BILL NUMBER: AB 474 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 9, 2009
PASSED THE ASSEMBLY SEPTEMBER 10, 2009
AMENDED IN SENATE SEPTEMBER 4, 2009
AMENDED IN SENATE JUNE 25, 2009
AMENDED IN ASSEMBLY MAY 18, 2009
AMENDED IN ASSEMBLY APRIL 27, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Blumenfield
(Coauthors: Assembly Members Bill Berryhill, Caballero, Gilmore,
Krekorian, and Nestande)
FEBRUARY 24, 2009
An act to amend Section 1102.6b of the Civil Code, and to amend
Sections 5898.12, 5898.14, 5898.20, 5898.21, 5898.22, 5898.24,
5898.28, and 5898.30 of, and to add Section 5898.31 to, the Streets
and Highways Code, relating to contractual assessments.
LEGISLATIVE COUNSEL'S DIGEST
AB 474, Blumenfield. Contractual assessments: water efficiency
improvements.
Existing law authorizes the legislative body of any city, defined
as a city, county, or city and county, to determine that it would be
convenient and advantageous to designate an area within which
authorized city officials and free and willing property owners may
enter into contractual assessments and make arrangements to finance
public improvements to specified lots or parcels or to finance the
installation of distributed generation renewable energy sources or
energy efficiency improvements that are permanently fixed to real
property, as specified. Existing law requires the legislative body to
make these determinations by adopting a resolution indicating its
intention to do so and requires the resolution to include certain
specified information.
This bill would expand these provisions to authorize the
legislative body of any public agency, as defined, to determine that
it would be in the public interest to designate an area within which
authorized city officials and free and willing property owners may
enter into contractual assessments to finance the installation of
water efficiency improvements that are permanently fixed to real
property, as specified. The bill would also, with respect to all of
its provisions, modify its definitions and require a legislative body
to perform additional record keeping duties and provide specified
notice to any entity that provides energy or water within the
boundaries of the area within which contractual assessments may be
entered into. This bill would also require additional specified
disclosures for a transfer of real property subject to a contractual
assessment. The bill would declare the intent of the Legislature in
regard to these provisions. This bill would make technical,
nonsubstantive changes to these provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1102.6b of the Civil Code is amended to read:
1102.6b. (a) This section applies to all transfers of real
property for which all of the following apply:
(1) The transfer is subject to this article.
(2) The property being transferred is subject to a continuing lien
securing the levy of special taxes pursuant to the Mello-Roos
Community Facilities Act (Chapter 2.5 (commencing with Section 53311)
of Part 1 of Division 2 of Title 5 of the Government Code), to a
fixed lien assessment collected in installments to secure bonds
issued pursuant to the Improvement Bond Act of 1915 (Division 10
(commencing with Section 8500) of the Streets and Highways Code), or
to a contractual assessment program authorized pursuant to Chapter 29
(commencing with Section 5898.10) of Part 3 of Division 7 of the
Streets and Highway Code.
(3) A notice is not required pursuant to Section 53341.5 of the
Government Code.
(b) In addition to any other disclosure required pursuant to this
article, the seller of any real property subject to this section
shall make a good faith effort to obtain a disclosure notice
concerning the special tax as provided for in Section 53340.2 of the
Government Code, or a disclosure notice concerning an assessment
installment as provided in Section 53754 of the Government Code, from
each local agency that levies a special tax pursuant to the
Mello-Roos Community Facilities Act, or that collects assessment
installments to secure bonds issued pursuant to the Improvement Bond
Act of 1915 (Division 10 (commencing with Section 8500) of the
Streets and Highways Code), or a disclosure notice concerning the
contractual assessment as provided in Section 5898.24 of the Streets
and Highways Code, on the property being transferred, and shall
deliver that notice or those notices to the prospective purchaser, as
long as the notices are made available by the local agency.
