BILL ANALYSIS Ó
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