BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 142
Author: DeSaulnier (D)
Amended: 8/22/13
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 4/17/13
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Emmerson
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 24-11, 5/28/13
AYES: Beall, Block, Corbett, De León, DeSaulnier, Evans,
Galgiani, Hancock, Hernandez, Hill, Jackson, Lara, Leno, Lieu,
Liu, Monning, Padilla, Pavley, Price, Roth, Steinberg, Torres,
Wolk, Wright
NOES: Anderson, Berryhill, Cannella, Correa, Emmerson, Gaines,
Huff, Knight, Nielsen, Walters, Wyland
NO VOTE RECORDED: Calderon, Fuller, Hueso, Yee, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Public transit
SOURCE : Bay Area Rapid Transit District
DIGEST : This bill, until January 1, 2021, allows the
governing board of a transit district, municipal operator, or
other public agency operating or contracting for the operation
of transit, commuter rail, or intercity rail services to levy a
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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.
Assembly Amendments add a January 1, 2021 sunset date and add
ferry terminals to the definition of a "transit station."
ANALYSIS : Several state laws allow local officials to levy
benefit assessments on real property to pay for public works and
public services. Proposition 218 (1996) requires owners of real
property to approve benefit assessments in a weighted ballot
election. Property owners vote in proportion to their proposed
assessments, which reflect how much their property benefits from
the proposed public works or public services. The Legislature
translated the new constitutional limits on benefit assessments
into statutory procedures for notice, hearing, and protests (SB
919, Rainey, Chapter 38, Statutes of 1997) and imposed
additional requirements to enhance the confidentiality and
impartiality of benefit assessment ballot proceedings (SB 1477,
Lewis, Chapter 220, Statutes of 2000).
State law allows the Santa Clara Valley Transportation Authority
to levy benefit assessments to pay for public rail rapid transit
facilities (AB 935, Diaz, Chapter 727, Statutes of 2003). To
levy an assessment, the Authority must comply with the notice,
hearing, and protest provisions required by Proposition 218 and
its implementing statutes (AB 2817, Salinas, Chapter 645,
Statues of 2004).
This bill allows the governing board of a transit district,
municipal operator, or other public agency operating or
contracting for the operation of transit, commuter rail, or
intercity rail services (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.
An operator other than a transit district, city, or county may
implement a special benefit district only if the action is
consistent with the general or specific plans of the city or
county within which the special benefit district is to be
created. This bill requires an operator's governing board, in
levying a benefit assessment, to comply with specified notice,
protest, and hearing procedures in the Proposition 218 Omnibus
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Implementation Act.
Definitions . This bill defines the following terms:
1."Benefit district" means a special benefit assessment district
established pursuant to the bill's provisions, the area of
which must lie not more than one-half mile from the center
point of any transit station or proposed transit station.
2."Board" means the governing board of the operator.
3."Eligible transit project" means transit stations and rail
facilities and associated services, but excludes operating
costs of rail or transit services.
4."Legal representative" means:
A. An official of a corporation owning real property in the
benefit district.
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:
The person is appointed under the laws of this
state.
The person is entitled to the possession of the
estate's real property.
The person is authorized by the appointing court to
exercise the particular right, privilege, or immunity
which he or she seeks to exercise.
1."Operator" means a transit district, municipal operator, or
other public agency operating or contracting for the operation
of transit, commuter rail, or intercity rail services.
2."Rail" means rail transit, commuter rail, or intercity rail.
3."Rail facilities" means land, buildings, and equipment, or any
interest therein, whether or not the operation thereof
produces revenue, which has, as its primary purpose, the
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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.
4."Transit station" means a rail station, ferry terminal, or a
bus transfer station, which state 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.
Resolution of intention . This bill allows an operator's board
to adopt a resolution, by a 2/3-vote, providing for notice and
hearing on its intention to establish one or more special
benefit districts and levy a special benefit assessment. The
resolution may provide that the proposed benefit district will
contain separate zones, which may consist of either contiguous
or noncontiguous areas of land within the operator's service
area. The proposed benefit district and each proposed zone must
be adjacent to, or in the vicinity of, one or more transit
stations or proposed transit stations. The boundaries of the
benefit district and of each zone must reflect, as accurately as
possible, the areas in which special benefits are conferred by
reason of the proximity and operation of one or more transit
stations.
This bill requires a resolution to state:
1.The maximum and minimum rate of assessment.
