BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 483|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 483
Author: Ting (D)
Amended: 8/13/13 in Senate
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 8/21/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
ASSEMBLY FLOOR : Not relevant
SUBJECT : Local government: taxes, fees, assessments, and
charges:
definitions
SOURCE : California Travel Association
DIGEST : This bill defines "specific benefit" and "specific
government service" for the purpose of determining whether a
levy is a tax pursuant to Article XIIIC of the California
Constitution.
ANALYSIS : Existing law allows local officials to charge
benefit assessments to property owners to pay for public works
and public services. Proposition 218 (1996) requires owners of
real property to approve benefit assessments in a weighted
ballot election. Property owners vote in proportion to their
proposed assessments, which reflect how much their property
benefits from the proposed public works or public services.
State law also allows local officials to create an assessment
CONTINUED
AB 483
Page
2
district, often called a business improvement district (BID), to
levy assessments on business owners to pay for specified types
of physical improvements or activities that benefit businesses
within the district. One type of business assessment-based
district is a tourism marketing district (TMD). TMDs are
typically formed to assess hotels and other lodging businesses
to pay for marketing and other activities that promote tourism
within the district and increase visitors' use of the hotels and
lodging facilities. The courts have said that assessments on
businesses, as opposed to real property, are not subject to
Proposition 218's provisions.
This bill:
1. Defines the terms "specific benefit" and "specific government
service" for the purposes of Articles XIIIC and XIIID of the
California Constitution.
2. Defines "specific benefit" as a benefit provided directly to
a payor and not provided to those not charged. This bill
specifies that ancillary or other benefits to nonpayors may
be created in the course of providing the specific benefit to
payors. A benefit is not excluded from classification as a
"specific benefit" by reason of a complete or partial
exemption from the levy, charge, or exaction imposed for that
benefit, provided that a levy, charge, or exaction imposed
for that benefit is used to provide that benefit only to the
payor.
3. Defines "specific government service" as a service that is
provided by an agency directly to the payor and is not
provided to those not charged. A "specific government
service" can include safety, maintenance, landscaping,
marketing, events, capital improvements, and promotions. A
service is not excluded from classification as a "specific
government service" by reason of a complete or partial
exemption from the levy, charge, or exaction imposed for that
service, provided that a levy, charge, or exaction imposed
for that service is used to provide that service only to the
payor.
Background
CONTINUED
AB 483
Page
3
In November 2010, voters approved Proposition 26, which amended
the California Constitution to expand the definitions of local
taxes and tax increases that require voter approval.
Proposition 26 defined any levy, charge, or exaction of any kind
imposed by a local government as a tax, requiring voter
approval, except for:
A charge for a specific benefit or privilege conveyed directly
to the payor and not conveyed to those not charged.
A charge for a specific government service or product provided
directly to the payor and not provided to those not charged.
A fee to cover certain costs of regulation.
Entrance fees for state or local property.
Fines imposed by a court or a local government.
A charge imposed as a condition of property development.
Assessments and property related fees governed by Proposition
218.
Because Proposition 26's exception for assessments applies only
to assessments governed by Proposition 218, the exception does
not apply to assessments on businesses. Improvements and
activities financed by TMDs and BIDs may be exempt from
Proposition 26's definition of a tax if they can be
characterized as charges for specific benefits or specific
government services provided directly to payors and not provided
to those not charged. However, Proposition 26 does not define
the terms "specific benefit" and "specific government service."
It is unclear whether assessments on businesses for improvements
or activities that produce benefits beyond those provided
directly to businesses qualify for any of Proposition 26's
exceptions. Recent lawsuits challenging assessments levied by
the City of San Diego's TMD cited Proposition 26. While one of
CONTINUED
AB 483
Page
4
those suits has been dismissed and two remain unresolved, they
underscore the uncertainty about Proposition 26's applicability
to business assessments.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/26/13)
California Travel Association (source)
Anaheim Orange County Visitor & Convention Bureau
Azul Hospitality Group
California Asian Pacific Chamber of Commerce
California Association of Boutique & Breakfast Inns
California Association of RV Parks & Campgrounds
California Attractions & Parks Association
California Business Properties Association
California Downtown Association
California Hotel and Lodging Association
California Lodging Industry Association
California Restaurant Association
California Retailers Association
California State Association of Counties
Certified Folder Display Service, Inc.
Chateau Montelena Winery
City of Pismo Beach Conference & Visitors Bureau
El Dorado County Visitors Authority
Fresno Clovis Convention & Visitors Bureau
Gaynes Consulting
Golden Gate Restaurant Association
Greater Palm Springs Convention & Visitors Bureau
Hotel Council of San Francisco
Humboldt County Convention & Visitors Bureau
LEGOLAND California Resort
Los Angeles Tourism & Convention Board
Novato Chamber of Commerce
Ojai Valley Chamber of Commerce
Ojai Visitors Bureau
Orange County Visitors Association
Palm Spring Bureau of Tourism
Pasadena Convention & Visitors Bureau
Pure Luxury Transportation
Quality Inn Temecula
Rancho Cordova Travel and Tourism
CONTINUED
AB 483
Page
5
San Francisco Chamber of Commerce
San Francisco Travel Association
San Mateo County/Silicon Valley Convention & Visitors Bureau
Santa Barbara Conference & Visitors Bureau and Film Commission
Santa Cruz County Conference & Visitors Council
Santa Monica Convention & Visitors Bureau
Santa Rosa Convention & Visitors Bureau
Santa Ynez Valley Hotel Association
Sea World San Diego
Sonoma County Tourism
Stockton Convention and Visitors Bureau
Sunset Publishing
Temecula Valley Convention & Visitors Bureau
Vallejo Convention & Visitors Bureau
Visit Mendocino Valley
Visit Napa Valley
Visit Newport Beach
Visit Oceanside
Visit Tri-Valley
Visit West Hollywood
Yosemite Sierra Visitors Bureau
OPPOSITION : (Verified 8/26/13)
California Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author, "AB 483 would
support California's important tourism industry by ensuring that
local governments may continue to establish and renew Tourism
Marketing Districts (TMDs) and other Business Improvement
Districts (BIDs). TMDs and BIDs are effective non-profit
entities electively formed by businesses in partnership with
local governments, whereby businesses impose an assessment on
themselves to privately fund tourism promotion efforts. This
bill clarifies definitions that govern these districts, allowing
them to operate more efficiently and bolster economic
development and job growth throughout the state."
ARGUMENTS IN OPPOSITION : CalTax is opposed to this bill and
writes, "AB 483 (Ting), which proposes to redefine terms in
Proposition 26, a successful 2010 ballot measure sponsored by
CalTax to protect taxpayers from hidden taxes. By redefining
terms used in Proposition 26, this bill undermines the will of
the voters and changes the intent of this measure."
CONTINUED
AB 483
Page
6
AB:d 8/26/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED