BILL NUMBER: AB 2618 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member John A. Pérez
(Coauthors: Assembly Members Dickinson and Ting)
FEBRUARY 21, 2014
An act to amend Sections 36601, 36602, 36622, 36625, 36628.5, and
36632 of, to amend and renumber Sections 36606, 36611, 36612, 36613,
36614, and 36614.5 of, and to add Sections 36609.5, 36614.6, 36614.7,
and 36615.5 to, the Streets and Highways Code, relating to benefit
assessments.
LEGISLATIVE COUNSEL'S DIGEST
AB 2618, as introduced, John A. Pérez. Property and business
improvement areas: benefit assessments.
The California Constitution generally requires that assessments,
fees, and charges be submitted to property owners for approval or
rejection after the provision of written notice and the holding of a
public hearing.
The Property and Business Improvement District Law of 1994
authorizes cities to form property and business improvement districts
that may levy assessments within a district for the purpose of
making improvements and promoting activities of benefit to the
properties and businesses within the district, and defines various
terms for purposes of the act.
The act requires a management district plan to include, among
other things, the name of the proposed district, a description of the
boundaries of the district, and the total annual amount proposed to
be expended for improvements, maintenance and operations, and debt
service in each year of operation of the district.
This bill would require a management district plan to
additionally include, for districts that are property-based, the
proportionate special benefit derived by each identified parcel, the
sum of all special benefits to be provided to the properties located
within the district, the sum of any general benefit being primarily
provided to the public or any entity other than the properties
located within the district, and a detailed engineer's report, as
specified.
This bill would define the term "special benefit" for purposes of
that act to mean a particular and distinct benefit over and above
general benefits, as defined, conferred on real property located in a
property-based district, as defined, or the public at large, as
specified.
The act additionally requires the city council to adopt a
resolution of formation containing, among other things, a statement
that the improvements and activities to be provided in the district
will be funded by the levy of the assessments and a finding that the
property or businesses within the area of the district will be
benefited by the improvements and activities funded by the
assessments proposed to be levied.
This bill would require, for a property-based district, a
statement of the source of funding to pay for any general benefits, a
finding that the property within the district will receive a special
benefit, the sum of all special benefits to be provided to the
properties within the district, and the sum of any general benefit
being primarily provided to the public or any entity other than the
properties located within the district.
The act authorizes a city council to levy assessments on
businesses or on property owners, or a combination of the 2, and
requires the city council to structure the assessments on whatever
manner it determines corresponds with the distribution of benefits
from the proposed improvements and activities.
This bill would require any property-based assessment to be
proportional to the special benefit conferred on the assessed
property, and would prohibit the assessment from exceeding the
reasonable cost of the proportional special benefit conferred, as
specified.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 36601 of the Streets and Highways Code is
amended to read:
36601. The Legislature finds and declares all of the following:
(a) Businesses located and operating within the
business districts in some of this state's communities
are economically disadvantaged, are underutilized, and are unable to
attract customers due to inadequate facilities, services, and
activities in the business districts.
(b) It is in the public interest to promote the economic
revitalization and physical maintenance of the business districts of
its cities in order to create jobs, attract new businesses, and
prevent the erosion of the business districts.
(c) It is of particular local benefit to allow cities to fund
business related improvements, maintenance, and activities through
the levy of assessments upon the businesses or real property that
receive certain benefits from those improvements.
(d) Assessments levied for the purpose of providing improvements
and promoting activities that benefit real property or businesses are
not taxes for the general benefit of a city, but are assessments for
the improvements and activities which confer special benefits upon
the real property or businesses for which the improvements and
activities are provided.
(e) Property and business improvement districts formed throughout
this state have provided many benefits to this state's communities
that have resulted in the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed
a 12-percent reduction in the incidence of robbery and an 8-percent
reduction in the total incidence of violent crimes within the 30
districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the
state, property and business improvement districts have become an
even more important tool with which communities may combat blight,
promote economic opportunities, and create a clean and safe
environment.
(g) Since the enactment of this act, the people of California have
adopted Proposition 218, which amended Article XIII D of the
constitution to place certain requirements and restrictions on the
formation of, and activities, expenditures, and assessments by
property-based districts. Article XIII D of the constitution requires
that property-based districts may only levy assessments for special
benefits.
