BILL ANALYSIS Ó
SB 142
Page 1
Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
SB 142 (DeSaulnier) - As Amended: May 7, 2013
SENATE VOTE : 24-11
SUBJECT : Public transit.
SUMMARY : Authorizes a governing board of a transit district,
municipal operator, or other public agency operating transit to
levy a special benefit assessment on real property to finance
the acquisition, construction, development, operation,
maintenance, or repair of eligible transit projects.
Specifically, this bill :
1)Defines the following terms:
a) "Benefit district" to mean "a special benefit assessment
district established" pursuant to this bill's provisions,
the area of which must not lie more than one-half mile from
the center point of any transit station or proposed transit
station;
b) "Transit station" to mean "a rail station or a bus
transfer station," which existing law defines as an
arrival, departure, or transfer point for the area's
intercity, intraregional, or interregional bus service
having permanent investment in multiple bus docking
facilities, ticketing services, and passenger shelters;
c) "Operator" to mean a "transit district, municipal
operator, or other public agency operating or contracting
for the operation of transit, commuter rail, or intercity
rail services";
d) "Board" to mean "the governing board of the operator";
e) "Eligible transit project" to mean "transit stations and
rail facilities and associated services, but excludes
operating costs of rail or transit services"; and,
f) "Rail facilities" to mean "land, buildings, and
equipment, or any interest therein, whether or not the
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operation thereof produces revenue, which has, as its
primary purpose, the operation of the rail system or the
providing of services to the passengers of the rail system,
but does not mean any land, buildings, or equipment, or
interest therein, which is used primarily for the
production of revenue not arising from the operation of the
rail system."
2)Authorizes the board, by a resolution adopted by a two-thirds
vote, to provide for notice and hearing on its intention to
establish one or more special benefit districts and levy a
special benefit assessment on real property for the purpose of
financing the acquisition, construction, development, joint
development, operation, maintenance, or repair of one more or
more eligible transit projects located within the benefit
district.
3)Authorizes an operator other than a transit district, city, or
county to implement a special benefit district under this
chapter only if the action is consistent with the general or
specific plans of the city or county within which special
benefit district is to be created.
4)Requires the board to comply with the notice, protest, and
hearing procedures in the Proposition 218 Omnibus
Implementation Act to levy a special benefit assessment.
5)States the resolution may provide that the proposed benefit
district will contain separate zones, which may consist of
contiguous or noncontiguous areas of land within the service
area of the operator. Requires the proposed benefit district
and each proposed zone, if any, to be an area adjacent to or
in the vicinity of one or more transit stations or proposed
transit stations. Requires the boundaries of the benefit
district of each zone, if any, to be drawn to reflect as
accurately as possible the areas where special benefits are
conferred by reason of the proximity and operation or one or
more transit stations.
6)Requires a notice stating the time and place of the hearing
and the boundaries and purpose of the proposed benefit
district to be published, as specified.
7)Requires the resolution to state the following:
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a) The minimum and maximum rate of assessments;
b) The amount of the special benefit assessment;
c) The purposes for which the special benefit assessment is
to be levied;
d) The estimated cost of accomplishing the purposes;
e) The dates or approximate intervals at which the
assessments are levied;
f) That the exterior boundaries of the benefit district are
set forth on a map on file with the operator, which governs
the extent of the benefit district and zones;
g) The name of the benefit district and any zones
designated by the board; and,
h) That a copy of the resolution must be included with the
notice given pursuant to the Proposition 218 Omnibus
Implementation Act.
8)Requires the board, in determining the amount of a special
benefit assessment, to measure the benefit to real property in
the benefit district or zones pursuant to the procedures and
approval process in Section 4 of Article XIIID of the
Constitution (Proposition 218).
9)Requires the special benefit assessments in the benefit
district and zones to be calculated in accordance with the
requirements in Section 4 of Article XIIID of the Constitution
(Proposition 218).
10)Requires the revenue from a special benefit assessment or
from bonds secured by a special benefit assessment to be used
only for financing the project for which it was levied.
Prohibits the revenue from being used for any other purpose or
for the payment of any other expense of the operator,
including but not limited to a transit, transportation, or
operating expense.
11)Allows the owner of a parcel, if any parcel owner in the
benefit district is in a joint tenancy, tenancy in common or
any other multiple ownership, to designate in writing which
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one of the owners shall be deemed the owner of the parcel for
the purposes of submitting an assessment ballot pursuant to
the Proposition 218 Omnibus Implementation Act. Specifies in
the absence of a designation, the Proposition 218 Omnibus
Implementation Act shall apply.
12)Authorizes the board to levy the assessment in accordance
with the resolution if a majority does not protest the
imposition of the assessment.
