Right
To Vote On Taxes Act
Statement
of Drafters' Intent
Howard
Jarvis Taxpayers Association, January 1997
SECTION
1. TITLE. This Act shall be known and may
be cited as the "Right to Vote on
Taxes Act."
Comment:
The title reflects the unifying theme —
there are three main elements of the
initiative and each relates to voter and
taxpayer control over local taxes. The
first part of the initiative deals with
general and special taxes; the second
section deals with assessment reform; the
third and last section deals with property
related fees and charges.
SECTION
2. FINDINGS AND DECLARATIONS. The people
of the State of California hereby find and
declare that Proposition 13 was intended
to provide effective tax relief and to
require voter approval of tax increases.
However, local governments have subjected
taxpayers to excessive tax, assessment,
fee and charge increases that not only
frustrate the purposes of voter approval
for tax increases, but also threaten the
economic security of all Californians and
the California economy itself. This
measure protects taxpayers by limiting the
methods by which local governments exact
revenue from taxpayers without their
consent.
Comment:
Findings specifically refer to Proposition
13. If local governments and courts had
not circumvented Proposition 13,
Proposition 218 would not have been
necessary.
SECTION
3. VOTER APPROVAL FOR LOCAL TAX LEVIES.
Article XIIIC of the California
Constitution is added to the California
Constitution to read:
Comment:
This section sets forth provisions similar
to those found in Proposition 62,
Government Code Section 53720, et seq.
Although Proposition 62 was upheld by the
California Supreme Court in Santa Clara
County Local Transportation Authority v.
Guardino (Howard Jarvis Taxpayers
Association, et al., Real Parties in
Interest) (1995) 11 Cal.4th 220, that
initiative was a statutory initiative and
charter cities, for the most part, have
refused to follow its mandates. On the
other hand, there is no dispute that
Proposition 218 applies to charter cities.
Article
XIIIC
SEC.
1. Definitions.
As
used in this Article:
(a)
"General tax" means any tax
imposed for general governmental purposes.
(b)
"Local government" means any
county, city, city and county, including a
charter city or county, any special
district, or any other local or regional
governmental entity.
(c)
"Special District" means an
agency of the state, formed pursuant to
general law or a special act, for the
local performance of governmental or
proprietary functions with limited
geographic boundaries including, but not
limited to, school districts and
redevelopment agencies.
Comment:
The terms "local government" and
"special district" are defined
broadly so as to encompass all government
entities other than the state itself.
These definitions are more expansive than
those set forth in Proposition 62.
(d)
"Special tax" means any tax
imposed for specific purposes, including a
tax imposed for specific purposes, which
is placed into a general fund.
Comment:
The purpose of this definition is to
require an analysis which looks to the
purpose of the funding, not to the name on
the account. See, e.g., Rider v. San Diego
(1991) 1 Cal.4th 1. This provision is
intended to prevent local governments from
levying special taxes without a two-thirds
vote simply by laundering the proceeds
through a general fund. To this extent,
the revised definition reverses Neecke v.
City of Mill Valley (1995) 39 Cal.App.4th
946. It also would prohibit schemes which
purport to authorize a "general"
tax with a simple majority vote while, at
the same time, propose a companion
"advisory" vote on how the money
should be spent. Such taxes retain their
"special" characteristics under
Proposition 218.
SEC.
2. Local Government Tax Limitation.
Notwithstanding
any other provision of this Constitution:
(a)
All taxes imposed by any local government
shall be deemed to be either general taxes
or special taxes. Special purpose
districts or agencies, including school
districts, shall have no power to levy
general taxes.
Comment:
This provision is similar to the language
of the Supreme Court in the Rider v. San
Diego decision recognizing that special
districts, by their special nature, have
no power to levy general taxes.
(b)
No local government may impose, extend, or
increase any general tax unless and until
that tax is submitted to the electorate
and approved by a majority vote. A general
tax shall not be deemed to have been
increased if it is imposed at a rate not
higher than the maximum rate so approved.
The election required by this subdivision
shall be consolidated with a regularly
scheduled general election for members of
the governing body of the local
government, except in cases of emergency
declared by a unanimous vote of the
governing body.
