bids were unsealed and introducing previously unknown factor disadvantaged all bidders except the one receiving franchise]; DeSilva, at pp. 1413, 1423–1424 [allowing correction of “ ‘material’ ” bid deviation while rejecting bid with no material deviation constituted an abuse of discretion]; Valley Crest, at pp. 1435, 1442–1443 [winning bidder received “unfair advantage” being allowed to correct material bid mistake after submission].) 15 parties fully litigated the issue, and it was central to the parties’ arguments about the validity of the bidding process. On appeal, POCF argues that the separate bid terms gave SDG&E an unfair competitive advantage in the bidding process, alleging that SDG&E in fact did not have a constitutional franchise, and, further, that SDG&E presented no admissible evidence supporting its constitutional franchise claim. The City and SDG&E’s combined respondent’s brief does not address the issue at all, prompting us to request supplemental briefing. We therefore begin by clarifying what constitutes a constitutional franchise, then address which party bore the burden of proof on that issue and whether that burden was met. Although not defined in the Charter, the term “franchise” generally refers to services that government is obligated to provide—such as water, gas, electricity, or telephone service—and the right to use public streets and ways to deliver those services to the public. (Copt–Air v. City of San Diego (1971) 15 Cal.App.3d 984, 987–988.) A franchise is conferred through a city’s legislative authority. (Pacific Rock etc. Co. v. City of Upland (1967) 67 Cal.2d 666, 668.) It arises when a government authorizes private companies to place infrastructure on public property to deliver utilities across city streets and other public ways. (Saathoff v. City of San Diego (1995) 35 Cal.App.4th 697, 703–704 (Saathoff).) 11 A private utility’s right to use public streets under a franchise is a property interest created by contract, namely the franchise agreement (Southern Cal. Gas Co. v. City of Vernon (1995) 41 Cal.App.4th 209, 218), “and a franchise fee is the purchase price of the franchise.” (Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 262 (Jacks).) 11 Courts have also recognized that cities may grant franchises not only for traditional utilities but also for other public services, such as ambulance service, garbage collection, and cable television. (Saathoff, supra, 35 Cal.App.4th at p. 704.) 16  In contrast, a constitutional franchise derives from article XI, section 19, of the 1879 California Constitution, which allowed any person or company to acquire a constitutional franchise merely by installing infrastructure in public streets to provide artificial light—without the need for legislative approval. (City of Santa Cruz v. Pacific Gas & Electric Co. (2000) 82 Cal.App.4th 1167, 1171 (Santa Cruz).) 12 Once infrastructure was installed, the arrangement became a binding contract with the state and granted the provider a protected property interest. (Id. at pp. 1171–1172.) “[A]ny requirement of payment for this privilege or limitation on its duration was an invalid restriction.” (Id. at pp. 1181–1182.) The existence of a constitutional franchise gives the franchisee the continuing authority to extend its infrastructure to new streets “so far as necessary to serve the municipality . . . .” (Russell v. Sebastian (1914) 233 U.S. 195, 210.) Although the Constitution was amended in 1911 to eliminate this type of automatic franchise, the amendment did not affect entities that had already begun providing electricity for artificial light using city streets. (Jacks, supra, 3 Cal.5th at p. 264 [“The constitutional amendment did not 12 As amended in 1884, article XI, section 19 stated as follows: “ ‘In any city where there are no public works owned and controlled by the municipality, for supplying the same with water or artificial light, any individual, or any company duly incorporated for such purpose under and by authority of the laws of this State, shall, under the direction of the Superintendent of Streets, or other officer in control thereof, and under such general regulations as the municipality may prescribe for damages and indemnity for damages, have the privilege of using the public streets and thoroughfares thereof, and of laying down pipes and conduits therein, and connections therewith, so far as may be necessary for introducing into and supplying such city and its inhabitants either with gaslight or other illuminating light, or with fresh water for domestic and all other purposes, upon the condition that the municipal government shall have the right to regulate the charges thereof.’ ” (Santa Cruz, supra, 82 Cal.App.4th at p. 1171.) 17 impair rights under existing constitutional franchises.”]; Santa Cruz, supra, 82 Cal.App.4th at p. 1172.) Their rights remained intact, and they could continue providing electricity for lighting without being subject to new fees for doing so. (Santa Cruz, at p. 1172.) But to complicate matters, the infrastructure used to deliver electricity for lighting—such as poles and wires—also carried electricity for additional purposes, including heating and cooking. (Ibid.) To cover these non-lighting uses, entities holding constitutional franchises entered into separate agreements with municipalities. (Ibid.) These agreements, often referred to as “complementary” franchises, required the payment of fees for the continued use of public streets to supply electricity or gas for non-lighting services. (Ibid.) POCF contends SDG&E had the burden of proving the existence of a constitutional franchise because the City and