The California Supreme Court has dropped its review of a business tax case from San Diego after deciding the court should not hear the case after all. The action means that the Fourth District Court of Appeal decision that exempted a tax on residential rentals from Proposition 218 remains in effect. However, the opinion will go unpublished. Last year, the Fourth District ruled that the City of San Diego's tax on rental residences was not subject to Proposition 218, the Right to Vote on Taxes Act of 1996 (see CP&DR Legal Digest, August 2000). The city assessed a business tax on all residential properties that are rented. The court held that Proposition 218 only applies to taxes imposed as an incident of property ownership. The San Diego tax is a general tax based on use of the property, the court held. The property owners contended that Proposition 218, which was intended to close Proposition 13 loopholes, applied to any taxes relating to property ownership. At the time, the ruling appeared to conflict with a Los Angeles case, in which the Second Appellate District struck down a tax levied on apartment owners to fund a slum-abatement program. The state Supreme Court reversed that decision in January. Apartment Association of Los Angeles v. City of Los Angeles, No. S082645 (see CP&DR Legal Digest, February 2001, October. 1999). The case that was dismissed is Edward Teyssier v. City of San Diego, No. S090271, C.A. 4th Div. No. D033171/D033622.