(h) Various courts have considered how special benefits should be
determined and assessed without guidance from the Legislature in
regard to how the Legislature intends for the Property and Business
Improvement District Law of 1994 to interact and comply with the
provisions of Article XIII D of the Constitution and how special
benefits are to be determined with regard to property-based
districts.
(1) The lack of legislative guidance appears to have created
uncertainty among various courts with regard to the determination of
special benefits, which could be perceived as providing an unclear or
inconsistent standard.
(2) It is of utmost importance that property-based districts
created under the this act have clarity regarding restrictions on
assessments they may levy and the proper determination of special
benefits. Legislative clarity with regard to this act will provide
districts with clear instructions and courts with legislative intent
regarding restrictions on property-based assessments, and the manner
in which special benefits should be determined.
(3) Of the appellate cases in which this act has been interpreted
Dahms v. Downtown Pomona Property and Business Improvement District
(2009) 174 Cal. App. 4th 708, most squarely relates to property-based
districts and its ruling provides clarity with regard to how special
benefits are determined and assessed with regard to those districts.
(i) It is the intent of the Legislature that this act should
reflect the provisions of Article XIII D of the Constitution and the
guidance regarding the application of those provisions set forth in
Dahms v. Downtown Pomona Property and Business Improvement District
(2009) 174 Cal. App. 4th 708 including the manner in which special
benefits should be determined.
SEC. 2. Section 36602 of the Streets and Highways Code is amended
to read:
36602. The purpose of this part is to supplement previously
enacted provisions of law that authorize cities to levy assessments
within a property and business improvement area
district, to assure that those assessments conform to
all constitutional requirements and are determined and assessed in
accordance with the guidance set forth in Dahms v. Downtown Pomona
Property and Business Improvement District (2009) 174Cal. App.4th 708
. This part does not affect or limit any other provisions of
law authorizing or providing for the furnishing of improvements or
activities or the raising of revenue for these purposes.
SEC. 3. Section 36606 of the Streets and Highways Code is amended
and renumbered to read:
36606. 36606.5. "Assessment" means
a levy or charge for the purpose of acquiring,
constructing, installing, or maintaining improvements and promoting
activities which that will
benefit the provide certain benefits to
properties or businesses located within a property and business
improvement district.
SEC. 4. Section 36609.5 is added to the Streets and Highways Code,
to read:
36609.5. "General benefit" means any benefit being primarily
provided to the public or any entity other than the properties or
businesses located within the property-based district. A general
benefit does not include a collateral benefit that arises
incidentally from a special benefit conferred on the properties or
businesses located within the property-based district.
SEC. 5. Section 36611 of the Streets and Highways Code is amended
and renumbered to read:
36611. 36614.5. "Property and
business improvement district," or "district," means a property and
business improvement district established pursuant to this part.
SEC. 6. Section 36612 of the Streets and Highways Code is amended
and renumbered to read:
36612. 36614. "Property" means real
property situated within a district.
SEC. 7. Section 36613 of the Streets and Highways Code is amended
and renumbered to read:
36613. 36606. "Activities" means,
but is not limited to, all of the following:
(a) Promotion of public events which benefit businesses or real
property in the district.
(b) Furnishing of music in any public place within the district.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention
and recruitment.
(e) Providing security, sanitation, graffiti removal, street and
sidewalk cleaning, and other municipal services supplemental to those
normally provided by the municipality.
(f) Activities which benefit businesses and real property located
in the district.
SEC. 8. Section 36614 of the Streets and Highways Code is amended
and renumbered to read:
36614. 36611. "Management district
plan" or "plan" means a proposal as defined in Section 36622.
SEC. 9. Section 36614.5 of the Streets and Highways Code is
amended and renumbered to read:
36614.5. 36612. "Owners'
association" means a private nonprofit entity that is under contract
with a city to administer or implement activities and improvements
specified in the management district plan. An owners' association may
be an existing nonprofit entity or a newly formed nonprofit entity.
An owners' association is a private entity and may not be considered
a public entity for any purpose, nor may its board members or staff
be considered to be public officials for any purpose. Notwithstanding
this section, an owners' association shall comply with the Ralph M.
Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of
Division 2 of Title 5 of the Government Code), at all times when
matters within the subject matter of the district are heard,
discussed, or deliberated, and with the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code), for all documents relating to activities of
the district.