13)Allows a real property owner, or their legal representative,
to jointly or severally file a petition with the board to
request that their property be excluded from a benefit
district on the ground that the property does not benefit or
reduced on the ground that the assessment exceeds the benefit
to the property. Requires the petition to include specific
information about the property and a map depicting its
location in relation to the benefit district.
14)Requires the board to provide specified notification of each
hearing on the petition for exclusion or reduction.
15)Requires the board, or its appointed hearing officer, at the
properly noticed hearing on the petition for exclusion or
reduction, to hear the following:
a) The petition for exclusion or reduction;
b) All evidence or proof that may be introduced by or on
behalf of the petitioners;
c) All objections to the petition that may be presented in
writing by any person, including the authority; and,
d) All evidence or proof that may be introduced in support
of objections to the petition.
16)Requires the persons filing the petition to pay the expenses
of giving the notice and hearing on the exclusion or reduction
petition.
17)Requires the board, or upon the record of hearing by a
hearing officer, to order the petition be denied if the
petitioner has not shown by a preponderance of the evidence
that in an exclusion petition the real property is not
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benefited or in a reduction petition that the assessment
exceeds the benefit to the property.
18)Requires the board, after the hearing on an exclusion or
reduction petition, to take one of the following actions by
resolution:
a) Order the exclusion of all or any part of the real
property described in the exclusion petition upon a finding
that the property will not benefit by the operations of the
operator in the vicinity of the benefit district;
b) Order a change in the benefit assessment to all or any
portion of the real property described in the reduction
petition to provide that it not exceed the amount of
benefit derived by the operations of the operator in the
vicinity of the benefit district; or,
c) Confirm the assessment on the real property subject to
the petition as correctly reflecting the amount of benefit
to the real property.
19)Authorizes the board, if they deem it necessary to incur
bonded indebtedness for the acquisition, construction,
development, joint development, completion, operation,
maintenance or repair of one or more eligible transit
facilities located within the benefit district, by resolution
passed by a two-thirds vote to provide that the bonded
indebtedness shall be payable from special benefit
assessments.
20)Requires the resolution to declare and state the following:
a) That the board intends to incur indebtedness for the
benefit district;
b) The purpose for which the debt is to be incurred;
c) The estimated costs and the amount of principal of
indebtedness;
d) That the general description and maps of the benefit
district and of each zone are on file with the operator and
available for inspection;
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e) That the special benefit assessments for the payment of
the bonds are levied in pursuant to the procedures and
approval process of Section 4 of Article XIIID of the
Constitution (Proposition 218);
f) The time and place for the hearing on the proposed
issuance of bonds;
g) That the board is required to comply with the
Proposition 218 Omnibus Implementation Act prior to levying
a special benefit assessment;
h) The maximum term the proposed bonds shall run before
maturity, not to exceed 40 years; and,
i) The maximum rate or rates of interest to be paid, not to
exceed 12%.
21)Specifies requirements on the notice of and conduct of the
hearing on the proposed issuance of bonds.
22)Requires the board, at the conclusion of the hearing on the
proposed issuance of bonds to determine, by a resolution
adopted by a two-thirds vote, whether to incur the bonded
indebtedness, and requires the resolution to state the amount
of the proposed debt, the purposes for which it to be
incurred, and the estimated cost of accomplishing the
purposes.
23)Establishes requirements on the rates at which special
assessments to pay bonded indebtedness must be levied, the
annual interest rates for bonds, the call and redemption of
the bonds, denomination of the bonds, and the form of the
bonds.
24)Authorizes the board to sell the bonds, including at a price
below par, as determined by resolution.
25)Requires the board, if the board determines by resolution to
sell by competitive bid, to give notice inviting sealed bids
in the manner that it prescribes. Requires that bonds are
awarded to the highest bidder, if satisfactory bids are
received. Allows the board to reject the bids, if they
determine that the bids received are not satisfactory to price
or if no bids are received, and either re-advertise or sell
the bonds at private sale or by negotiation, or by other
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lawful means.
26)Requires the board, if the board determines by resolution to
not sell by competitive bid, to sell the bonds at a public or
private sale, by negotiation, or by other lawful means.
27)Specifies requirements governing the accrued interest and
premiums received on the sale of bonds.
28)Specifies how the board may provide for the issuance, sale,
or exchange or refunding bonds to redeem bonds used by the
operator.
29)Authorizes the board to change the purposes for which any
proposed debt is to be incurred subject to notification,
protest, and hearing requirements. Requires the board at the
conclusion of the hearing to determine by resolution whether
to make any or all of the changes set forth in the notice.
