BILL ANALYSIS Ó AB 2801 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2801 (Gallagher) - As Amended May 4, 2016 ----------------------------------------------------------------- |Policy | Local Government |Vote:|8 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: Yes SUMMARY: This bill, regarding protest proceedings for property-related fees, pursuant to Proposition 218, requires the local agency to maintain all written protests for a minimum of two years following the date of the hearing to consider written protests. FISCAL EFFECT: Unknown, likely minor, potentially reimbursable mandate costs (GF). Local agencies would likely incur minor ongoing costs to store records. Although not required, many local agencies already hold these records, sometimes electronically. These AB 2801 Page 2 costs could be subject to state-reimbursement to the extent local agencies file a claim for reimbursement and the Commission on State Mandates determines specified activities are subject to reimbursement. COMMENTS: 1)Purpose. 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. 2)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 AB 2801 Page 3 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. 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 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. Current law is silent on maintaining written protests. However, ballots submitted during proposed assessment proceedings under Proposition 218 must be preserved for a minimum of two years. 3)Prior Legislation. a) 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. b) SB 321 (Benoit), Chapter 580, Statutes of 2009, imposed additional requirements on local governments when conducting assessment ballot proceedings, pursuant to Proposition 218. c) AB 2218 (Gaines) of 2008, held on the Senate Appropriations Suspense File, would have imposed new AB 2801 Page 4 restrictions on local governments, when conducting property-related fee and assessment ballot proceedings, pursuant to Proposition 218. d) 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. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081