2.The amount of the special benefit assessment and the purposes
for which it is to be levied.
3.The estimated cost of accomplishing the purposes, and the
dates or approximate intervals at which the assessment shall
be levied.
4.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 any zones.
5.The name of the benefit district and any zones, as designated
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by the board.
This bill requires that a copy of the resolution must be
included with the notice given pursuant to the Proposition 218
Omnibus Implementation Act.
This bill requires an operator's board to publish a notice
stating the time and place of the hearing, and setting forth the
boundaries and purpose of the proposed benefit district,
pursuant to a specified statute.
This bill allows a board to levy an assessment in accordance
with the resolution if a majority does not protest the
imposition of an assessment.
Petitions for exclusion or reduction . This bill allows a
property owner, or an owner's legal representative, to file a
petition with an operator's board requesting that the board
exclude his or her property from a benefit district on the
grounds that the property is not benefited. Similarly, the bill
allows a property owner, or an owner's legal representative, to
file a petition with an operator's board requesting that the
board reduce an assessment on the grounds that the assessment
exceeds the benefit to the real property.
This bill requires that:
1.Petitions for exclusion or reduction must contain specified
information.
2.The board must provide notice, pursuant to specified
requirements, of each hearing upon a petition for exclusion or
reduction.
3.The board or its appointed hearing officer must hear:
The petition for exclusion or reduction.
All evidence or proof that may be introduced by or on
behalf of the petitioners.
All objections to the petition that may be presented in
writing by any person, including the authority.
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All evidence or proof that may be introduced in support
of objections to the petition.
1.The person filing the petition must pay the operator's
expenses of giving the notice and of the hearing.
This bill requires an operator's board to deny a petition if the
petitioner has not shown by a preponderance of the evidence that
in an exclusion petition the real property is not benefited or
in a reduction petition that the assessment exceeds the benefit
to the property. After a hearing on an exclusion or reduction
petition, an operator's board, by resolution, must take one of
the following actions:
Order the exclusion of all or any part of the real property
described in the petition upon a finding that the property will
not be benefited by the operations of the operator in the
vicinity of the benefit district.
Order a change in the benefit assessment to all or any portion
of the real property described in the 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.
Confirm the assessment on the real property subject to the
petition as correctly reflecting the amount of benefit to the
real property.
Bonds . If an operator's board deems it necessary to incur a
bonded indebtedness to acquire, construct, develop, complete,
operate, maintain, or repair one or more eligible transit
facilities located within the benefit district, this bill allows
the board to provide, by resolution, that the bonded
indebtedness will be payable from special benefit assessments
levied within the benefit district. This bill requires a board
to adopt the resolution by a 2/3-vote, and requires that the
resolution must contain declarations and statements relating to:
1.The purpose for which the debt is to be incurred.
2.Estimated costs and the amount of principal of the
indebtedness.
3.Maps showing the boundaries of the benefit district and any
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zones.
4.Compliance with constitutional and statutory requirements for
approving benefit assessments.
5.The extent to which an operator's revenues are to be used for
bond-related payments.
6.The time and place set for hearing on the proposed issuance of
the bonds.
7.The maximum term of the proposed bonds, which must not exceed
40 years.
8.The maximum annual interest rate, which must not exceed 12%.
9.The priority of special benefit assessment revenues pledged to
the bonds.
This bill prohibits an operator from pledging any portion of its
general fund revenues to pay any part of any bonded indebtedness
incurred under the bill's provisions, unless required by the
California Constitution.
This bill specifies requirements for providing notice of, and
conducting, a hearing on the issuance of bonds payable from
special benefit assessments.
This bill requires that an operator's board must, by resolution
adopted by a 2/3 vote, make a final and conclusive determination
of whether to incur the bonded indebtedness. The resolution
must state the amount of the proposed debt, the purposes for
which it is to be incurred, and the estimated cost of
accomplishing the purposes.
This bill specifies:
1.The rates at which special assessments to pay bonded
indebtedness must be levied.
2.That bonds issued pursuant to the bill's provisions must bear
interest at an annual rate or rates not exceeding 12%.
3.Requirements relating to call and redemption of the bonds, the
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denomination of the bonds, and the form of the bonds.
This bill allows an operator's board to sell bonds as the board
determines by resolution. The bill specifies the manner in
which bonds may be sold by competitive bid and allows the board
to sell bonds at a price below par.