(c) (1) The seller of real property subject to this section may
satisfy the disclosure notice requirements in regard to the bonds
issued pursuant to the Improvement Bond Act of 1915 (Division 10
(commencing with Section 8500) of the Streets and Highways Code) by
delivering a disclosure notice that is substantially equivalent and
obtained from another source, until December 31, 2004.
(2) The seller of real property subject to this section may
satisfy the disclosure notice requirements in regard to the
assessments collected under the contractual assessment program
authorized pursuant to Chapter 29 (commencing with Section 5898.10)
of Part 3 of Division 7 of the Streets and Highway Code by delivering
a disclosure notice that is substantially equivalent and obtained
from another source.
(3) For the purposes of this section, a substantially equivalent
disclosure notice includes, but is not limited to, a copy of the most
recent year's property tax bill or an itemization of current
assessment amounts applicable to the property.
(d) (1) Notwithstanding subdivision (c), at any time after the
effective date of this section, the seller of real property subject
to this section may satisfy the disclosure notice requirements of
this section by delivering a disclosure notice obtained from a
nongovernmental source that satisfies the requirements of paragraph
(2).
(2) A notice provided by a private entity other than a designated
office, department, or bureau of the levying entity may be modified
as needed to clearly and accurately describe a special tax pursuant
to the Mello-Roos Community Facilities Act levied against the
property or to clearly and accurately consolidate information about
two or more districts that levy or are authorized to levy a special
tax pursuant to the Mello-Roos Community Facilities Act against the
property, and shall include the name of the Mello-Roos entity levying
taxes against the property, the annual tax due for the Mello-Roos
entity for the current tax year, the maximum tax that may be levied
against the property in any year, the percentage by which the maximum
tax for the Mello-Roos entity may increase per year, and the date
until the tax may be levied against the property for the Mello-Roos
entity and a contact telephone number, if available, for further
information about the Mello-Roos entity. A notice provided by a
private entity other than a designated office, department, or bureau
of the levying entity may be modified as needed to clearly and
accurately describe special assessments and bonds pursuant to the
Improvement Bond Act of 1915 levied against the property, or to
clearly and accurately consolidate information about two or more
districts that levy or are authorized to levy special assessments and
bonds pursuant to the Improvement Bond Act of 1915 against the
property, and shall include the name of the special assessments and
bonds issued pursuant to the Improvement Bond Act of 1915, the
current annual tax on the property for the special assessments and
bonds issued pursuant to the Improvement Bond Act of 1915 and a
contact telephone number, if available, for further information about
the special assessments and bonds issued pursuant to the Improvement
Bond Act of 1915.
(3) This section does not change the ability to make disclosures
pursuant to Section 1102.4 of the Civil Code.
(e) If a disclosure received pursuant to subdivision (b), (c), or
(d) has been delivered to the transferee, a seller or his or her
agent is not required to provide additional information concerning,
and information in the disclosure shall be deemed to satisfy the
responsibility of the seller or his or her agent to inform the
transferee regarding the special tax or assessment installments and
the district. Notwithstanding subdivision (b), (c), or (d), nothing
in this section imposes a duty to discover a special tax or
assessment installments or the existence of any levying district not
actually known to the agents.
SEC. 2. Section 5898.12 of the Streets and Highways Code is
amended to read:
5898.12. (a) It is the intent of the Legislature that this
chapter should be used to finance public improvements to lots or
parcels which are developed and where the costs and time delays
involved in creating an assessment district pursuant to other
provisions of this division or any other law would be prohibitively
large relative to the cost of the public improvements to be financed.
(b) It is also the intent of the Legislature that this chapter
should be used to finance the installation of distributed generation
renewable energy sources or energy efficiency improvements that are
permanently fixed to residential, commercial, industrial,
agricultural, or other real property.
(c) It is also the intent of the Legislature to address chronic
water needs throughout California by permitting voluntary individual
efforts to improve water efficiency. The Legislature further intends
that this chapter should be used to finance the installation of water
efficiency improvements that are permanently fixed to residential,
commercial, industrial, agricultural, or other real property,
including, but not limited to, recycled water connections, synthetic
turf, cisterns for stormwater recovery, and permeable pavement.