Comment:
Under Proposition 218, a tax measure put
to the voters could incorporate future
increases and, if the ballot measure is
approved, then the agency would not have
to seek additional authorization from the
voters for those increases. Also, except
in cases of emergency, tax-measure
elections are to be consolidated with
regular elections at which members of
governing bodies are chosen. A unanimous
vote is needed to declare an emergency
but, consistent with existing case law,
this should be interpreted as a unanimous
vote of those present at the meeting. The
concern is that the nature of the
emergency might keep some members of the
local legislative body from attending a
meeting.
(c)
Any general tax imposed, extended or
increased, without voter approval, by any
local government on or after January 1,
1995, and prior to the effective date of
this article, shall continue to be imposed
only if approved by a majority vote of the
voters voting in an election on the issue
of the imposition, which election shall be
held within two years of the effective
date of this article and in compliance
with subdivision (b).
Comment:
This provision of Proposition 218 applies
to any general fund tax levied after 1994.
Those taxes imposed, extended or increased
without voter approval on or after January
1, 1995 which have not received majority
voter approval must be approved by a
simple majority vote of the electorate by
November 6, 1998. The reason the drafters
designated an effective date of January 1,
1995 was to prevent a "rush" of
new taxes imposed prior to November 1996
designed to avoid voter approval.
The
designation of the January 1, 1995 date
does not, in any way, affect any potential
claim against a local government entity
for violations of Proposition 62. Taxes
imposed prior to that date without voter
approval may still be subject to challenge
under that initiative as well as the
recent Guardino decision.
(d)
No local government may impose, extend, or
increase any special tax unless and until
that tax is submitted to the electorate
and approved by a two-thirds vote. A
special tax shall not be deemed to have
been increased if it is imposed at a rate
not higher than the maximum rate so
approved.
Comment:
This section states that any tax that is
levied for a specific purpose must obtain
a two-thirds vote of the electorate. These
taxes include any tax impose for a
specific purpose or purposes including,
but not limited to, local sales taxes or
parcel taxes designated for specific
purposes.
SEC.
3. Initiative Power For Local Taxes,
Assessments, Fees and Charges.
Notwithstanding
any other provision of this Constitution,
including, but not limited to Sections 8
and 9 of Article II, the initiative power
shall not be prohibited or otherwise
limited in matters of reducing or
repealing any local tax, assessment, fee
or charge. The power of initiative to
affect local taxes, assessments, fees and
charges shall be applicable to all local
governments and neither the legislature
nor any local government charter shall
impose a signature requirement higher than
that applicable to statewide statutory
initiatives.
Comment:
This section merely "constitutionalizes"
the principles of Rossi v. Brown, (1995) 9
Cal.4th 688, a recent decision of the
California Supreme Court upholding the
right of the electorate to use the local
initiative power to reduce or eliminate
government imposed levies via the
initiative power.
A
concern has been expressed with respect to
this provision's impact on existing and
future bonds. The drafters believe these
concerns are not well-founded. First, with
respect to existing bonds, the impairment
clause of the federal constitution (U.S.
Const., art. I, Sec. 10(1)) would prevent
a revenue stream protected thereunder from
being jeopardized by an inappropriate use
of the initiative power. Notwithstanding
the clear application of federal law,
however, Proposition 218's detractors
contended, during the campaign, that there
is no expressed exclusion for existing
bonds under this provision. Because that
part of the Right to Vote on Taxes Act
dealing with assessment reform set forth
in proposed Article XIIID does have such
an exemption, the implication is that the
lack of one in Section 3 was intentional.
There are two responses to this argument.
First, if anything, the protection for
existing assessments which are used to
repay bonded debt reflects a policy of
protecting those instruments. Second, the
reason that there was an expressed
exception in the assessment provisions is
that those provisions were dealing with
retroactive application of the initiative.
Because of that, a special effort was made
to carefully detail those exemptions.
In
any event, it is clear that the impairment
clause would prevent extension of the
initiative power to jeopardize a dedicated
revenue stream used to pay existing bonded
indebtedness. Indeed, the California State
Treasurer called opponents of Proposition
218 "irresponsible" for their
failed effort to make the credit
worthiness of existing bonds an issue
during the campaign.
Proposition
218 does not greatly expand the initiative
power. This power historically was
intended to apply to the repeal of taxes.
See, Rossi v. Brown, supra at 699-705. It
was not until the Meyers line of cases
that this even became an issue. But the
Supreme Court in Rossi expressly
repudiated Meyers and its progeny (Rossi
at 705-711) and the goal of the proponents
has simply been to place this repudiation
in the California Constitution.
