BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: SB 171 HEARING: 5/8/13 AUTHOR: Hueso FISCAL: No VERSION: 4/8/13 TAX LEVY: No CONSULTANT: Austin COACHELLA VALLEY WATER DISTRICT'S PROPERTY RELATED FEES Allow the Coachella Valley Water District to levy property related fees. Background and Existing Law Proposition 218 (1996) defined a property-related fee or charge as any levy other than an ad valorem tax, a special tax, or an assessment imposed by an agency on a parcel or a person as an incident of property ownership, including a user fee or charge for a property-related service. Before a local government can charge a new property-related fee, or increase an existing fee, Proposition 218 requires local officials to: Identify the parcels to be charged. Calculate the fee for each parcel. Notify the parcels' owners in writing about the fees and the hearing. Hold a public hearing to consider and count protests. Abandon the fees if a majority of the parcels' owners protest. New or increased property-related fees also require: A majority-vote of the affected property owners; Two-thirds registered voter approval; or, Weighted ballot approval by the affected property owners. The election requirements don't apply to property-related fees for sewer, water, or refuse collection services. A 2002 appellate court decision in Howard Jarvis Taxpayers Association v. City of Salinas found that a city's charges on developed parcels to fund storm water management were property-related fees, and were not covered by Proposition SB 171 -- 4/8/13 -- Page 2 218's exemption for "sewer" or "water" services. As a result, storm water fees require a vote of property owners or registered voters. Drainage from impervious surfaces produces urban runoff, stormwater discharges, and water pollution. To protect rivers and oceans, the federal Clean Water Act requires the states to reduce pollution from urban runoff. Most stormwater discharges require National Pollutant Discharge Elimination (NPDES) permits. In California, the State Water Resources Control Board (SWRCB) and the Regional Water Quality Control Boards (RWQCBs) are pushing counties, cities, and special districts to reduce urban runoff and stormwater discharges. Formed in 1918, the Coachella Valley Water District (CVWD) provides irrigation and drinking water, collects and recycles wastewater, provides storm water protection, replenishes the groundwater basin and promotes water conservation to over 107,000 homes and businesses across 1,000 square miles mostly within the Coachella Valley in Riverside County. CVWD is governed by a five-member Board of Directors elected to four-year terms by district voters. Each director represents a division of the district, but is elected at-large by all voters. The Board of Directors sets policy and represents the ratepayers. The District can levy special assessments to raise funds for constructing, operating, and maintaining public works (SB 650, Kelley, 1993). The Legislature has authorized counties, cities, sanitary districts, county sanitation districts, sewer maintenance districts, and other districts responsible for sanitary sewers and sewerage systems to impose fees in connection with storm drainage services and facilities (SB 682, Mello, 1991). In 2005, the Legislature authorized the Ventura County Watershed Protection District to impose property related fees to fund storm drainage services and facilities (AB 554, Nava, 2005). In 2010, the Los Angeles County Flood Control District was granted the same power (AB 2554, Brownley, 2010). Coachella Valley Water District officials want the Legislature to grant them the same authority. Proposed Law SB 171 -- 4/8/13 -- Page 3 Senate Bill 171 authorizes the Coachella Valley Water District to impose a fee or charge to pay for constructing, operating, improving and maintaining the District's public works in compliance with Article XIII D of the California Constitution. SB 171 clarifies that the Coachella Valley Water District's benefit assessments must comply with the state laws that implement Proposition 218, including majority vote threshold requirements. State Revenue Impact No estimate. Comments 1.Purpose of the bill . The Coachella Valley Water District covers more than 1,000 square miles, and there is only one drainage system in the Lower Coachella Valley that handles stormwater, agricultural drainage, and now urban drainage. The system was originally constructed by the Bureau of Reclamation to manage storm flows and agricultural drainage, but urban development that is moving into the Lower Valley also uses the system. Operation and maintenance costs of the system are currently paid by the farmers in the Lower Valley. As farm areas are urbanized, the number of farmers has decreased while urban drainage has driven costs up. The current fee structure has caused shortages in funding for operations and maintenance and is unsustainable as agricultural contributions continue to decline. SB 171's aim is to provide a tool to the Coachella Valley Water District to assist in the continued operation and maintenance of their drainage facilities. 2. Is a fee necessary ? The District already has the authority to impose benefit assessments. Under Proposition 218, benefit assessments need weighted majority property owner approval. Rather than expose the taxpayers to a new type of fee, the Committee may wish to consider whether the District should use its existing revenue tools. 3. Proposition 218 still intact . Proposition 218 protects property owners' interests by requiring a local SB 171 -- 4/8/13 -- Page 4 government that wants to charge a property-related fee to meet certain requirements. SB 171 does not change that. If the District uses SB 171 to impose a property-related fee, it must meet the constitutional requirements added by Proposition 218. If it can't, it can't impose the fee. Support and Opposition (5/2/13) Support : Coachella Valley Water District, Desert Valleys Builders Association Opposition : Unknown.