BILL ANALYSIS Ó AB 2403 Page 1 ASSEMBLY THIRD READING AB 2403 (Rendon) As Amended May 15, 2014 Majority vote LOCAL GOVERNMENT 9-0 ----------------------------------------------------------------- |Ayes:|Achadjian, Levine, Alejo, | | | | |Bradford, Gordon, | | | | |Melendez, Mullin, Rendon, | | | | |Waldron | | | ----------------------------------------------------------------- SUMMARY : Expands the definition of "water" in the Proposition 218 Omnibus Implementation Act. Specifically, this bill : 1)Makes changes to the Proposition 218 Omnibus Implementation Act of 1996 to add "from any source" to the current definition of "water." 2)Finds and declares that this act is declaratory of existing law, including the decision of the Sixth District Court of Appeal in Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586 and Howard Jarvis Taxpayers Association v. City of Salinas (2002) 98 Cal.App.4th 1351. 3)Makes other technical and conforming changes. 4)Finds and declares that the provisions of the Proposition 218 Omnibus Implementation Act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent. EXISTING LAW : 1)Defines, for purposes of Article XIII C and Article XIII D of the California Constitution and the Proposition 218 Omnibus Implementation Act, "water" to mean "any system of public improvement intended to provide for the production, storage, supply, treatment, or distribution of water". 2)"Recycled water" means, pursuant to the Water Code, "water which, as a result of treatment of waste, is suitable for a direct beneficial use or a controlled use that would not AB 2403 Page 2 otherwise occur and is therefore considered a valuable resource." 3)Provides notice, protest, hearing, and election procedures for the levying of new or increased assessments or property-related fees or charges by local government agencies pursuant to Proposition 218. FISCAL EFFECT : None COMMENTS : 1)Current law and purpose of this bill. The Proposition 218 Omnibus Implementation Act, currently defines "water" to mean "any system of public improvement intended to provide for the production, storage, supply, treatment, or distribution of water." Under this bill the definition of water is "any system of public improvement intended to provide for the production, storage, supply, treatment or distribution of water from any source." This bill is author-sponsored. 2)Author's statement. According to the author, "This bill would put the new Griffith decision into statute and allow public agencies to apply the simpler protest process to their approval of stormwater management fees, where the management programs address both water supply and water quality. "In 2002, the [Sixth District] Court of Appeal interpreted this exception for water/sewer rates to exclude costs for stormwater drains. The service in the 2002 case emphasized flood control, moving water to the ocean as quickly as possible. That program had nothing to do with water supply. Those fees had developed to address the water quality challenges presented by stormwater. Stormwater management has changed since 2002. Since Proposition 218 passed in 1996, managing stormwater has become more about water supply, as agencies develop methods to 'capture' stormwater, clean it, and recharge groundwater aquifers for water supply. In 2013, the Court of Appeals again considered stormwater in a Proposition 218 context, for a program that charged fees for groundwater recharge, including stormwater capture. "This bill offers one alternative to address the evolving nature of California's stormwater management programs, especially the growing development of 'stormwater recapture' AB 2403 Page 3 programs for recharging groundwater aquifers." 3)Proposition 218 Omnibus Implementation Act. Proposition 218 Omnibus Implementation Act distinguishes among taxes, assessments and fees for property-related revenues, and requires certain actions before such revenues may be collected. Counties and other local agencies with police powers may impose any one of these options on property owners, after completing the Proposition 218 Omnibus Implementation Act process. Special districts created by statute, however, must have specific authority for each of these revenue sources. The California Constitution defines a fee (or charge) as any levy other than an ad valorem tax, special tax, or assessment that is imposed by a local government on a parcel or on a person as an incident of property ownership, including a user fee for a property-related service. The fee imposed on any parcel or person cannot exceed the proportional cost of the service that is attributable to the parcel. Prior to imposing or increasing a property-related fee, the local government is required to identify the parcels, mail a written notice to all the property owners subject to the fee detailing the amount of the fee, the reason for the fee, and the date, time, and location of a public hearing on the proposed fee. No sooner than 45 days after mailing the notice to property owners, the agency must conduct a public hearing on the proposed fee. If a majority of owners of the identified parcels provide written protests against the fee, it cannot be imposed or increased by the agency. Additionally, Article XIII D Section 6 subdivision (c) of the California Constitution, provides election requirements, "Except for fees or charges for sewer, water, and refuse collection services, no property-related fee or charge shall be imposed or increased unless and until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area." The election for the fee is required to be conducted no less than 45 days following the public hearing. The definition of "water" under the Proposition 218 Omnibus Implementation Act is significant because the election AB 2403 Page 4 requirements are on fees for services other than water, sewer, and trash services. 4)Griffith v. Pajaro Valley Water Management Agency. Prior to the appellate decision in Griffith v. Pajaro Valley Water Management Agency, the issue of whether a charge for groundwater augmentation was considered a water service and therefore exempt from the election requirements was contested. Under Griffith the court relied on the definition of "water" in Proposition 218 Omnibus Implementation Act narrowly construing an earlier decision in Howard Jarvis Taxpayers Association v. City of Salinas, which did not apply the Act's definitions to a storm water charge dispute. The Griffith decision found that a groundwater augmentation charge is a fee for "water service". According to the Griffith decision, "Moreover, the Legislature has endorsed the view that water service means more than just supplying water. The Proposition 218 Omnibus Implementation Act, enacted specifically to construe Proposition 218 Omnibus Implementation Act, defines 'water' as 'any systems of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water'. Thus, the entity who produces, stores, supplies, treats, or distributes water necessarily provides water service. Defendant's statutory mandate to purchase, capture, store, and distribute supplemental water therefore describes water service." The Court made several other decisions regarding Proposition 218 Omnibus Implementation Act, however, the portions of the case that discuss "water service" are especially pertinent to this bill. The Legislature may wish to consider following the appellate decision in Griffith which has provided more guidance on several issues under Proposition 218 Omnibus Implementation Act's provisions regarding water, sewer, trash, and other property-related fees if it is helpful for the Legislature to amend the definition of "water." The Legislature may wish to consider if it is the best policy to let stakeholders continue to rely on the court's decision in light of the clarity provided by Griffith. 5)Arguments in support. Supporters argue that while California's drought and efforts to provide a continued, safe, reliable supply of water presents many challenges, that the AB 2403 Page 5 clarifying language in this bill provides an opportunity to remove any confusion that may exist and will enable all of our communities to get one step closer to attaining a sustainable water future. 6)Arguments in opposition. None on file. Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916) 319-3958 FN: 0003431