BILL ANALYSIS Ó
AB 483
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Date of Hearing: September 11, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 483 (Ting) - As Amended: September 4, 2013
SUBJECT : Local government: taxes, fees, assessments, and
charges: definitions.
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
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
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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
from, the governmental activity.
AS PASSED BY THE ASSEMBLY this bill made a technical, clarifying
change to property tax law.
FISCAL EFFECT : None
COMMENTS :
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1)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."
2)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, 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
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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.
3)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."
4)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.
5)In opposition to the bill, the California Taxpayers
Association argues, "While the stated purpose of the bill is
to provide clarification of Article XIIIC, the language of the
bill is broader than the preamble describes, and could
potentially open the door for local governments to abuse
current taxpayer protections."
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6)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.
Opposition arguments: Opposition argues that this bill
undermines the will of the voters and changes the intent of
Proposition 26.
REGISTERED SUPPORT / OPPOSITION :
Support
California Travel Association [SPONSOR]
Anaheim Orange County Visitor & Convention Bureau
Azul Hospitality Group
California Asian Pacific Chamber of Commerce
California Association of Boutique & Breakfast Inns
California Association of Port Authorities
California Association of RV Parks & Campgrounds
California Attractions and Parks Association
California Business Properties Association
California Downtown Association
California Hotel & Lodging Association
California Lodging Industry Association
California Retailers Association
California State Association of Counties
Certified Folder Display Service, Inc.
Chateau Montelena Winery
City and County of San Francisco
City of Pismo Beach Conference & Visitors Bureau
County of Santa Cruz
Downtown Sacramento Partnership
El Dorado County Visitors Authority
Fresno/Clovis Convention & Visitors Bureau
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Gaynes Consulting
Greater Palm Springs Convention & Visitors Bureau
Hotel Council of San Francisco
Humboldt County Convention & Visitors Bureau
League of California Cities
Legoland California Resort
Los Angeles Tourism & Convention Board
Novato Chamber of Commerce
Ojai Valley Chamber of Commerce
Orange County Visitors Association
Palm Springs Bureau of Tourism
Pasadena Convention & Visitors Bureau
Pure Luxury Transportation
Quality Inn Temecula
Rancho Cordova Travel & Tourism
San Diego Zoo and Safari Park
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 and Visitors Council
Santa Monica Convention & Visitors Bureau
Santa Rosa Convention & Visitors Bureau
Support (continued)
Santa Ynez Valley Hotel Association
Sea World San Diego
Sonoma County Tourism
Stockton Convention & Visitors Bureau
Sunset Publishing
Temecula Valley Convention and Visitors Bureau
Vallejo Convention & Visitors Bureau
Visit Mendocino County
Visit Napa Valley
Visit Newport Beach
Visit Oceanside
Visit Tri-Valley
Visit West Hollywood
Yosemite Sierra Visitors Bureau
San Diego Zoo Global
Opposition
California Manufacturers & Technology Association
California Taxpayers Association
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Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958