(d) It is also the intent of the Legislature that a public agency
in the process of establishing an assessment program, to the extent
feasible, use a good faith effort to provide advance notice of the
proposed program to water and electric service providers in the
relevant service area, as set forth in Section 5898.24, to allow the
most efficient coordination and collaboration between the public
agency and water and electric service providers.
(e) This chapter shall not be used to finance facilities for
parcels which are undergoing development.
(f) This chapter shall not be used to finance the purchase or
installation of appliances that are not permanently fixed to
residential, commercial, industrial, agricultural, or other real
property.
(g) Assessments may be levied pursuant to this chapter only with
the free and willing consent of the owner of each lot or parcel on
which an assessment is levied at the time the assessment is levied.
SEC. 3. Section 5898.14 of the Streets and Highways Code is
amended to read:
5898.14. (a) The Legislature finds all of the following:
(1) Energy and water conservation efforts, including the promotion
of energy efficiency improvements to residential, commercial,
industrial, agricultural, or other real property are necessary to
address the issue of global climate change.
(2) The upfront cost of making residential, commercial,
industrial, agricultural, or other real property more energy and
water efficient prevents many property owners from making those
improvements. To make those improvements more affordable and to
promote the installation of those improvements, it is necessary to
authorize an alternative procedure for authorizing assessments to
finance the cost of energy and water efficiency improvements.
(b) The Legislature declares that a public purpose will be served
by a voluntary contractual assessment program that provides the
legislative body of any public agency with the authority to finance
the installation of distributed generation renewable energy sources
and energy or water efficiency improvements that are permanently
fixed to residential, commercial, industrial, agricultural, or other
real property.
SEC. 4. Section 5898.20 of the Streets and Highways Code is
amended to read:
5898.20. (a) (1) The legislative body of any public agency may
determine that it would be convenient and advantageous to designate
an area within the public agency, which may encompass the entire
public agency or a lesser portion, within which authorized public
agency officials and property owners may enter into voluntary
contractual assessments for public improvements and to make financing
arrangements pursuant to this chapter.
(2) The legislative body of any public agency may also determine
that it would be convenient, advantageous, and in the public interest
to designate an area within the public agency, which may encompass
the entire public agency or a lesser portion, within which authorized
public agency officials and property owners may enter into voluntary
contractual assessments to finance the installation of distributed
generation renewable energy sources or energy or water efficiency
improvements that are permanently fixed to real property pursuant to
this chapter.
(b) The legislative body shall make these determinations by
adopting a resolution indicating its intention to do so. The
resolution of intention shall include a statement that the public
agency proposes to make voluntary contractual assessment financing
available to property owners, shall identify the kinds of public
works, distributed generation renewable energy sources, or energy or
water efficiency improvements that may be financed, shall describe
the boundaries of the area within which voluntary contractual
assessments may be entered into, and shall briefly describe the
proposed arrangements for financing the program, including a brief
description of criteria for determining the creditworthiness of a
property owner. The resolution of intention shall state that it is in
the public interest to finance the installation of distributed
generation renewable energy sources or energy or water efficiency
improvements, or both, pursuant to paragraph (2) of subdivision (a),
if applicable. The resolution shall state that a public hearing
should be held at which interested persons may object to or inquire
about the proposed program or any of its particulars, and shall state
the time and place of the hearing. The resolution shall direct an
appropriate public agency official to prepare a report pursuant to
Section 5898.22 and to enter into consultations with the county
auditor's office or county controller's office in order to reach
agreement on what additional fees, if any, will be charged to the
city or county for incorporating the proposed voluntary contractual
assessments into the assessments of the general taxes of the city or
county on real property.
(c) As used in this chapter, each of the following terms shall
have the following meaning:
(1) "Efficiency improvements" means permanent improvements fixed
to residential, commercial, industrial, agricultural, or other real
property.
(2) "Legislative body" means the governing body of a public
agency.
