BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2476


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          ASSEMBLY THIRD READING


          AB  
          2476 (Daly)


          As Amended  May 27, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Local           |5-0  |Waldron, Cooley, Beth |                    |
          |Government      |     |Gaines, Gordon,       |                    |
          |                |     |Linder                |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |18-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonta,         |                    |
          |                |     |Calderon, Chang,      |                    |
          |                |     |Daly, Gallagher,      |                    |
          |                |     |Eduardo Garcia, Roger |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Requires local agencies to provide specified notice to  








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          non-resident property owners before the adoption of any new  
          parcel tax.  Specifically, this bill:   


          1)Requires a local agency, within 30 days following a  
            legislative body's vote, to place a proposed parcel tax on the  
            ballot to provide specified notice to property owners affected  
            by the tax that do not reside within the jurisdictional  
            boundaries of the taxing entity.  


          2)Defines the following terms:


             a)   "Local agency" to mean "a city, county, special  
               district, or school district authorized to impose a parcel  
               tax;" and, 


             b)   "Parcel tax" to mean "a tax levied by a local agency  
               upon any parcel of property identified using the assessor's  
               parcel number system or upon any person as an incident of  
               property ownership, pursuant to the California Constitution  
               (Section 4 of Article XII A), that is collected via the  
               annual property tax bill."    


          3)Requires the notice to include, but is not limited to, the  
            following information:


             a)   The amount or rate of the proposed parcel tax in  
               sufficient detail to allow each property owner to calculate  
               the amount of the tax to be levied against the owner's  
               property;


             b)   The method and frequency for collecting the proposed  
               parcel tax, and the duration of time the parcel tax will be  








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               imposed;


             c)   The date that the proposed parcel tax will be voted on;  
               and,


             d)   The telephone number and address of an individual,  
               office, or organization that interested persons may contact  
               to receive additional information about the proposed parcel  
               tax.  


          4)Requires the notice to be mailed to non-resident property  
            owners, who are affected by the new parcel tax, and whose  
            names and addresses appear on the last equalized county  
            assessment roll or the State Board of Equalization assessment  
            roll.  


          5)Requires the notice to be accomplished through mailing,  
            postage prepaid in the United States mail and to be deemed  
            given when deposited.   


          6)Requires the notice to be in at least 10-point type, and to be  
            in one of the following forms:


             a)   An envelope or mailing, which includes the name of the  
               local agency and the return address of the sender on the  
               cover; or, 


             b)   A postcard, which includes the name of the local agency  
               and the return address of the sender on the front, and  
               includes information in a prescribed format, as specified.   










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          7)Authorizes the local agency to recover the reasonable costs of  
            the notice from the proceeds of the parcel tax.  Prohibits the  
            recovered costs from exceeding the reasonable costs of  
            preparing and mailing the notice.  


          8)Provides that no reimbursement is required by this bill,  
            pursuant to the California Constitution, 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 this bill, pursuant to  
            current law governing state-mandated local costs.  


          9)Requires, if a parcel tax is not approved by the voters and  
            the Commission on State Mandates determines that this bill  
            contains costs mandated by the state, reimbursement to local  
            agencies and school districts for those costs be made,  
            pursuant to current laws governing state-mandated local costs.  
             


          EXISTING LAW:   


          1)Authorizes cities, counties, and special districts to impose a  
            special tax for specified purposes with the approval of  
            two-thirds of the voters.    


          2)Authorizes school districts to impose qualified special taxes,  
            in accordance with specified procedures, including the  
            approval of two-thirds of the voters in the district.  


          3)Authorizes a parcel tax to fund a variety of local government  
            services subject to approval of two-thirds of the voters.  









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          4)Restricts parcel tax revenue to only fund the specified  
            purpose and services that voters approved.  


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:


          1)If the parcel tax is not approved by the voters, potentially  
            reimbursable mandate costs, potentially in the tens of  
            thousands of dollars (GF) annually, for preparing and mailing  
            the notices.  