The
next issue is whether Section 3 has an
impact on future bonds. For a number of
reasons, any detrimental impact is wholly
speculative. First, as noted above, the
initiative power could not be used to
impair bonds that are already sold (even
if they are sold after Proposition 218
becomes effective). The concern that the
new provision will put potential bond
holders "on notice" that the
revenue stream could be eliminated is not
well-founded. The concerns expressed, in
short, do not take into account the fact
that the people's power of initiative is a
co-extensive power with that of the
legislative body. See e.g., Carlson v.
Cory (1983) 139 Cal.App.3d 724 and DeVita
v. County of Napa (1995) 9 Cal.4th 763. If
the legislative body could be enjoined
from impairing contractual rights, then so
could the people.
The
above does not leave the taxpayers without
a remedy, however. If the taxpayers wish
to preclude or limit future rate or tax
increases via an initiative, they could do
so prior to any valid, legally binding
commitment being made by the legislative
body with respect to a particular revenue
stream. For example, the one scenario
where our initiative could in fact have an
impact is when the bonds are authorized,
but not sold. Presumably, at that point,
the legislative body could decide not to
sell the bonds and no
"impairment" would be at issue.
If this is true, then there is no policy
reason why the people, using the
initiative power, could not be able to
impact the sale of the bonds in a similar
fashion. It should be noted, however, that
since Rossi was decided more than a year
ago, the drafters are aware of no instance
where the initiative power was even
threatened to be used to stop the sale of
unsold bonds.
SECTION
4. ASSESSMENT AND PROPERTY RELATED FEE
REFORM.
Comment:
This is the third major element of
Proposition 218 which provides significant
reforms in the area of assessments, fees
and charges.
Article
XIIID is added to the California
Constitution to read:
ARTICLE
XIIID
SEC.
1. Application.
Notwithstanding
any other provision of law, the provisions
of this article shall apply to all
assessments, fees, and charges, whether
imposed pursuant to state statute or local
government charter authority. Nothing in
this Article or Article XIIIC shall be
construed to:
(a)
Provide any new authority to any agency to
impose a tax, assessment, fee or charge.
(b)
Affect existing laws relating to the
imposition of fees or charges as a
condition of property development.
Comment:
The purpose of this provision is to leave
unaffected existing laws relating to the
imposition of developer fees. Although
there have been abuses in this area by
local governments (resulting in
substantially increased housing costs),
the focus of Proposition 218 is on those
levies imposed simply by virtue of
property ownership. Developer fees, in
contrast, are imposed as an incident of
the voluntary act of development.
Proposition 218 should not significantly
impede the ability of developers to employ
"land secured financing" as a
means to finance infrastructure. While
assessments on developers are to be
treated as any other assessment, it should
be noted that Mello-Roos taxes (as special
taxes consistent with the provisions of
Proposition 13) will still be available to
developers.
One
significant impact of Proposition 218 on
developers is that a tax imposed on
development would be subject to voter
approval just like any other tax. For
example, in Centex Real Estate Corp. v.
City of Vallejo (1993) 19 Cal.App.3d 1358,
the court upheld the legality of a
so-called "excise tax" on
development levied by a charter city
outside the restrictions that state law
places on the imposition of developer
fees. Because such levies are conceded to
be taxes (levied solely for the purpose of
raising revenue), they would fall under
the purview of Proposition 218's voter
approval requirement. (Such taxes also
violate Proposition 62. However,
Proposition 218 does not present the yet
unresolved issue regarding whether the
voter approval requirements of Proposition
62 are enforceable as against charter
cities).
(c)
Affect existing laws relating to the
imposition of timber yield taxes.
Comment:
These taxes are already addressed in the
California Constitution and by
legislation. The intent of Proposition 218
was to leave this entire area of law
unaffected.
SEC.
2. Definitions.
As
used in this article:
(a)
"Agency" means any local
government as defined in subdivision (b)
of Section 1 of Article XIIIC.
(b)
"Assessment" means any levy or
charge upon real property by an agency for
a special benefit conferred upon the real
property. "Assessment" includes,
but is not limited to, "special
assessment," "benefit
assessment,"
"maintenance assessment" and
"special assessment tax."
(c)
"Capital cost" means the cost of
acquisition, installation, construction,
reconstruction or replacement of a
permanent public improvement by an agency.
(d)
"District" means an area
determined by an agency to contain all
parcels which will receive a special
benefit from a proposed public improvement
or property-related service.
(e)
"Fee" or "charge"
means any levy other than an ad valorem
tax, a special tax or an assessment,
imposed by an agency upon a parcel or upon
a person as an incident of property
ownership, including user fees or charges
for a property related service.
Comment:
Included in covered fees and charges are
levies for property related services. Such
services should be broadly construed to
include levies imposed for services or
regulatory activities which have a nexus
to the beneficial use of property
including rent control fees.
"Fees," for purposes of this
article, are limited to levies imposed as
an incident of property ownership or fees
for property related services. DMV fees,
statewide fees, fines, and recreation fees
such as park gate fees, are not affected.
However, fees for sewer, water and refuse
collection, because of their connection to
property, are included.
(f)
"Maintenance and operation
expenses" means the cost of rent,
repair, replacement, rehabilitation, fuel,
power, electrical current, care, and
supervision necessary to properly operate
and maintain a permanent public
improvement.
(g)
"Property ownership" shall be
deemed to include tenancies of real
property where tenants are directly liable
to pay the assessment, fee, or charge in
question.
Comment:
Under this definition, if a tenant of real
property is directly liable to pay an
assessment, that tenant would have the
right to protest and vote. This will
depend on the terms of the lease.
"Direct pass-throughs" are more
common in commercial leases than in
residential leases. Moreover, it would not
be inappropriate for the Legislature to
provide the specific guidelines with
respect to the duties of the agency and
property owners for the implementation of
this provision.
(h)
"Property-related service" means
a public service having a direct
relationship to property ownership.
(I)
"Special benefit" means a
particular and distinct benefit over and
above general benefits conferred on real
property located in the district or to the
public at large. General enhancement of
property value does not constitute
"special benefit."
Comment:
What constitutes a special benefit will
depend on the nature of the capital
improvement or service being provided. It
must be more than a mere increase in the
value of the property because, arguably,
the availability of any public service
could provide additional value. It must a
direct and special benefit conferred on
the property that exceeds the benefit
conferred on the public or large or even
to other similar properties.
SEC.
3. Property Taxes, Assessments, Fees and
Charges Limited.
Comment:
This section provides an exclusive list of
those levies which can be imposed on real
property.
(a)
No tax, assessment, fee or charge shall be
assessed by any agency upon any parcel of
property or upon any person as an incident
of property ownership except:
(1)
The ad valorem property tax imposed
pursuant to Article XIII and Article XIIIA
of this Constitution.
(2)
Any special tax receiving a two-thirds
vote pursuant to Article XIIIA, Section 4.
Comment:
Proposition 218 permits special taxes with
a two-thirds vote consistent with
Proposition 13. Although there remain
significant policy issues with respect to
any non-ad valorem property tax, the
authors of Proposition 218 realized it
would be difficult to repeal existing
statutory authorization for special taxes
on property as long as those taxes secured
the requisite two-thirds vote. General
taxes on property are not permitted on
property under existing California
Constitutional principles. (Article XIII,
Section 1).
(3)
Assessments as provided by this article.
(4)
Fees or charges for property related
services as provided by this article.
(b)
For purposes of this article, fees for the
provision of electrical or gas service
shall not be deemed charges or fees
imposed as an incident of property
ownership.
SEC.
4. Procedures and Requirements for All
Assessments.
(a)
An agency which proposes to levy an
assessment shall identify all parcels
which will have a special benefit
conferred upon them and upon which an
assessment will be imposed. The
proportionate special benefit derived by
each identified parcel shall be determined
in relationship to the entirety of the
capital cost of a public improvement, the
maintenance and operation expenses of a
public improvement, the cost of the
property related service being provided.
No assessment shall be imposed on any
parcel which exceeds the reasonable cost
of the proportional special benefit
conferred on that parcel. Only special
benefits are assessable, and an agency
shall separate the general benefits from
the special benefits conferred on a
parcel. Parcels within a district that are
owned or used by any agency, the State of
California or the United States shall not
be exempt from assessment unless the
agency can demonstrate by clear and
convincing evidence that such publicly
owned parcels in fact receive no special
benefit.