SEC. 10. Section 36614.6 is added to the Streets and Highways
Code, to read:
36614.6. "Property-based assessment" means any levy or charge
upon real property by a city.
SEC. 11. Section 36614.7 is added to the Streets and Highways
Code, to read:
36614.7. "Property-based district" means any district supported
in part by any property-based assessment.
SEC. 12. Section 36615.5 is added to the Streets and Highways
Code, to read:
36615.5. "Special benefit" means a particular and distinct
benefit over and above general benefits conferred on real property
located in a property-based district or to the public at large.
General enhancement of property value does not constitute "special
benefit." To the extent a special benefit concomitantly produces a
collateral benefit for properties generally or for the public at
large, that collateral benefit is not a general benefit.
SEC. 13. Section 36622 of the Streets and Highways Code is amended
to read:
36622. The management district plan shall contain all of the
following:
(a) If the assessment will be levied on property, a map of the
district in sufficient detail to locate each parcel of property and,
if businesses are to be assessed, each business within the district.
If the assessment will be levied on businesses, a map that identifies
the district boundaries in sufficient detail to allow a business
owner to reasonably determine whether a business is located within
the district boundaries. If the assessment will be levied on property
and businesses, a map of the district in sufficient detail to locate
each parcel of property and to allow a business owner to reasonably
determine whether a business is located within the district
boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the
boundaries of benefit zones, proposed for establishment or extension
in a manner sufficient to identify the affected lands and businesses
included. The boundaries of a proposed property assessment district
shall not overlap with the boundaries of another existing property
assessment district created pursuant to this part. This part does not
prohibit the boundaries of a district created pursuant to this part
to overlap with other assessment districts established pursuant to
other provisions of law, including, but not limited to, the Parking
and Business Improvement Area Law of 1989 (Part 6 (commencing with
Section 36500)). This part does not prohibit the boundaries of a
business assessment district created pursuant to this part to overlap
with another business assessment district created pursuant to this
part. This part does not prohibit the boundaries of a business
assessment district created pursuant to this part to overlap with a
property assessment district created pursuant to this part.
(d) The improvements and activities proposed for each year of
operation of the district and the maximum cost thereof. If the
improvements and activities proposed for each year of operation are
the same, a description of the first year's proposed improvements and
activities and a statement that the same improvements and activities
are proposed for subsequent years shall satisfy the requirements of
this subdivision.
(e) The total annual amount proposed to be expended for
improvements, maintenance and operations, and debt service in each
year of operation of the district. If the assessment is levied on
businesses, this amount may be estimated based upon the assessment
rate. If the total annual amount proposed to be expended in each year
of operation of the district is not significantly different, the
amount proposed to be expended in the initial year and a statement
that a similar amount applies to subsequent years shall satisfy the
requirements of this subdivision.
(f) The proposed source or sources of financing, including the
proposed method and basis of levying the assessment in sufficient
detail to allow each property or business owner to calculate the
amount of the assessment to be levied against his or her property or
business. The plan also shall state whether bonds will be issued to
finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be
levied. In a new district, the maximum number of years shall be five.
Upon renewal, a district shall have a term not to exceed 10 years.
Notwithstanding these limitations, a district created pursuant to
this part to finance capital improvements with bonds may levy
assessments until the maximum maturity of the bonds. The management
district plan may set forth specific increases in assessments for
each year of operation of the district.
(i) The proposed time for implementation and completion of the
management district plan.
(j) Any proposed rules and regulations to be applicable to the
district.
(k) (1) A list of the properties or
businesses to be assessed, including the assessor's parcel numbers
for properties to be assessed, and a statement of the method or
methods by which the expenses of a district will be imposed upon
benefited real property or businesses, in proportion to the benefit
received by the property or business, to defray the cost thereof,
including operation and maintenance.
(2) In a property-based district, the proportionate special
benefit derived by each identified parcel shall be determined in
relationship to the entirety of the capital cost of a public
improvement, the maintenance and operation expenses of a public
improvement, or the cost of the property related service being
provided. An assessment shall not be imposed on any parcel that
exceeds the reasonable cost of the proportional special benefit
conferred on that parcel. Only special benefits are assessable, and a
property-based district shall separate the general benefits from the
special benefits conferred on a parcel. Parcels within a
property-based district that are owned or used by any city, public
agency, the State of California, or the United States shall not be
exempt from assessment unless the governmental entity can demonstrate
by clear and convincing evidence that those publicly owned parcels
in fact receive no special benefit.