(3) (A) For the purpose of financing the installation of water
efficiency improvements, "public agency" means a city, county, city
and county, municipal utility district, community services district,
sanitary district, sanitation district, or water district, as defined
in Section 20200 of the Water Code. The definition of "city" in
Section 5005 shall not apply to this subparagraph.
(B) For the purpose of financing the installation of distributed
generation renewable energy sources or energy efficiency
improvements, "public agency" means a county, city, city and county,
or a municipal utility district, an irrigation district, or public
utility district that owns and operates an electric distribution
system. The definition of "city" in Section 5005 shall not apply to
this subparagraph.
(C) For the purpose of financing the public improvements, "public
agency" means a city as defined in Section 5005.
SEC. 5. Section 5898.21 of the Streets and Highways Code is
amended to read:
5898.21. Notwithstanding any other provision of this chapter,
upon the written consent of an authorized public agency official, the
proposed arrangements for financing the program pertaining to the
installation of distributed generation renewable energy sources or
energy or water efficiency improvements that are permanently fixed to
real property may authorize the property owner to purchase directly
the related equipment and materials for the installation of
distributed generation renewable energy sources or energy or water
efficiency improvements and to contract directly for the installation
of distributed generation renewable energy sources or energy or
water efficiency improvements that are permanently fixed to the
property owner's residential, commercial, industrial, agricultural,
or other real property.
SEC. 6. Section 5898.22 of the Streets and Highways Code is
amended to read:
5898.22. The report shall contain all of the following:
(a) A map showing the boundaries of the territory within which
voluntary contractual assessments are proposed to be offered.
(b) A draft contract specifying the terms and conditions that
would be agreed to by a property owner within the voluntary
contractual assessment area and the public agency.
(c) A statement of public agency policies concerning voluntary
contractual assessments including all of the following:
(1) Identification of types of facilities, distributed generation
renewable energy sources, or energy or water efficiency improvements
that may be financed through the use of contractual assessments.
(2) Identification of a public agency official authorized to enter
into voluntary contractual assessments on behalf of the public
agency.
(3) A maximum aggregate dollar amount of voluntary contractual
assessments.
(4) A method for setting requests from property owners for
financing through voluntary contractual assessments in priority order
in the event that requests appear likely to exceed the authorization
amount.
(d) A plan for raising a capital amount required to pay for work
performed pursuant to voluntary contractual assessments. The plan may
include amounts to be advanced by the public agency through funds
available to it from any source. The plan may include the sale of a
bond or bonds or other financing relationship pursuant to Section
5898.28. The plan shall include a statement of or method for
determining the interest rate and time period during which
contracting property owners would pay any assessment. The plan shall
provide for any reserve fund or funds. The plan shall provide for the
apportionment of all or any portion of the costs incidental to
financing, administration, and collection of the voluntary
contractual assessment program among the consenting property owners
and the public agency.
(e) A report on the results of the consultations with the county
auditor's office or county controller's office concerning the
additional fees, if any, that will be charged to the city or county
for incorporating the proposed voluntary contractual assessments into
the assessments of the general taxes of the city or county on real
property, and a plan for financing the payment of those fees.
SEC. 7. Section 5898.24 of the Streets and Highways Code is
amended to read:
5898.24. (a) A legislative body shall publish notice of a hearing
pursuant to Section 6066 of the Government Code, and the first
publication shall occur not later than 20 days before the date of the
hearing.
(b) A legislative body shall provide written notice of a proposed
contractual assessment program to all water or electric providers
within the boundaries of the area within which voluntary contractual
assessments may be entered into not less than 60 days prior to
adoption of any resolution pursuant to Section 5898.26.
(c) (1) A legislative body administering a voluntary contractual
assessment program shall designate an office, department, or bureau
of the local agency that shall be responsible for annually preparing
the current roll of assessment obligations by assessor's parcel
number on property subject to a voluntary contractual assessment.
(2) The designated office, department, or bureau shall establish
procedures to promptly respond to inquiries concerning current and
future estimated liability for a voluntary contractual assessment.
