BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1021|
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THIRD READING
Bill No: SB 1021
Author: Wolk (D)
Amended: 4/2/14
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 4/9/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Vidak
SUBJECT : School districts: parcel taxes
SOURCE : California School Boards Association
DIGEST : This bill allows school districts to impose parcel
taxes on a square foot basis, and tax parcels differently based
on classification.
ANALYSIS : The California Constitution requires 2/3-voter
approval when a local agency wants to impose or increase a
special tax (Proposition 13, 1978). However, the Legislature
must authorize school or special districts to impose taxes
because these agencies have no plenary taxing powers.
Responding to Proposition 13's reduction in local revenue, the
Legislature generally authorized all local agencies to impose
special taxes with 2/3-voter approval, but voters subsequently
approved an initiative requiring the Legislature to grant
specific taxing power to local agencies to impose taxes
(Proposition 62, 1986).
Prior to Proposition 62, school districts imposed parcel taxes
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to fund education; however, the initiative prompted school
districts to seek specific legislative authorization to ratify
the existing taxes and clarify the authority to impose new ones.
The Legislature allowed school and community college districts
to impose qualified special taxes that applied uniformly to all
taxpayers or real property within the district, and allowed
districts to exempt persons over the age of 65 from the tax. In
1991, the Legislature additionally allowed 15 types of local
agencies to impose similar taxes; however, the legislation
allowed local agencies to tax unimproved property at a lower
rate than improved property, and contained no other exemptions.
(SB 158, Senate Local Government Committee, Chapter 70).
This bill defines special taxes that apply uniformly to include
one or more taxes imposed:
On a per parcel basis,
According to the square footage of the parcel or its
improvements,
According to the residential, multifamily residential,
industrial, or commercial classification of a parcel, so long
as the same rate of tax is levied on all properties of the
same classification, and
At a lower rate on unimproved property.
This bill allows districts to combine multiple parcels into one
when they are commonly owned and constitute one economic unit.
This bill applies only to school district parcel taxes imposed
in the future; it contains "no inference" language that directs
courts to adjudicate cases similar to Borikas v. Alameda Unified
School District, 214 Cal. App. 4th 135, under the law in place
at the time the district imposed the tax.
Background
At least eight school districts have passed variable rate parcel
tax measures that utilize separate rates, based on square
footage or other property improvements, according to the
California School Boards Association. For example, the Mountain
View-Whisman School District's parcel tax contains six rates
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that increase according to the size of the parcel; other
districts structure their taxes to account for multifamily and
mixed-use housing by imposing the tax on those uses per dwelling
unit, while imposing a different rate for single-family
residential and other uses.
In 2013, George Borikas successfully challenged Alameda Unified
School District's Measure H, which imposed a variable rate
parcel tax, at rates of:
1.$120 per parcel per year for residential parcels, and
commercial and industrial parcels under 2,000 square feet, and
2.15 cents per square foot for commercial and industrial
property above 2,000 square feet, not to exceed $9,500 per
year.
The Court determined in Borikas v. Alameda Unified School
District that because the school district statute did not also
contain the language in SB 158 allowing for a lower rate on
unimproved property, districts could not differentiate property
by classification and assign different tax rates to each class.
The Court pointed specifically to the differences between the
two statutes in its decision:
Section 50079.1 (the Community College District Statute) does
not include exemptions for senior or disabled taxpayers. It
does, however, provide that "unimproved property may be taxed
at a lower rate than improved property." The inclusion of
this additional language - expressly allowing community
colleges to classify and differentially tax real property -
makes manifest that the definitional language alone does not
allow [school] districts to establish rational classifications
and impose different tax rates."