This bill establishes rules governing the accrued interest and
premiums received on the sale of bonds
This bill specifies how an operator's board can provide for the
issuance, sale, or exchange of refunding bonds to redeem or
retire any bonds issued by the operator.
This bill allows an operator's board, subject to specified
notice and hearing requirements, to change the purposes for
which any proposed debt is to be incurred, the estimated cost,
the amount of bonded debt to be incurred, or the boundaries of
the benefit district or zones. The board must not change the
boundaries to include any territory which will not, in its
judgment, be benefited by the action of the operator.
Other provisions . This bill establishes rules for submitting an
assessment ballot for a parcel that has multiple owners. The
bill allows the legal representative of a corporation or an
estate owning real property in the benefit district to act on
behalf of the corporation or the estate.
This bill requires that actions or proceedings to contest,
question, or deny the validity or legality of the formation of
any benefit district or zone, the issuance of any bonds, or any
related proceedings must begin within six months from the date
of the formation, or the formation of the benefit district or
zone, the issuance of the bonds, and all related proceedings
must held to be in every respect valid, legal, and
incontestable.
This bill grants an operator all powers necessary for,
incidental to, or convenient for, collecting, enforcing,
administering, or distributing a special benefit assessment in
accordance with state law.
This bill requires an operator to spend the revenue from a
special benefit assessment, or from bonds secured by such a
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special benefit assessment, only to finance the project for
which it was levied. The bill prohibits that revenue from being
used for any other purpose or the payment of any other expense
including, a transit, transportation, or operating expense.
This bill requires a board's secretary to certify to a county
assessor that an operator has imposed a special benefit
assessment and specifies information that must be provided to
the county assessor with the certification.
This bill requires a county to levy and collect special benefit
assessments at the same time and in the same manner as taxes are
levied and collected. The bill allows the county to deduct its
reasonable expenses of collection and requires the county to
transmit the balance of the assessments to the operator.
This bill declares that, in the event of conflict with any other
law, its provisions must prevail with respect to benefit
districts within an operator's service area.
This bill repeals specified statutes authorizing local
governments to levy ad valorem assessments on taxable land
within benefit districts to finance transit projects.
This bill contains legislative findings and declarations. The
bill declares an operator's board to 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 a benefit assessment
district.
This bill sunsets on January 1, 2021.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 9/9/13)
Bay Area Rapid Transit District (source)
California Transit Association
Metropolitan Transportation Commission
Peninsula Corridor Joint Powers Board
San Mateo County Transit District
San Mateo County Transportation Authority
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Los Angeles County Metropolitan Transportation Authority
OPPOSITION : (Verified 9/9/13)
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : The Metropolitan Transportation
Commission states in support, "The Metropolitan Transportation
Commission supports SB 142 (DeSaulnier) which authorizes the
governing board of any transit district, municipal operator, or
other public agency operating or contracting for the operation
of transit, commuter rail, or intercity rail services (an
'operator') to levy a special benefit assessment on real
property to finance the acquisition, construction, development,
operation, maintenance, or repair of one or more-eligible
transit projects, subject to the approval of 2/3 of their
governing board.
"Projects eligible for funding from a benefit assessment
district must be consistent with the general or specific plans
of the city or county where the special benefit district is
located. SB142 also authorizes the governing board of a transit
operator to issue, bonds, if approved by 2/3rds of the board.
The bill provides a public hearing process allowing property
owners an opportunity to be involved in the creation of the
special district and to file a petition requesting that their
property be excluded or that the rate be adjusted.
"While state law enacted in 1968 authorized transit agencies
statewide to create special benefit districts, subsequent
constitutional changes made that authority unworkable. Santa
Clara Valley Transportation Authority (VTA) secured the ability
to establish a benefit assessment district by a vote of their
board through state legislation enacted in 2003, but they are
the only agency with this authority statewide."
ARGUMENTS IN OPPOSITION : The Howard Jarvis Taxpayers
Association (HJTA) states in opposition, "While we are pleased
the bill appears to abide by all the relevant constitutional
requirements specified under Proposition 218, we object to an
agency seeking new revenue authority when the means they already
have available to them (bonds, special taxes) should be
sufficient to construct capital infrastructure projects.
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"In addition, 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) noted 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 assessment. 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."
AGB:JA:nl 9/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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