BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2801


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          Date of Hearing:  April 20, 2016 


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                           Susan Talamantes Eggman, Chair


          AB 2801  
          (Gallagher) - As Amended April 4, 2016


          SUBJECT:  Local government:  fees and charges:  written protest.


          SUMMARY:  Imposes requirements on local governments, when  
          conducting protest proceedings for property-related fees,  
          pursuant to Proposition 218.  Specifically, this bill:    


          1)Imposes additional requirements on local governments (used  
            interchangeably with 'agency'), when conducting protest  
            proceedings to impose or increase property-related fees or  
            charges.  


          2)Prohibits a local agency from requiring a written protest to  
            include any identification of the property other than the  
            street address, unless the property does not have a street  
            address.  


          3)Prohibits a local agency from requiring a written protest to  
            be submitted on a form provided by the agency.  


          4)Requires the agency to keep any written protest it receives  
            securely stored and sealed until the public hearing at which  








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            time it may be opened and counted pursuant to existing law.  


          5)Requires the agency to maintain all written protests for a  
            minimum of two years.  


          6)Provides that a written protest is a public record, pursuant  
            to the definition of public records contained in the  
            California Public Records Act (PRA), and requires that a  
            written protest is subject to the provisions of the PRA.  


          7)Requires notwithstanding 6), above, written protests to remain  
            confidential, and prohibits written protests from being  
            disclosed, pursuant to state law including, but not limited  
            to, PRA, until they have been opened for counting at a public  
            hearing.  


          8)Makes several findings and declarations.  


          9)Provides that no reimbursement is required, pursuant to the  
            California Constitution, which exempts the state from  
            reimbursing local agencies for costs related to complying with  
            the PRA and the Ralph M. Brown Act (Brown Act), as specified.   



          EXISTING LAW:   


          1)Provides notice, protest, and hearing procedures for the  
            levying of new or increased assessments or property-related  
            fees or charges by local government agencies, pursuant to  
            Proposition 218.  










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          2)Defines "agency" to mean any local government, including a  
            county, city, city and county, including a charter city or  
            county, any special district, or any other local regional  
            governmental entity.  


          FISCAL EFFECT:  This bill is keyed fiscal.  


          COMMENTS:  


          1)Proposition 218.  Article XIII D of the California  
            Constitution [Proposition 218, 1996] 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.  


            The Constitution defines a fee (or charge) as any levy other  
            than an ad valorem tax, special tax, or assessment that is  
            imposed by a local government on a parcel or on a person as an  
            incident of property ownership, including a user fee for a  
            property-related service.  The fee imposed on any parcel or  
            person cannot exceed the proportional cost of the service that  
            is attributable to the parcel.  Additionally, a  
            property-related fee cannot be imposed for general  
            governmental services like police, fire, and library services.  
             Prior to imposing or increasing a property-related fee, the  
            local government is required to identify the parcels, mail a  
            written notice to all the property owners subject to the fee  
            detailing the amount of the fee, the reason for the fee, and  
            the date, time, and location of a public hearing on the  
            proposed fee.  No sooner than 45 days after mailing the notice  








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            to property owners, the agency must conduct a public hearing  
            on the proposed fee.  If a majority of owners of the  
            identified parcels provide written protests against the fee,  
            it cannot be imposed or increased by the agency.  One written  
            protest per parcel, filed by an owner or tenant of the parcel,  
            is counted in order to calculate the majority protest.   
            Additionally, the California Constitution specifies election  
            requirements, except for fees or charges for sewer, water, and  
            refuse collection services.  


          2)Bill Summary.  This bill establishes several requirements for  
            the protest proceedings for property-related fees conducted by  
            local agencies.  This bill would prohibit a local agency from  
            requiring written protest to be submitted on a form provided  
            by the agency.  Additionally a local agency would be  
            prohibited from requiring written protest to include any  
            information about the property, except for a street address.   
            Written protests would have to be sealed and securely stored  
            until they can be opened and counted at a public hearing.   
            This bill specifies that written protest must be kept for two  
            years and is a public record, pursuant to the PRA.  This bill  
            provides no reimbursement to local agencies. pursuant to the  
            California Constitution, which exempts the state from  
            reimbursing local agencies for costs related to complying with  
            the PRA and the Brown Act.  This bill is sponsored by the  
            Howard Jarvis Taxpayers Association.  


          3)Prior Legislation.  AB 1260 (Caballero), Chapter 280, Statues  
            of 2007, clarified how a public agency may provide notice when  
            proposing a new, or increasing an existing property-related  
            fee.  AB 2218 (Gaines) of 2008, held on the Senate  
            Appropriations Suspense File,  would have imposed new  
            restrictions on local governments, when conducting  
            property-related fee and assessment ballot proceedings,  
            pursuant to Proposition 218.  SB 321 (Benoit), Chapter 580,  
            Statutes of 2009, imposed additional requirements on local  
            governments when conducting assessment ballot proceedings,  








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            pursuant to Proposition 218.  


            SB 553 (Yee), Chapter 215, Statues of 2013, applied many of  
            the requirements in current law for assessment ballot  
            procedures to the elections for property-related fees  
            submitted to property owners.  For example, SB 553 required  
            specified information to be printed on the ballot and  
            established requirements for ballot tabulation, including that  
            the ballots are tabulated in a location accessible to the  
            public and by an impartial person with no vested interest in  
            the outcome.  