SDG&E asserted in their answers that they acted lawfully. The City and SDG&E counter that POCF alleged, as an element of its third cause of action, that SDG&E did not possess a constitutional franchise and POCF was therefore obliged to prove its non-existence. We agree with the City and SDG&E that POCF had the burden of proof on this issue. The City structured the bidding process around whether a bidder possessed a constitutional franchise and awarded the franchise under the ordinance applicable to an entity asserting such a right. Whether SDG&E in fact possessed a constitutional franchise is therefore integral to POCF’s claim that the bidding process violated competitive bidding mandates. POCF expressly alleged that SDG&E lacked a constitutional franchise and that the two-ordinance structure improperly conferred a competitive advantage. Because that allegation was essential to POCF’s cause of action, POCF bore 18 the burden of proving it. (Cal. Correctional Peace Officers, supra, 10 Cal.4th at p. 1153.) POCF’s attempt to shift the burden based on the City’s and SDG&E’s affirmative defenses is unavailing. An affirmative defense must raise a “new matter” not already placed at issue by the complaint. (Code Civ. Proc., § 431.30, subd. (b)(2); State Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228 Cal.App.3d 721, 725.) The defenses asserted here merely denied POCF’s allegations and did not inject new factual issues. They therefore constituted a traverse, not a shifting of the burden of proof. (Bevill v. Zoura (1994) 27 Cal.App.4th 694, 698.) POCF’s alternative argument—that the burden should shift because the existence of a constitutional franchise was peculiarly within SDG&E’s knowledge—fails both procedurally and substantively. Exceptions to Evidence Code section 500 are rare and narrowly construed. (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1670.) Whether the traditional placement of the burden of proof should be modified depends on a multifactor analysis that includes the parties’ comparative knowledge of the issue, the accessibility of relevant evidence, the policy consequences of a failure of proof, and the likelihood of the fact’s existence or nonexistence. (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 660–661.) POCF did not raise this theory in the trial court, did not address the Lakin factors on appeal, and identified no evidentiary record showing exclusive control of relevant documents by SDG&E or the City. The argument is therefore forfeited. (People v. Accredited Surety & Casualty Co., Inc. (2021) 65 Cal.App.5th 122, 132.) POCF likewise forfeited three additional theories raised for the first time in supplemental briefing—that constitutional franchises were terminated in 1914, expired by 2011, or were negated by franchise fee 19 practices. Arguments not raised in the trial court or opening briefs may not be introduced at this stage. (Hewlett-Packard Co. v. Oracle Corp., supra, 65 Cal.App.5th at p. 548.) In summary, POCF’s challenge rises or falls on a factual premise it failed to prove. Its claim of an unlawful, anti-competitive bidding process depended entirely on the assertion that SDG&E lacked a constitutional franchise and therefore received an improper advantage. Because POCF bore—and failed to meet—the burden of proving that essential fact, the City’s decision to structure the invitations to bid based on the possible existence of such a franchise cannot be deemed arbitrary, capricious, or legally invalid. Absent proof that the predicate assumption underlying the two-ordinance framework was false, there is no basis for concluding the City violated its competitive bidding obligations. The trial court therefore correctly denied the petition for writ of mandate. 13 B. THE FOUR CHALLEGED SURCHARGES ARE NOT UNCONSTITUTIONAL TAXES 1. Voter Initiatives Through a series of ballot initiatives, California voters have modified the Constitution to regulate how local governments can impose taxes, fees, and other assessments. (City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191, 1199 (San Buenaventura).) Proposition 13, the initial measure in this series, established article XIII A. 14 (San Buenaventura, at p. 1199.) Among other things, the initiative prohibits 13 The City’s opposed request to take judicial notice of nine City municipal ordinances and two documents filed with the California Secretary of State, filed on January 9, 2026, is denied. 14 All references to articles are to the California Constitution. 20 counties, cities, and special districts from enacting any “special tax” without a two-thirds vote of the electorate, “ ‘ “to prevent local governments from subverting its limitations.” ’ ” (Ibid.) However, courts consistently held that article XIII A did not restrict local governments from imposing “ ‘legitimate special assessments’ ”—charges on property owners to help defray the costs of local improvements that directly benefit their properties. (San Buenaventura, at p. 1199.) In 1996, voters passed Proposition 218 to further restrict a local government’s use of such special assessments. (San Buenaventura, supra, 3 Cal.5th at p. 1200.) It expanded Proposition 13’s protections by adding article XIII D, which introduced new limits on assessments, fees, and charges tied to property ownership. (San Buenaventura, at p. 1200.) This article requires that property-related charges must not exceed the proportional cost of the services provided to the property. (Ibid.) Proposition 218 also introduced article XIII C, which limits local governments’ power to impose taxes by requiring voter approval for all such taxes. (San Buenaventura, at p. 1