Comment:
These requirements for assessments are
similar to those imposed by traditional
assessment law. The overall purpose of
this section is to permit assessments to
be used, once again, as a legitimate
financing mechanism for capital
improvements and services that provides
particular benefits to property and not
just a means to impose flat rate parcel
taxes. These requirements are: assessments
must be proportional to the benefit; only
special benefits are assessable; and
public properties must pay their fair
share. Historically, benefit assessments
have also been levied on public
properties. (See, e.g., Municipal
Improvement Act of 1911). Only in recent
years when assessments have been used to
impose what are, in effect, parcel taxes,
have public properties received blanket
exemptions from assessments. Under
Proposition 218, if public property is
benefited in the same manner as private
property, then it must be assessed.
(b)
All assessments must be supported by a
detailed engineer's report prepared by a
registered professional engineer certified
by the State of California.
Comment:
This requirement is consistent with
traditional assessment law. Only since
Proposition 13 have non-engineers been
able to prepare "engineers'
reports."
(c)
The amount of the proposed assessment for
each identified parcel shall be calculated
and the record owner of each parcel shall
be given written notice by mail of the
proposed assessment, the total amount
thereof chargeable to the entire district,
the amount chargeable to the owner's
particular parcel, the duration of such
payments, the reason for the assessment
and the basis upon which the amount of the
proposed assessment was calculated,
together with the date, time, and location
of a public hearing on the proposed
assessment. Each notice shall also
include, in a conspicuous place thereon, a
summary of the procedures applicable to
the completion, return and tabulation of
the ballots required pursuant to
subdivision (d), including a disclosure
statement that the existence of a majority
protest, as defined in subdivision (e),
will result in the assessment not being
imposed.
(d)
Each notice mailed to owners of identified
parcels within the district pursuant to
subdivision (c) shall contain a ballot
which includes the agency's address for
receipt of any such ballot once completed
by any owner receiving the notice whereby
the owner may indicate his or her name,
reasonable identification of the parcel,
and his or her support or opposition to
the proposed assessment.
Comment:
Notice requirements for assessments have
been substantially liberalized in recent
years to the detriment of taxpayers.
Proposition 218 requires mailed notice,
not just publication in a newspaper.
Mailed notice would also include a ballot
to be returned by the property owners as
more fully described below.
Notice
of Proposed Assessment: The procedures for
processing and tabulating protests against
a proposed assessment under Proposition
218 are largely set forth in the
initiative. Under Proposition 218, each
property owner subject to a proposed
assessment must receive a written notice
of the proposed assessment and a ballot to
be returned to the agency indicating
support or opposition to the proposed
assessment.
The
notice, ballot, and return envelope must
be mailed to property owners at least 45
days before the required public hearing on
the assessment. During the 45 days between
the time the notice is mailed and the
hearing is held, the engineers report and
all other pertinent materials or public
records must be made available to property
owners for their review, along with the
address where they may review the
documents. It must also set forth:
1)
The amount proposed to be charged as an
assessment against the specific parcel.
2)
The amount proposed to be charged as an
assessment to the entire district.
3)
The length of time the proposed assessment
will be in place.
4)
The reasons for the assessment and the
grounds upon which the proposed assessment
for the parcel was calculated.
5)
The date, location and time of the
required public hearing.
6)
A summary of the protest procedure,
including instructions for the completion
and return of the ballot.
Drafters'
Suggested Procedures:
Ballot:
The ballot should remain sealed with all
pertinent property owner information on
the outside of the envelope so that both
the signature and the information can be
verified by the tabulator before the
envelope is opened. The envelope should
include parcel number, signature, address,
sworn declaration, etc. The ballot should
include the agency's address (or a
self-addressed envelope, stamp at agencies
discretion) for return of the ballot.
Tabulation
Procedures: Ballots should be opened and
tabulated at the end of the public
hearing. Ballots can be mailed to the
agency or delivered personally to the
agency prior to actual ballot tabulations.
Ballots are tabulated by adding the amount
of the assessment on each ballot
indicating either approval of, or
opposition to, the assessment. If the
dollar amount representing the consenting
ballots exceeds the dollar amount
reflective of the opposing ballots, the
assessment may be imposed. In the event of
a tie, the assessment cannot be imposed.
Ballots
should be retained by the agency for a
sufficient period of time to permit
resolution of disputes involving the
ballot process. Also, nothing in
Proposition 218 prohibits the use of
independent private firms or public
agencies to contract with the levying
agency to administer the ballot process.