          2)If the measure is approved, the bill allows a local agency to  
            recover reasonable costs of the notice requirement from the  
            proceeds of the parcel tax.  Local costs will vary by  
            jurisdiction depending on the number of property owners  
            affected. Assuming $1 per-property owner cost of printing,  
            postage and staff time, a jurisdiction with 50,000 property  
            owners would incur $50,000 in costs for the notification per  
            ballot measure.  Between 2002 and November 2013, 45% of the  
            396 measures placed on the ballot were approved (178 passed,  
            218 failed).  


          COMMENTS:  


          1)Parcel Taxes.  California Constitution Article XIII, Section  
            A, allows cities, counties, and special districts, by a  
            two-thirds vote of the qualified electors in that  
            jurisdiction, to impose special taxes, except ad valorem taxes  
            on real property or a transaction tax or sales tax on the sale  
            of real property within that city, county or special district.  
             A parcel tax is a particular type of excise tax that is based  
            on either a flat per-parcel rate or a rate that varies  
            depending upon use, size, and/or number of units on each  








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            parcel.  Proposition 13 (1978) contained a 1% limit on ad  
            valorem property tax; therefore, a parcel tax based upon the  
            value of property would constitute a violation of Proposition  
            13.  The California Constitution specifies that only two types  
            of taxes may be imposed upon a parcel of property:  first, an  
            ad valorem property tax imposed, pursuant to Article VIII and  
            Article XIIIA, and second, a special tax receiving two-thirds  
            voter approval, pursuant to Section 4 of Article XIIIA.  A  
            parcel tax must be adopted as a special tax that is not based  
            on the property's value.  


            To place a parcel tax measure on the ballot, a local agency  
            must adopt a resolution, which includes the type of tax and  
            rate to be levied, the method of collection, and the date of  
            the election.  To adopt an ordinance, local agencies must  
            comply with the Ralph M. Brown Act, which includes public  
            notification and hearing requirements.  For example, a local  
            agency must post an agenda at least 72 hours prior to its  
            meeting.  Additionally, current law requires cities and  
            counties to publish specific information 15 days after passing  
            an ordinance.  Special taxes, such as parcel taxes, are  
            subject to additional accountability [SB 165 (Alarcón),  
            Chapter 535, Statutes of 2000].  Current law requires local  
            agencies to:  a) issue a statement indicating the specific  
            purpose of the tax and a requirement that the proceeds be used  
            only for that purpose; b) create an account in which to  
            deposit proceeds; and, c) issue an annual report that includes  
            the amount of funds collected and expended, along with the  
            status of any project required or authorized by the tax  
            measure.  


            After the local agency has voted to place a parcel tax measure  
            on the ballot, the election must be held on "established  
            election dates," which means March, April, or November of an  
            even-numbered year, or March, June, or November in an  
            odd-numbered year.  A parcel tax measure levied by a local  
            agency requires approval by two-thirds of the qualified  








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            electors.  The Court has interpreted the phrase "qualified  
            electors of such district" to mean the registered voters  
            voting in the election concerning the proposed tax.  [Neilson  
            v. City of California City (2005) 133 Cal. App.4th 1296,  
            1312.]  Non-resident property owners that are not registered  
            voters are not included among the voters voting on a proposed  
            parcel tax.  On the other hand, voters who do not own real  
            property, but are registered within the district's boundaries,  
            like renters or tenants, are able to vote on a parcel tax even  
            though they may not be paying the tax, except as passed  
            through in rent.  


          2)Bill Summary.  Under this bill, within 30 days following a  
            local agency's vote to place a proposed parcel tax on the  
            ballot, that city, county, special district, or school  
            district would be required to provide specified notice to  
            non-resident parcel owners.  Local agencies would be required  
            to provide the notification in one of two forms defined in the  
            bill.  This bill outlines the specific information about the  
            parcel tax to be included in the notice and authorizes the  
            local agency to recover reasonable costs of the notice from  
            the proceeds of the parcel tax should it be enacted by the  
            voters.   This bill is sponsored by the California Realtors  
            Association.  