30)Prohibits the board from changing the purposes, estimated
costs, boundaries of the benefit district or zones, or the
amount of bonded debt until after its gives notice on its
intention, stating each proposed change and establishes
requirements for the notice, as specified.
31)States that all decisions and determinations of the board,
upon notice and hearing, are final and conclusive.
32)Establishes a six month timeframe from the date of the
formation of the benefit district, issuance of bonds, and all
proceeding for any action or proceeding which contests,
questions, or denies the validity or legality of the formation
of any benefit district or zone, issuance of bonds, or any
related proceedings.
33)Requires the board's secretary to certify to the county
assessor that the board imposed a special benefit assessment
and requires that the secretary provide specified information
with certification.
34)Requires the county to levy the special benefit assessment in
the same manner as taxes are levied and collected. Allows the
county to deduct its reasonable expenses of collection and
requires that the balance of the assessments transmits to the
operator.
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35)Declares that in the event of conflict with any other law,
the provisions in this bill will prevail with respect to
benefit districts within the service area of the operator.
36)Repeals specified statutes authorizing local governments to
levy ad valorem assessments on taxable land within benefit
districts to finance transit projects.
37)Defines "legal representative" to mean:
a) An official of a corporation owning real property in the
benefit district; and,
b) A guardian, conservator, executor, or administrator of
the estate of the holder of title to real property in the
benefit district who is all of the following:
i) The person is appointed under the laws of this
state;
ii) The person is entitled to the possession of the
estate's real property; and,
iii) The person is authorized by the appointing court to
exercise the particular right, privilege, or immunity
which he or she seeks to exercise.
38)Defines "rail" to mean "rail transit, commuter rail, or
intercity rail."
39)Provides that no reimbursement is required because a local
agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the
program or level of service mandated by the bill's provisions.
40)Makes findings and declarations including that the board of
the operator shall be the conclusive judge of the proportion
of special and general benefits produced by the eligible
transit projects and of the distribution of the special
benefits among parcels of property within the benefit
assessment district.
EXISTING LAW :
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1)Authorizes the Southern California Rapid Transit District, the
predecessor agency to the Los Angeles County Metropolitan
Transportation Authority (MTA), to create benefit assessment
districts to levy assessments for public rail rapid transit
facilities and services on property.
2)Authorizes the Santa Clara Valley Transportation Authority
(VTA) board of directors to create benefit assessment
districts and levy assessments to build, maintain, operate,
and improve rail transit stations.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)This bill authorizes the governing board of an operator to
levy a special benefit assessment on real property to finance
the acquisition, construction, development, joint development,
operation, maintenance, or repair of one or more eligible
transit projects, as specified. Under this bill the board
must comply with many requirements to establish one or more
special benefit assessment districts and levy a special
benefit assessment. Notice, hearing, and protest process as
well as requirements to calculate the assessment must comply
with the requirements set forth by Proposition 218 (1996).
This bill also authorizes the board to incur bonded
indebtedness, payable from special benefit assessments levied
within the benefit district. The board must comply with
specified notice, hearing and requirements on the resolution
in order to issue, sell, or refund bonds. Once a benefit
assessment is levied pursuant to the provisions of the bill, a
county must levy and collect the special benefit assessments
at the same time and manner as other taxes. The county is
authorized to deduct reasonable expenses for collection. This
bill is author-sponsored.
2)According to the author, "At the same time as it experiences
unprecedented growth, public transit has been subject to
increasing funding challenges. State and federal funding is
always in jeopardy as both levels are forced to prioritize
spending precious tax dollars. Local governments and patrons
are making up the difference. To the extent the state can
create tools for local governments to support their transit
service, the state can also further its own goals for
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sustainable communities and reduced greenhouse gas emissions.
Senator Mills authored the current law authorizing transit
agencies to create special benefit districts in 1968. Due to
the tax changes created by Propositions 13 of 1978 and 218 of
1996, however, transit agencies are unable to employ the
current authority and it appears no transit agency ever took
advantage of this opportunity. This bill replaces this
authority with workable language that reflects current
constitutional restrictions and makes it available to all
public agencies operating transit, commuter rail or intercity
rail services in California."
3)The Legislature has also granted specific authority to transit
districts, in 1983, under SB 1238 (Watson and Roberti) which
authorized the Southern California Rapid Transit District, the
predecessor agency to the Los Angeles County Metropolitan
Transportation Authority (MTA), to levy special benefit
assessments for public rail rapid transit facilities and
services. In 2003, AB 935 (Diaz) authorized the Santa Clara
Valley Transportation Authority (VTA) to levy benefit
assessments to build, maintain, operate, and improve rail
transit stations.