In Borikas, the Court eliminated school districts' ability to
apply different rates to property based on its classification,
or based on whether the property has improvements. School
districts want to restore flexibility they thought they had
before the Court's decision.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
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SUPPORT : (Verified 4/15/14)
California School Boards Association (source)
AFSCME, AFL-CIO
Alameda Unified School District
Association of California School Administrators
California Association of School Business Officials
California Labor Federation
California School Employees Association
California Teachers Association
Davis Joint Unified School District
Kentfield School District
Larkspur-Corte Madera School District
San Diego Unified School District
San Francisco Unified School District
Wiseburn School District
OPPOSITION : (Verified 4/15/14)
Air Logistics Corporation
Apartment Association of Greater Los Angeles
Apartment Association, California Southern Cities
Associated General Contractors of California
Building Owners and Managers Association of California
California Apartment Association
California Association of Realtors
California Attractions and Parks Association
California Bankers Association
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Chemical Transfer Company, Inc.
California Grocers Association
California Healthcare Institute
California Hotel and Lodging Association
California Independent Petroleum Association
California Manufacturers and Technology Association
California Mortgage Bankers Association
California Railroad Industry
California Restaurant Association
California Retailers Association
California Tank Lines, Inc.
California Taxpayers Association
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Council of State Taxation
East Bay Rental Housing Association
Family Business Association
Family Winemakers of California
Howard Jarvis Taxpayers Association
International Council of Shopping Centers
NAIOP of California, the Commercial Real Estate Development
Association
National Association of Real Estate Investment Trusts
National Federation of Independent Businesses
NorCal Rental Property Association
Orange County Business Council
Orange County Taxpayers Association
San Diego County Apartment Association
Santa Barbara Rental Property Association
Silicon Valley Leadership Group
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Superior Tank Wash, Inc.
TechAmerica
Tenet Health Care Corporation
West Coast Leasing, LLC
West Coast Lumber and Building Material Association
ARGUMENTS IN SUPPORT : According to the author, "Under the
recent court decision, school districts can no longer apply
higher or lower rates to parcels based on commercial,
industrial, or residential classification of the parcel.
Districts can't even tax an empty property at a lower rate than
an oil refinery or a research and development campus. SB 1021
restores this needed local control by allowing school district
boards to structure its tax according to local values and
priorities. Because these taxes must be approved by 2/3 vote of
local voters, school district boards must forge a communitywide
consensus to ensure voters approve the tax, evident by the high
approval rates in parcel tax elections. The bill simply returns
local control to its state before the court case, and conforms
the school district law to 15 other laws that allow local
agencies to impose parcel taxes. The bill doesn't grant any
additional powers to districts they didn't have before the case.
The choice SB 1021 presents is clear: the Legislature can
decide who should and shouldn't pay local taxes, or local voters
can choose at the ballot box whether the tax placed on the
ballot by the locally elected school board after a full, public
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process is worth it."
ARGUMENTS IN OPPOSITION : According to the opposition, this
bill overturns the Borikas decision on a prospective basis by
allowing more than 1,000 school districts to impose nonuniform
parcel taxes. In other words, this bill allows school districts
to use property classifications commercial, industrial,
single-family residential and multifamily residential to impose
different tax rates. For example, a school district may choose
to tax commercial property (shopping malls, restaurants, etc.)
at $2 per square foot; industrial property (manufacturing
facilities, warehouses, etc.) at $1 per square; single-family
residential property at $200 per parcel; and multifamily
residential property (apartment buildings, duplexes, etc.) at
$1,000 per parcel.
Further complicating the parcel tax regime, this bill allows
school districts to treat multiple parcels as one under certain
conditions for purposes of a parcel tax. If a developer owns an
office building on one parcel, and a to-be-developed, but
currently unimproved adjacent parcel, this bill would give the
taxing authority the ability to collapse the two parcels into a
single taxable site, and apply a parcel tax on the unimproved
site at a much higher rate. This bill also appears to allow
school districts to impose layered parcel taxes: A school
district could impose a parcel tax based upon square footage as
well as a parcel tax based upon the parcel's use, for example.
AB:nk 4/15/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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