          3)Author's Statement.  According to the author, "Currently,  
            property owners are required to pay parcel taxes approved by  
            the voters of a local jurisdiction.  If a property owner is a  
            resident of the local jurisdiction that is seeking to enact a  
            parcel tax, that property owner will receive a voter pamphlet  
            prior to the election.  Non-resident property owners - who own  
            a parcel or parcels within a local jurisdiction but reside  
            elsewhere - receive no notice of a pending parcel tax vote.   
            AB 2476 seeks to provide a measure of fairness by establishing  
            a process for notifying the non-resident property owners.   
            While the parcel tax on any one single-family residential  
            parcel may be relatively little, the same tax applied to a  








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            multi-family building can be extremely costly.  One East Bay  
            city has a parcel tax of $96 for single-family residential  
            parcels and $72 per multi-family residential parcel.  If a  
            building has, for example, 100 multi-family units that  
            translates to a parcel tax of over seven thousand dollars.   
            Property owners deserve to know whether they may be facing  
            such a tax."  


          4)Previous Legislation.  The author has introduced several  
            parcel tax measures.  AB 237 (Daly) of 2015, which was held on  
            suspense in the Assembly Appropriations Committee, was nearly  
            identical to this bill.  AB 892 (Daly) of 2013, which was held  
            on suspense in the Assembly Appropriations Committee, would  
            have required the Board of Equalization to report annually to  
            the Governor on the imposition of each locally assessed parcel  
            tax.  Most recently, AB 2109 (Daly), Chapter 781, Statutes of  
            2014, required the State Controller to report annually on the  
            imposition of each locally assessed parcel tax, and required  
            each county, city, and special district to provide any  
            information required by the Controller in order to complete  
            the report.  


          5)Policy Considerations.  The Legislature may wish to consider  
            the following:


             a)   Favoring Property Owners.  This bill only requires  
               specified notification to be sent to non-resident property  
               owners.  Opposition argues that this bill treats qualified  
               voters who are property owners more favorably by providing  
               them with an informational notice beyond what non-property  
               owner voters would receive; therefore, the Legislature may  
               wish to consider if tenants and property owners voting on a  
               parcel tax measure should be afforded the same notification  
               and information.  
             b)   Existing Public Information.  Current law requires the  
               local agency to go through several public steps before and  








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               after they place a parcel tax on the ballot.  The public,  
               including non-resident property owners, have access to all  
               of this information.  Opposition argues that requiring  
               additional notice to be given to property owners is  
               redundant and expensive.  


             c)   Other Parcel Tax Bills.  Parcel taxes require a  
               two-thirds vote of registered voters for passage.  There  
               have been several legislative attempts to lower the  
               two-thirds voter threshold to 55% for counties, cities,  
               special districts, and school districts.  The Legislature  
               may wish to consider if this bill goes against the trend of  
               attempting to make it easier for local agencies to impose a  
               parcel tax.  Only 45% of the 396 measures placed on the  
               ballot from 2002 through November 2013 were approved.   
               Since this type of tax already requires such a high voter  
               threshold, the Legislature may wish to consider if the  
               additional requirements in this bill will provide yet  
               another barrier for cash strapped local agencies to provide  
               necessary services, and discourage local agencies from  
               using parcel taxes as a viable financing tool. 


          6)Arguments in Support.  The California Association of Realtors  
            argue, "Property owners may want to mount a campaign in  
            opposition to the proposed parcel tax but not receiving timely  
            notice of a proposed tax precludes any such action on their  
            part.  [This bill] will alert property owners as to any  
            upcoming parcel tax ballot election and put them on notice as  
            to the amount of any parcel tax that they may have to pay."  


          7)Arguments in Opposition.  The California Special Districts  
            Association argues, "AB 2476 would impose additional burdens  
            and expense on local agencies contemplating a parcel tax,  
            while providing very limited additional benefit to their  
            constituents."  The California School Boards Association  
            argues, "Governing board decisions regarding parcel taxes are  








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            already required to take place in open and publicly-noticed  
            meeting in which interested parties may participate.  This  
            bill would divert resources away from the core mission of  
            local agencies - in our case, the education of children - to  
            provide a duplicative notice of questionable value."  




          Analysis Prepared by:                                             
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0003237