This bill is modeled after prior legislation and contains the
same process in place for MTA and VTA to allow exclusion and
reduction petitions for property owners.
4)Although prior authority for benefit assessments was granted,
no transit districts have levied an assessment following the
passage of Proposition 218 in 1996 (Article XIII D of the
California Constitution), which 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 process. Special
districts created by statute, however, must have specific
authority for each of these revenue sources.
Notice, protest, and hearing requirements for new, extended,
or increased assessments are governed by Proposition 218,
which involves mailed protest ballots to all assessed property
owners, a 45-day protest period, and a public hearing at which
protests are counted and the presence or absence of a majority
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protest is determined. After complying with notice, protest,
and hearing requirements, if a majority protest is not
received from property owners, the legislative body may adopt
a resolution to establish the assessment district and levy the
assessment.
5)Under this bill, an operator must comply with the requirements
established by Proposition 218, as described above, to abide
by the notice, protest, and hearing requirements. This bill
also requires an operator to calculate a special benefit
assessment pursuant to Proposition 218 which requires a
professional engineers report to estimate the amount of
special benefit to landowners and the amount of general
benefit, the overall benefit to society at large.
The engineer's report is heavily relied upon to demonstrate
that the improvements or services to be financed will benefit
assessed properties in different manner than the benefit
society in general will receive and cannot rest only on the
general increase in property values that arise from a better
served community.
The Committee may wish to consider if the task of separating
the general benefits from the special benefits as required by
the Constitution will be possible for transit operators to
accomplish.
6)According to the Howard Jarvis Taxpayers Association, in
opposition to the bill, "We believe there is an insufficient
benefit nexus to support transit funding under a 'benefit
assessment' theory. A 2008 California Supreme Court case
Silicon Valley Taxpayers' Association v. Santa Clara County
Open Space Authority (HJTA was co-counsel) notes that
improvements that merely 'enhance the overall quality of life
and desirability of the area' was not a sufficient nexus to
qualify for a benefit assessments. It is intriguing that one
of the few transportation entities for which special benefit
authority exists; the Santa Clara Valley Transportation
Authority (SCVTA) has never exercised it. This would seem to
validate the questionable legality of this practice."
7)Generally assessments go toward paying for specific tangible
benefits, of which each parcel partakes, like lighting or
irrigation improvement, which can then be apportioned in
relationship to the total cost of the improvements. Case law
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in this area is constantly examining the definition of a
special versus general benefit, especially for assessments
that fund services that broadly benefit society.
As local agencies continue to question if benefit assessments
are worth pursuing, many of them are also seeking additional
financing tools citing the burden placed on agencies to defend
benefit assessments and the increased number of legal
challenges.
In light of these concerns, the Committee may wish to ask the
author to include a sunset date in the bill to provide the
Legislature an opportunity to examine the outcomes of any
benefit assessment districts created pursuant to this bill,
and if in fact it is a tool that transit operators are able to
successfully use despite legal uncertainty.
8)The Committee may wish to consider the following:
a) This bill contains a process in which property owners
can petition to exclude or reduce assessments to their
property. Because Proposition 218 includes requirements to
determine which properties are included in a benefit
assessment district and the apportionment of each
assessment, the Committee may wish to ask the author why
the petition process is necessary to include in the bill
considering the protections put in place by Proposition
218.
b) Under this bill property owners can petition to reduce
or be excluded from the assessment. This bill also grants
the board the authority to change the purpose for which any
proposed debt is to be incurred. Given that bonds that are
backed by benefit assessments can be more expensive than
other types of bonds because of the risk that property
owners may fail to pay assessments, the Committee may wish
to consider if the provisions described above will only
worsen the financial markets already cautious approach to
assessment backed bonds.
c) The Committee may also wish to ask the author to more
clearly define some of the terms described in the bill to
provide more clarity on the types of services that are to
be considered eligible transit projects or the types of
public agencies that are to be considered operators.
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9)Support arguments : Supporters argue that this bill will
provide an important tool for local transit-oriented
development and will foster greater use of public
transportation, a critical component of meeting the state's
environmental goals.
Opposition arguments : Opposition argues that transit
operators already have the means available to them (bonds,
special taxes) that should be sufficient to construct capital
infrastructure projects and that there is an insufficient
benefit nexus to support transit funding under a 'benefit
assessment' theory.
10)This bill was heard by the Transportation Committee on July
1, 2013, and passed with
an 11- 3 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
California Transit Association
Los Angeles County Metropolitan Transportation Authority
San Francisco Bay Area Rapid Transit District
Santa Clara Valley Transportation Authority
Opposition
Howard Jarvis Taxpayers Association
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958