(l) In a property-based district, the sum of all special benefits
to be provided to the properties located within the property-based
district.
(m) In a property-based district, the sum of any general benefit
being primarily provided to the public or any entity other than the
properties located within the district. A general benefit does not
include any collateral benefit that arises incidentally from the
provision of a special benefit to properties located within the
property-based district, and the amount of those collateral benefits
need not be deducted from the sum of special benefits to be provided
to the properties located within the property-based district.
(n) In a property-based district, a detailed engineer's report
prepared by a registered professional engineer certified by the State
of California supporting all assessments contemplated by the
management district plan.
( l )
(3) Any other item or matter required to be
incorporated therein by the city council.
SEC. 14. Section 36625 of the Streets and Highways Code is amended
to read:
36625. (a) If the city council, following the public hearing,
decides to establish the proposed property and business improvement
district, the city council shall adopt a resolution of formation that
shall contain all of the following:
(1) A brief description of the proposed activities and
improvements, the amount of the proposed assessment, a statement as
to whether the assessment will be levied on property, businesses, or
both within the district, a statement about whether bonds will be
issued, and a description of the exterior boundaries of the proposed
district. The descriptions and statements do not need to be detailed
and shall be sufficient if they enable an owner to generally identify
the nature and extent of the improvements and activities and the
location and extent of the proposed district.
(2) The number, date of adoption, and title of the resolution of
intention.
(3) The time and place where the public hearing was held
concerning the establishment of the district.
(4) A determination regarding any protests received. The city
shall not establish the district or levy assessments if a majority
protest was received.
(5) A statement that the properties, businesses, or properties and
businesses in the district established by the resolution shall be
subject to any amendments to this part.
(6) A statement that the improvements and activities to be
provided in the district will be funded by the levy of the
assessments , and, for a property-based district, to
the extent that general benefits are provided, the source of funding
to pay for those general benefits . The revenue from the levy
of assessments within a district shall not be used to provide
improvements or activities outside the district or for any purpose
other than the purposes specified in the resolution of intention, as
modified by the city council at the hearing concerning establishment
of the district.
(7) A finding that the property or businesses within the area of
the property and business improvement district will be benefited by
the improvements and activities funded by the assessments proposed to
be levied , and, for a property-based district ,
that property within the district will receive a special
benefit .
(8) In a property-based district, the sum of all special benefits
to be provided to the properties within the property-based district.
(9) In a property-based district, the sum of any general benefit
being primarily provided to the public or any entity other than the
properties located within the property-based district. General
benefits do not include collateral benefits that arise incidentally
from the provision of special benefits to the properties located
within the property-based district, and the amount of those
collateral benefits need not be deducted from the sum of special
benefits to be provided to the properties located within the
property-based district.
(b) The adoption of the resolution of formation and, if required,
recordation of the notice and map pursuant to Section 36627 shall
constitute the levy of an assessment in each of the fiscal years
referred to in the management district plan.
SEC. 15. Section 36628.5 of the Streets and Highways Code is
amended to read:
36628.5. The city council may levy assessments on businesses or
on property owners, or a combination of the two, pursuant to this
part. The city council shall structure the assessments in whatever
manner it determines corresponds with the distribution of benefits
from the proposed improvements and activities , provided that
any property-based assessment is proportional to the special benefit
conferred on the assessed property .
SEC. 16. Section 36632 of the Streets and Highways Code is amended
to read:
36632. (a) The assessments levied on real property pursuant to
this part shall be levied on the basis of the estimated
proportionally with the distribution of a special
benefit to the real property , and shall not exceed the
reasonable cost of the proportional special benefit conferred on the
real property. Any additional costs of providing general benefits
shall not be included in the amounts assessed. However, a general
benefit does not include collateral benefits that arise incidentally
from special benefits conferred on the properties or
businesses located within the property and business
improvement property-based district. The city
council may classify properties for purposes of determining the
special benefit provided to property of
by the improvements and activities provided
pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall
be levied on the basis of the estimated benefit to the businesses
within the property and business improvement district. The city
council may classify businesses for purposes of determining the
benefit to the businesses of the improvements and activities provided
pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned
for agricultural use, are conclusively presumed not to benefit from
the improvements and service funded through these assessments, and
shall not be subject to any assessment pursuant to this part.