          4)Author's Statement.  According to the author, "AB 2801 adds  
            needed transparency to the fee protest procedure first  
            implemented by Proposition 218, which voters approved in 1996.  
             Proposition 218 provides a streamlined protest procedure in  
            place of an election when local agencies propose increases in  
            water, sewer, or refuse collection rates.  The agency must  
            mail a specified notice to affected ratepayers and allow them  
            at least 45 days before the hearing on the increase to submit  
            written protests.  If a majority of the ratepayers submit  
            timely written protests, the rate increase is tabled.  To  
            ensure that ratepayers are not disenfranchised, uniform  
            standards should be adopted across California for how protest  
            notices should be accepted and retained. 


            "Over the nearly 20 years that Proposition 218 has been in  
            place, there have been a number of inconsistencies regarding  
            how to record and tabulate protest procedures.  Included among  
            these are complaints about agencies opening protests before  
            the hearing, unjustifiably disqualifying protests, and  
            erecting unnecessary procedural hurdles to discourage  
            protests.  


            "In recent years the Legislature has enacted standards for  








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            fair and transparent assessment and fee elections.  SB 1477  
            (Lewis, of 2000), which related to assessment elections, and  
            SB 553 (Yee, of 2013), which related to fee elections,  
            increased public confidence in the process and the declared  
            outcome of these elections by requiring, for example, that  
            ballots must remain sealed until the public hearing, must be  
            tabulated in public view by a disinterested person, became  
            disclosable public records after the hearing, and needed to be  
            maintained for a minimum of two years.  Both SB 1477 and SB  
            553 (an HJTA sponsored bill) were approved on a wide  
            bi-partisan basis.  In the same manner, the procedure for fee  
            protests should be fair and transparent.  


            "AB 2801 similarly requires the local agency to keep protests  
            securely stored and sealed until the public hearing and makes  
            them disclosable public records after the hearing.  The bill  
            states that a protest in order to be valid doesn't need to be  
            on a form provided by the public agency, and also that a  
            protest doesn't need to include any identifying information  
            beyond a street address.  This bill doesn't mandate new  
            responsibilities or requirements upon local agencies; it  
            simply broadens and makes more inclusive the process regarding  
            how to protest a rate increase."  


          5)Committee Amendments.  The Committee may wish to ask the  
            author to strike out all of the provisions in the bill with  
            the exception of the requirement that local agencies maintain  
            written protests for a minimum of two years.  This requirement  
            is consistent with current law for ballots in property-related  
            fee elections.  Additionally, the Committee may wish to  
            clarify that the two-year period begins on the date of the  
            hearing which protest is considered.  The Committee may wish  
            to ask the author to remove all other provisions of the bill  
            in light of the following:


             a)   Consistency.  Proponents of this bill state that there  








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               are inconsistencies with local agencies recording and  
               tabulating protest procedures.  The Committee may wish to  
               consider if this bill prohibits locals from providing a  
               standardized form that must be used for written protest if  
               it will in fact result in less uniformity.    


               Additionally, the Committee may wish to consider how local  
               agencies can keep written protests "securely stored and  
               sealed" when this bill prohibits them from providing a  
               specific form.  Opposition notes that local agencies may  
               receive written protests in multiple formats, including,  
               e-mails, faxes, postcards, handwritten notes, unmarked  
               envelopes, or included with a bill payment.  The Committee  
               may wish to consider the practical challenges for local  
               agencies in complying with the seemingly inconsistent  
               requirements and prohibitions established by this bill. 


             b)   Hearing.  In December 2015, the City of Milpitas  
               received 2,046 written protests, short of the 9,100  
               necessary for a majority protest.  The Committee may wish  
               to consider the practicality of requiring a local agency to  
               count and verify all written protests in a hearing.   
               Additionally, opposition notes that some local agencies  
               include written protests in an agenda packet so the  
               governing board and public can see the number of protests  
               and any comments for consideration at the hearing, which  
               also allows members of the public to verify their protest  
               has been received.  The Committee may wish to consider that  
               this bill would prohibit that practice, which some may  
               argue makes the protest process more transparent.  


             c)   Parcels.  Opposition argues that because the protest  
               process is based on parcels, a local agency might require a  
               parcel number to ensure that they only count one protest  
               per parcel.  Parcels may have multiple street addresses  
               with the same parcel number; therefore, allowing a local  








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               agency to require a parcel number ensures a fair and  
               efficient process.  The Committee may wish to consider if  
               prohibiting a local agency from requiring specified  
               information on a written protest will be contrary to the  
               stated goal of the bill to provide a more fair and  
               consistent process.  


          6)Arguments in Support.  The Howard Jarvis Taxpayers Association  
            (HJTA) argues, 
          "AB 2801 will provide much needed transparency to the protest  
            notice process.  Earlier this year, HJTA heard from an  
            individual in Fresno County who wanted to review protests from  
            a recent rate increase proposal, only to find that he could  
            not because the protests were not disclosable public records.   
            As with any process regarding taxpayer dollars, ratepayers  
            deserve to have as much access as is reasonably prudent.   
            Certainly, allowing concerned citizens to review protests is  
            not burdensome.  AB 2801 mirrors earlier proposals that  
            extended this necessary transparency across all forms of local  
            government exactions."  



          7)Arguments in Opposition.  The California State Association of  
            Counties argues, "At the present we are unaware of a pervasive  
            problem with existing local practices.  We are eager to learn  
            of incidents where the existing written protest submission or  
            review procedure did not meet the needs of the property  
            owners?"  The California Special Districts Association argues,  
            "The piecemeal approach contained in AB 2801 will create new  
            questions regarding implementation and will be difficult for  
            local agencies to implement.  Each public agency establishes a  
            written protest process be designated to meet the needs of the  
            local community."  


          









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          REGISTERED SUPPORT / OPPOSITION:




          Support


          Howard Jarvis Taxpayers Association [SPONSOR]




          Opposition


          California Special Districts Association 


          California State Association of Counties (unless amended)











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