BILL NUMBER: AB 2618 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 21, 2014
INTRODUCED BY Assembly Member John A. Pérez
(Coauthors: Assembly Members Dickinson and Ting)
FEBRUARY 21, 2014
An act to amend Sections 36601, 36602, 36603.5, 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 amended, 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 total amount of all special benefits
to be provided to conferred on the
properties located within the property-based district, the
sum total amount 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 , or other real property , 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 , maintenance, 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 total amount of all
special benefits to be provided to conferred
on the properties within the property-based
district, and the sum total amount of
any general benefit being primarily provided to the public
or any entity other than the properties located within the district
benefit .
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 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
business districts 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 special
benefit conferred upon real property or businesses
in a business district 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.
even if there is some incidental benefit to property
or persons not assessed, from the improvements, maintenance, or
activities that confer the special benefit.
(e) Property and business improvement districts formed throughout
this state have provided many conferred
special benefits to this state's communities that have
resulted in on properties and businesses within their
districts and have made assessed properties and businesses more
useful by providing 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
tools with which communities may
to 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 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
Constitution provides 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.
(h) The act amending this section is intended to provide the
Legislature's guidance with regard to this act, its interaction with
the provisions of Article XIII D of the Constitution, and the
determination of special benefits in property-based districts.
(1) The lack of legislative guidance appears to have
created has resulted in uncertainty
among various courts with regard to the determination of special
benefits, which could be perceived as providing an unclear or
inconsistent standard. and inconsistent application of
this act, which discourages the use of assessments to fund needed
improvements, maintenance, and activities in property-based
districts, contributing to blight and other underutilization of
property.
(2) Improvements, maintenance, or activities conferring special
benefits upon property to be assessed also inevitably provide
incidental, secondary, or collateral effects that benefit others not
assessed. This incidental benefit is part of a special benefit and is
not intended to generally benefit the public and, therefore, does
not constitute a general benefit under Article XIII D of the
Constitution.
(2)
(3) 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 district, to
assure ensure 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 act . 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 36603.5 of the Streets
and Highways Code is amended to read:
36603.5. Any provision in of this
part that conflicts with any other provision of law shall prevail
over the other provision of law , as to districts created under
this part .
SEC. 3. SEC. 4. Section 36606 of the
Streets and Highways Code is amended and renumbered to read:
36606.5. "Assessment" means a levy or charge
for the purpose of acquiring, constructing, installing, or
maintaining improvements and promoting activities that will provide
certain benefits to properties or businesses located within a
property and business improvement district.
SEC. 4. SEC. 5. Section 36609.5 is
added to the Streets and Highways Code, to read:
36609.5. "General benefit" means , for purposes of a
property-based district, any benefit being primarily
provided to the public at large or any
entity person or property 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 "General benefit" excludes all
types and components of a "special benefit" as defined in Section
36615.5 .
SEC. 5. SEC. 6. Section 36611 of the
Streets and Highways Code is amended and renumbered to read:
36614.5. "Property and business improvement district," or
"district," means a property and business improvement district
established pursuant to this part.
SEC. 6. SEC. 7. Section 36612 of the
Streets and Highways Code is amended and renumbered to read:
36614. "Property" means real property situated within a district.
SEC. 7. SEC. 8. Section 36613 of the
Streets and Highways Code is amended and renumbered to read:
36606. "Activities" means, but is not limited to, all of the
following that benefit businesses or real property in the
district :
(a) Promotion of public events which benefit businesses
or real property in the district. events.
(b) Furnishing of music in any public place within the
district place .
(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 Other services that
benefit businesses and real property located in the district.
SEC. 8. SEC. 9. Section 36614 of the
Streets and Highways Code is amended and renumbered to read:
36611. "Management district plan" or "plan" means a proposal as
defined in Section 36622.
SEC. 9. SEC. 10. Section 36614.5 of
the Streets and Highways Code is amended and renumbered to read:
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 records relating to
activities of the district.
SEC. 10. SEC. 11. Section 36614.6 is
added to the Streets and Highways Code, to read:
36614.6. "Property-based assessment" means any levy or
charge assessment made pursuant to this part
upon real property by a city property .
SEC. 11. SEC. 12. 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 which a
city levies a property-based assessment.
SEC. 12. SEC. 13. Section 36615.5 is
added to the Streets and Highways Code, to read:
36615.5. "Special benefit" means , for purposes of a
property-based district, 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 large, or to other
real property from the improvements, maintenance, or activities of a
property-based district and the incidental secondary or
collateral benefit from those improvement s, maintenance,
or activities. "Special benefit" excludes 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 and any
"general benefit" as defined in Section 36609.5 .
SEC. 13. SEC. 14. Section 36622 of
the Streets and Highways Code is amended to read:
36622. The management district plan shall contain
include, but is not limited to, 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 , maintenance, and activities
proposed for each year of operation of the district and the maximum
cost thereof. If the improvements , maintenance,
and activities proposed for each year of operation are the
same, a description of the first year's proposed improvements ,
maintenance, and activities and a statement that the same
improvements , maintenance, 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 , or
activities , 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 activities . 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
total amount 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.
all special benefits to be conferred on the properties in the
property-based district .
(n) In a property-based district, the total amount of any general
benefit.
(n)
(o) 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.
(3)
(p) Any other item or matter required to be
incorporated therein by the city council.
SEC. 14. SEC. 15. 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 a proposed
property and business improvement district, the city council shall
adopt a resolution of formation that shall contain
include, but is not limited to, all of the following:
(1) A brief description of the proposed activities and
improvements, maintenance, and activities, 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 on whether
bonds will be issued, and a description of the exterior boundaries
of the proposed district. The descriptions and statements do
not need to not be detailed
and shall be sufficient if they enable an owner to generally identify
the nature and extent of the improvements , maintenance,
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 , maintenance,
and activities to be provided in conferred on
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 source for those general
benefits. The revenue from the levy of assessments within a district
shall not be used to provide improvements , maintenance,
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 , maintenance, and activities funded by
the assessments proposed to be levied
proposed assessments , 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 total amount of all special
benefits to be conferred on 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. benefit.
(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. SEC. 16. 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 , maintenance, and
activities, provided that any property-based assessment is
proportional to the special benefit conferred on the assessed
property.
SEC. 16. SEC. 17. 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 proportionally with
to the distribution of a special benefit
to conferred on 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-based district. The city council may classify
properties for purposes of determining the special benefit
provided to conferred on property by the
improvements , maintenance, and activities
provided c onferred 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 , maintenance,
and activities provided conferred
pursuant to this part.
(c) Properties zoned solely for
residential use, or that are zoned for agricultural use,
are conclusively presumed not to receive
special benefit from the improvements , maintenance,
and service activities funded through
these assessments, and shall not be subject to any assessment
pursuant to this part.