Neither the designated office, department, or bureau, nor the
legislative body, shall be liable if any estimate of future voluntary
contractual assessment liability is inaccurate, nor for any failure
of any seller to request notice pursuant to this chapter or to
provide the notice to a buyer.
(d) For purposes of enabling sellers of real property subject to a
voluntary contractual assessment to satisfy the notice requirements
of Section 1102.6b of the Civil Code, the legislative body shall
cause to be recorded in the office of the county recorder for the
county in which the real property is located, concurrently with the
instrument creating the voluntary contractual assessment, a separate
document that meets all of the following requirements:
(1) The title of the document shall be "Payment of Contractual
Assessment Required" in at least 14-point boldface type.
(2) The document shall include all of the following information:
(A) The names of all current owners of the real property subject
to the contractual assessment, and the legal description and the
assessor's parcel number for the affected real property.
(B) The annual amount of the contractual assessment.
(C) The date or circumstances under which the contractual
assessment expires, or a statement that the assessment is perpetual.
(D) The purpose for which the funds from the contractual
assessment will be used.
(E) The entity to which funds from the contractual assessment will
be paid and specific contact information for that entity.
(F) The signature of the authorized representative of the
legislative body to which funds from the contractual assessment will
be paid.
(e) The recorder shall only be responsible for examining the
document required by subdivision (d) and determining that it contains
the information required by subparagraphs (A), (E), and (F) of
paragraph (2) of subdivision (d). The recorder shall index the
document under the names of the persons and entities identified in
subparagraphs (A) and (E) of paragraph (2) of subdivision (d). The
recorder shall not examine any other information contained in the
document required by subdivision (d).
SEC. 8. Section 5898.28 of the Streets and Highways Code is
amended to read:
5898.28. A public agency may issue bonds pursuant to this
chapter, the principal and interest for which would be repaid by
voluntary contractual assessments. A public agency may advance its
own funds to finance work to be repaid through voluntary contractual
assessments, and may from time to time sell bonds to reimburse itself
for such advances. A public agency may enter into a relationship
with an underwriter or financial institution that would allow the
sequential issuance of a series of bonds, each bond being issued as
the need arose to finance work to be repaid through voluntary
contractual assessments. The interest rate of each bond may be
determined by an appropriate index, but shall be fixed at the time
each bond is issued. Bond proceeds may be used to establish a reserve
fund, and to pay for expenses incidental to the issuance and sale of
the bonds. Division 10 (commencing with Section 8500) shall apply to
any bonds issued pursuant to this section, insofar as that division
is not in conflict with this chapter.
SEC. 9. Section 5898.30 of the Streets and Highways Code is
amended to read:
5898.30. Assessments levied pursuant to this chapter, and the
interest and any penalties thereon shall constitute a lien against
the lots and parcels of land on which they are made, until they are
paid. Division 10 (commencing with Section 8500), insofar as those
provisions are not in conflict with the provisions of this chapter,
Article 13 (commencing with Section 53930) of, and Article 13.5
(commencing with Section 53938) of, Chapter 4 of Part 1 of Division 2
of Title 5 of the Government Code apply to the imposition and
collection of assessments contracted for pursuant to this chapter,
including, but not limited to, provisions related to lien priority,
the collection of assessments in the same manner and at the same time
as the general taxes of the city or county on real property, and any
penalties and remedies in the event of delinquency and default.
SEC. 10. Section 5898.31 is added to the Streets and Highways
Code, to read:
5898.31. Since contractual assessments on real property under
this chapter are voluntary and imposed pursuant to an agreement with
an assessed property owner, the Legislature finds and declares that
voluntary contractual assessments under this chapter are not
assessments for the purposes of Articles XIII C and XIII D of the
California Constitution and therefore the provisions of Articles XIII
C and XIII D and Article 4.6 (commencing with Section 53750) of
Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code
are not applicable to voluntary contractual assessments levied
pursuant to this chapter.