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)
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|COMMITTEE VOTE: |8-1 |(September 11, |RECOMMENDATION: |concur |
|(L. GOV.) | |2013) | | |
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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,
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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 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
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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 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
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lists seven exceptions to what constitutes a local tax, 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.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
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