BILL ANALYSIS Ó
AB 483
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 483 (Ting)
As Amended September 4, 2013
2/3 vote. Urgency
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|ASSEMBLY: | |(April 22, |SENATE: |34-4 |(September 9, |
| | |2013) | | |2013) |
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(Vote not relevant)
Original Committee Reference: REV. & TAX.
SUMMARY : Defines "specific benefit" and "specific government
service" for the purposes of determining whether a levy is a tax
pursuant to Article XIIIC of the California Constitution.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Define the following terms:
a) "Specific benefit" to mean "a benefit that is provided
directly to a payor and is not provided to those not
charged. A specific benefit is not excluded from
classification as a 'specific benefit' merely because an
indirect benefit to a nonpayor occurs incidentally and
without cost to the payor as a consequence of providing the
specific benefit to the payor"; and,
b) "Specific government service" to mean "a service that is
provided by a local government directly to the payor and is
not provided by those not charged. A specific government
service is not excluded from classification as a 'specific
government service' merely because an indirect benefit to a
nonpayor occurs incidentally and without cost to the payor
as a consequence of providing the specific government
service to the payor. A 'specific government service' may
include, but is not limited to, maintenance, landscaping,
marketing, events, and promotions."
2)State that the local government bears the burden of proving by
a preponderance of the evidence that a levy, charge, or other
exaction imposed for a specific benefit for specific
government services is not a tax, that the amount is no more
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than necessary to cover the reasonable costs to the local
government in providing the specific benefit or government
service, and that the manner in which those costs are
allocated to a payor bear a fair or reasonable relationship to
the specific benefits or services received by the payor.
3)Include an urgency clause allowing this bill to take effect
immediately upon enactment.
4)Make findings and declarations that the purpose of this bill
is to clarify that business improvement district and tourism
marketing district assessments are not taxes within the
meaning of Article XIIIC of the California Constitution merely
because they might generate indirect, secondary benefits for
nonpayers, provided that those indirect, secondary benefits
occur incidentally and without cost to the payors of the
assessment.
EXISTING LAW :
1)Allows, under the Property and Business Improvement District
Law of 1994, property owners to petition a city or county to
set up an improvement district to levy assessments on property
owners or business owners for specified purposes.
2)Allows, under the Parking and Business Improvement Area Law of
1989, a city council or county board of supervisors to set up
an "improvement area" and levy assessments on businesses to
pay for several types of physical improvements or activities
within the area.
3)Defines a "tax" in Article XIIIC to mean "any levy, charge or
exaction of any kind imposed by a local government" with
specified exceptions.
4)Provides in Article XIIIC that the local government bears the
burden of providing by a preponderance of the evidence that a
levy, charge, or other exaction is not a tax, that the amount
is no more than necessary to cover the reasonable costs of the
governmental activity, and that the manner in which those
costs are allocated to a payor bear a fair or reasonable
relationship to the payor's burdens on, or benefits received
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from, the governmental activity.
AS PASSED BY THE ASSEMBLY this bill made a technical, clarifying
change to property tax law.
FISCAL EFFECT : None
COMMENTS : The formation of an assessment district allows local
officials to charge benefit assessments on property owners to
pay for public works and public services. Most assessments are
levied against real property, and are generally collected on the
property tax roll, secured by a lien against the assessed
property, and subject to Proposition 218 (1996). Assessments
levied in connection with business improvement districts,
however, are levied on businesses, not real property, are not
subject to Proposition 218, and are usually collected along with
business license taxes and are not secured by a lien against
real property.
Business improvement districts (BIDs) are one model for how
local governments use assessment financing to pay for projects
to attract and retain businesses. The Parking and Business
Improvement Area Law of 1989 allows a city council or county
board of supervisors to set up an "improvement area" and levy
assessments on businesses to pay for several types of physical
improvements or activities within the area. The Property and
Business Improvement District Law of 1994 allows property owners
to petition a city or county to set up an "improvement district"
and levy assessments on property owners to pay for promotional
activities and physical improvements. Local officials may also
use the 1994 law to assess business owners.
One type of business assessment district is a tourism marketing
district (TMD). TMDs are formed by local businesses to assess
hotels and other lodging businesses to pay for marketing and
other activities to promote tourism. According to the
California Travel Association, California's 65 TMDs "spent more
than $120 million to market and promote their destinations in
2010. Their efforts generated $8.9 billion in new, direct
spending - a remarkable $70 return for each dollar invested."
Proposition 26 (2010) amended Article XIIIC to broaden the
definition of what constitutes a tax to include many payments
previously considered fees or charges. Language in Proposition
26 lists seven exceptions to what constitutes a local tax,
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including two that are relevant to this bill: 1) A charge
imposed for a specific benefit conferred or privilege granted
directly to the payer that is not provided to those not charged,
and which does not exceed the reasonable costs to the local
government of conferring the benefit or granting the privilege;
and 2) A charge imposed for a specific government service or
product provided directly to the payer that is not provided to
those not charged, and which does not exceed the reasonable
costs to the local government of providing the service or
product.
According to the author, "The 2010 passage of voter-approved
Proposition 26 created potential legal uncertainty over these
Districts' ability to privately fund tourism marketing and
promotional activities. In response to the ambiguity created by
a lack of defined terms in Proposition 26, this bill clarifies
that any incidental benefit from a TMD or BID to a business
located outside a district's boundary does not violate the law."
Absent a definition for a "specific benefit" or a "specific
government service" there is legal uncertainty surrounding the
application of Proposition 26 to business-based assessments.
According to the Legislative Analyst's Office analysis of
Proposition 26, "some business assessments could be considered
to be taxes because government uses the assessment revenues to
improve shopping districts (such as providing parking, street
lighting, increased security, and marketing), rather than
providing a direct and distinct service to the business owner."
This bill defines the terms "specific benefit" and "specific
government service" for the purpose of Article XIIIC of the
Constitution. This bill also mirrors language in Article XIIIC
added by Proposition 26 to state that the local government bears
the burden of proving, by a preponderance of evidence, that the
assessment charged for a specific benefit or government service
is not more than necessary to cover the costs of providing the
specific benefit or service, and that the costs are allocated
are in proportion to the benefit and service received. This
bill is an urgency measure and is sponsored by the California
Travel Association.
Support arguments: Supporters argue that this bill protects
California's tourism industry by clarifying a few key terms
related to the implementation of Proposition 26.
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Opposition arguments: Opposition argues that this bill
undermines the will of the voters and changes the intent of
Proposition 26.
This bill was substantially amended in the Senate and the
Assembly-approved provisions of this bill were deleted. The
subject matter of this bill, as amended in the Senate, has not
been heard in any Assembly policy committee this legislative
session.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
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