Thus, a local agency could contract either
with an accounting firm or a county
registrar of voters for this purpose.
Preprinted
ballots in the following format are
recommended:
Parcel
No. [preprinted from assessors tax roll]
Record
Owner: [preprinted from assessors tax
roll]
Address:
[preprinted from assessors tax roll]
Yes,
I approve of the proposed annual
assessment of $ [preprinted] on the parcel
identified on this ballot.
No,
I do not approve the proposed assessment
on this parcel.
Signature
of Record Owner or Authorized
Representative in the case of property
owned by non-individuals.
As
previously noted, the Legislature may wish
to provide additional details with respect
to those tenants of real property who, by
virtue of their lease, are directly
obligated to pay an assessment. The
Drafters do not recommend legislation
which places the burden of determining who
has the right to protest an assessment on
the public agency. One possible solution
is a statute providing that the property
owners have an affirmative duty to inform
tenants, and transmit the ballots, in
those situations where the tenants are
financially responsible for the payment.
Legal
Issue Regarding Right to Vote
During
the campaign, opponents of Proposition 218
claimed that the initiative would deprive
electors of the right to vote by giving
corporations (including foreign
corporations) more voting power than
individual voters or property owners.
However, limiting the ability to protest
assessments to those who own property is
consistent with over one hundred years of
assessment law. Similarly, Proposition
218's specific provision of
"weighting" the protest votes
according to the amount of the assessment
is also consistent with the
"weighting" formula of some
existing statutes. See, e.g. Fire
Suppression Assessments, Gov't Code
§ 50078, et seq. This formula was
selected because it the most reflective of
the policy that those who have to pay
should have the right to affect the
decision of whether the levy should be
imposed. Moreover, some of the other
existing "weighting" formulas,
such as those based on acreage, led to
some strange and inequitable results. The
County of Los Angeles' park assessments
are prime examples.
(e)
The agency shall conduct a public hearing
upon the proposed assessment not less than
45 days after mailing the notice of the
proposed assessment to record owners of
each identified parcel. At the public
hearing, the agency shall consider all
protests against the proposed assessment
and tabulate the ballots. The agency shall
not impose an assessment if there is a
majority protest. A majority protest
exists if, upon the conclusion of the
hearing, ballots submitted in opposition
to the assessment exceed the ballots
submitted in favor of the assessment. In
tabulating the ballots, the ballots shall
be weighted according to the proportional
financial obligation of the affected
property.
(f)
In any legal action contesting the
validity of any assessment, the burden
shall be on the agency to demonstrate that
the property or properties in question
receive a special benefit over and above
the benefits conferred on the public at
large and that the amount of any contested
assessment is proportional to, and no
greater than, the benefits conferred on
the property or properties in question.
Comment:
Although this provision shifts burden of
proof in taxpayers' favor on issue of
benefits to property, it is consistent
with some current case law. See, e.g.,
Beaumont Investors v. Beaumont-Cherry
Water Dist. (1985) 165 Cal.App.3d 567.
(g)
Because only special benefits are
assessable, electors residing within the
district who do not own property within
the district shall not be deemed under
this Constitution to have been deprived of
the right to vote for any assessment. If a
court determines that the Constitution of
the United States or other federal law
requires otherwise, the assessment shall
not be imposed unless approved by a
two-thirds vote of the electorate in the
district in addition to being approved by
the property owners as required by Section
4(e).
Comment:
Under existing law, it is not a violation
of the right to vote to limit elections to
property owners if the district provides
only a narrow, property related service.
So. Cal. Rapid Transit District v. Bolen
(1992) 1 Cal.4th 654.
SEC.
5. Effective Date
Comment:
Although titled "effective
date," this section has some
important exceptions regarding the
requirements for assessments. If one of
the following exceptions does not apply,
then an existing assessment must cease by
July 1, 1997 unless ratified by the
property owners.
Pursuant
to subdivision (a) of Section 10 of
Article II, the provisions of this article
shall become effective the day after the
election unless otherwise provided.
Beginning July 1, 1997, all existing, new
or increased assessments shall comply with
this article. Notwithstanding the
foregoing, the following assessments
existing on the effective date of this
article shall be exempt from the
procedures and approval process set forth
in Section 4:
Comment:
An assessment is deemed "existing on
the effective date of this Article,"
even if it is the type of assessment which
comes up for annual renewal. As long as
the assessment rates and methodology
remained the same from year to year, the
fact that the assessment is
"imposed" annually would not
necessarily trigger applicability of the
requirements of this Article. This would
be true even if the total revenue to the
district increased due to changes in land
use for specific parcels (e.g.,
newly-created or improved parcels). Again,
as long as the assessment rates and
methodology remain the same, an increase
in revenue as the result of land use
changes would not trigger applicability of
Section 4. However, the procedures and
approval process of Section 4 would apply
to the entire assessment in the event the
assessments were increased either by the
rate of assessment or by a change in
methodology.
(a)
Any assessment imposed exclusively to
finance the capital costs or maintenance
and operation expenses for sidewalks,
streets, sewers, water, flood control,
drainage systems or vector control.
Subsequent increases in such assessments
shall be subject to the procedures and
approval process set forth in Section 4.
Comment:
This is the "traditional
purposes" exception. These existing
assessments do not need property owner
approval to continue. However, future
assessments for these traditional purposes
are covered. The reference to
"streets" does not include
street lighting.
(b)
Any assessment imposed pursuant to a
petition signed by the persons owning all
of the parcels subject to the assessment
at the time the assessment is initially
imposed. Subsequent increases in such
assessments shall be subject to the
procedures and approval process set forth
in Section 4.
Comment:
This provision exempts most land secured
financing arrangements used by developers.
(c)
Any assessment the proceeds of which are
exclusively used to repay bonded
indebtedness of which the failure to pay
would violate the Contract Impairment
Clause of the Constitution of the United
States.
Comment:
Even an amendment to the California
Constitution cannot impair a contract
protected by the federal constitution.
However, this exception can only be used
for bonds that are actually protected by
the impairment clause. Certificates of
Participation and other creative debt
instruments would not be protected.
Moreover, in order to qualify for this
exception, the assessment levied would
have to be specifically tied to the
repayment of bonds.
(d)
Any assessment which previously received
majority voter approval from the voters
voting in an election on the issue of the
assessment. Subsequent increases in such
assessments shall be subject to the
procedures and approval process set forth
in Section 4.
Comment:
Although the exception for assessments
previously approved by the voters will
permit the continued collection of some
particularly illegitimate assessments,
requiring an additional approval process
would be redundant. It should also be
noted, however, that the vote necessary to
qualify for this exception must be
binding. Advisory votes are insufficient.
SEC.
6. Property Related Fees and Charges.
Comment:
The purpose of this section is to prevent
the exploitation of "fees" as a
means to avoid the new restrictions on
assessments. Because flat rate parcel
taxes have avoided the strictures of
Proposition 13 simply by being called
"assessments," the drafters are
concerned that the same will happen with
"fees" — that is,
circumventing taxpayer protections by
manipulating the label of the levy.
(a)
Procedures for New or Increased Fees and
Charges. An agency shall follow the
procedures pursuant to this section in
imposing or increasing any fee or charge
as defined pursuant to this Article
including, but not limited to, the
following:
(1)
The parcels upon which a fee or charge is
proposed for imposition shall be
identified. The amount of the fee or
charge proposed to be imposed upon each
parcel shall be calculated. The agency
shall provide written notice by mail of
the proposed fee or charge to the record
owners of each identified parcel upon
which the fee or charge is proposed for
imposition, the amount of the fee or
charge proposed to be imposed upon each,
the basis upon which the amount of the
proposed fee or charge was calculated, the
reason for the fee or charge, together
with the date, time, and location of a
public hearing on the proposed fee or
charge.
Comment:
This section is applicable to any fee
imposed on a parcel basis or for fees
which provide a property related service.
It does not affect fees that are not
property related such as DMV fees, park
fees, or administrative charges imposed by
a local government.
(2)
The agency shall conduct a public hearing
upon the proposed fee or charge not less
than 45 days after mailing the notice of
the proposed fee or charge to the record
owners of each identified parcel upon
which the fee or charge is proposed for
imposition. At the public hearing, the
agency shall consider all protests against
the proposed fee or charge. If written
protests against the proposed fee or
charge are presented by a majority of
owners of the identified parcels, the
agency shall not impose the fee or charge.
Comment:
Votes on property fees and charges are not
weighted in the same manner as
assessments. Because fees can vary
according to usage of the service, there
is no workable methodology to apportion
the votes of the service users. Thus, the
issue of a fee increase will be determined
by a simple majority vote of property
owners or fee payers.
(b)
Requirements for Existing, New or
Increased Fees and Charges. A fee or
charge shall not be extended, imposed or
increased by any agency unless it meets
all of the following requirements:
Comment:
These five requirements are applicable to
all fees, including those that currently
exist. In essence, these requirements
mandate that fees not exceed the
"cost of service."
(1)
Revenues derived from the fee or charge
shall not exceed the funds required to
provide the property related service.
(2)
Revenues derived from the fee or charge
shall not be used for any purpose other
than that for which the fee or charge was
imposed.
Comment:
Requirements 1 & 2 will prohibit the
current practice of siphoning off fee
revenue to supplement a city's general
fund. This practice, sometimes known as
charging an "in lieu franchise
fee," currently occurs both in Los
Angeles and Sacramento, as well as in many
other municipalities. However, "cost
of service" may also include
reasonable overhead expenses as well as
other items on a service bill which are
necessary to provide service to the
particular service user. What is included
in "cost of service" will have
to be determined on a case by case basis.
(3)
The amount of a fee or charge imposed upon
any parcel or person as an incident of
property ownership shall not exceed the
proportional cost of the service
attributable to the parcel.
Comment:
As with assessments, fees and charges,
must be proportional to the actual use of
the service.
(4)
No fee or charge may be imposed for a
service unless that service is actually
used by, or immediately available to, the
owner of the property in question. Fees or
charges based on potential or future use
of a service are not permitted. Standby
charges, whether characterized as charges
or assessments, shall be classified as
assessments and shall not be imposed
without compliance with Section 4.
Comment:
Standby charges are usually nothing more
than flat rate parcel taxes imposed on the
theory that water or sewer service may, at
some point in the indefinite future, be
available to the property being charged.
This provision is a flat prohibition of
such levies. However, if a current standby
charge is in the nature of an assessment
and can meet the more stringent
"special benefit" requirements,
it may take advantage of the exemption for
assessments. If not, the levy would have
to be reimposed as an assessment and meet
all requirements of Section 4 or cease to
be collected.
(5)
No fee or charge may be imposed for
general governmental services including,
but not limited to, police, fire,
ambulance or library services where the
service is available to the public at
large in substantially the same manner as
it is to property owners.
Comment:
This provision prohibits the imposition of
parcel "charges" for general
governmental services. The purpose of this
provision is to stop those levies, such as
the County of Los Angeles' parcel
"charge" for library services
irrespective of use of library services.
Reliance
by an agency on any parcel map including,
but not limited to, an assessor's parcel
map, may be considered a significant
factor in determining whether a fee or
charge is imposed as incident of property
ownership for purposes of this Article. In
any legal action contesting the validity
of a fee or charge, the burden shall be on
the agency to demonstrate compliance with
this Article.
(c)
Voter Approval for New or Increased Fees
and Charges. Except for fees or charges
for sewer, water, and refuse collection
services, no property related fee or
charge shall be imposed or increased
unless and until such fee or charge is
submitted and approved by a majority vote
of the property owners of the property
subject to the fee or charge or, at the
option of the agency, by a two-thirds vote
of the electorate residing in the affected
area. The election shall be conducted not
less than 45 days after the public
hearing. An agency may adopt procedures
similar to those for increases in
assessments in the conduct of elections
under this subdivision.
Comment:
This exemption for sewer, water and refuse
collection is for voter approval only.
Such fees must still meet all of the five
substantive requirements of paragraph (b).
The policy reason for this exemption is
consistent with preventing end-runs around
Proposition 13. Since water, sewer and
refuse collection fees pre-date
Proposition 13, they were exempted from
voter approval.
(d)
Beginning July 1, 1997, all fees or
charges shall comply with this Section.
SECTION
5. LIBERAL CONSTRUCTION. The provisions of
this Act shall be liberally construed to
effectuate its purposes of limiting local
government revenue and enhancing taxpayer
consent.
Comment:
The purpose of this section is to ensure
that, in the event of any ambiguity, the
rights of taxpayers will be the paramount
consideration.
SECTION
6. SEVERABILITY. If any provision of this
Act, or part thereof, is for any reason
held to be invalid or unconstitutional,
the remaining sections shall not be
affected, but shall remain in full force
and effect, and to this end the provisions
of this act are severable.
Comment:
This provision is a standard severability
clause.