BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: AB 474 HEARING: 7/1/09
AUTHOR: Blumenfield FISCAL: No
VERSION: 6/25/09 CONSULTANT:
Weinberger
BENEFIT ASSESSMENTS FOR WATER EFFICIENCY (URGENCY)
Background and Existing Law
A benefit assessment is an involuntary charge that property
owners pay for a public improvement or service that
provides a special benefit to their property. The amount
of the assessment is directly related to the amount of the
benefit their property receives. Benefit assessments can
finance public projects like flood control, street
improvement, streetlights, and public landscaping.
As an alternative to benefit assessments, cities and
counties can use "contractual assessments" to finance
public improvements on developed parcels when the costs and
time delays to create an assessment district would be
prohibitively large relative to the cost of the public
improvements to be financed (SB 837, McQuorqudale, 1987).
Contractual assessments may be levied only with the free
and willing consent of the affected property owners.
To use contractual assessments, a city council or county
board of supervisors must adopt a resolution, which:
Determines that it would be convenient,
advantageous, and in the public interest to designate
an area within which officials and property owners may
enter into contractual assessments and make related
financing arrangements.
Identifies the kinds of public works which may be
financed.
Describes the boundaries of the area within which
contractual assessments may be entered into.
Describes the proposed financing arrangements.
States the time and place for a public hearing.
Directs an official to prepare a detailed report
about the contractual assessment program.
The report on the proposed contractual assessment program
must contain:
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A map of the area where contractual assessments
will be offered.
A draft contract specifying the terms and
conditions.
A list of the types of facilities which may be
financed.
The official authorized to enter into contractual
assessments on behalf of the county or city.
The maximum aggregate dollar amount of contractual
assessments.
A method for prioritizing requests from property
owners for financing.
A plan for raising a capital amount required to pay
for work performed pursuant to contractual
assessments.
After holding a public hearing, the legislative body may
adopt a resolution confirming the program as detailed in
the report, may confirm a modified version of the report,
or may abandon the proceedings.
Last year, legislators authorized city and county officials
to use contractual assessments to finance the installation
of distributed generation renewable energy sources or
energy efficiency improvements to residential, commercial,
industrial, or other real property (AB 811, Levine, 2008).
Local officials also want to use contractual assessments to
finance water efficiency improvements on private property.
Proposed Law
Assembly Bill 474 authorizes the use of contractual
assessments to finance the installation of water efficiency
improvements that are permanently fixed to residential,
commercial, industrial, agricultural, or other real
property.
AB 474 specifies that, for the purpose of financing the
installation of water efficiency improvements, "public
agency" means a city, county, city and county,
municipal utility district, community services district,
sanitary district, sanitation district, or water district,
as defined in statute.
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AB 474 specifies that, for the purpose of financing the
installation of distributed generation renewable energy
sources or energy efficiency improvements, "public agency"
means a county, city, city and county, or a municipal
utility district, an irrigation district, or public utility
district that owns and operates an electric distribution
system.
AB 474 specifies that, for the purpose of financing other
public improvements, "public agency" means a city as
defined by the Improvement Act of 1911.
The bill requires the resolution of intention to authorize
contractual benefit assessments to include a brief
description of criteria for determining the
creditworthiness of a property owner.
AB 474 requires a legislative body to provide written
notice, at least 60 days before adopting a resolution
making contractual benefit assessment financing available
to property owners, to any entity that provides energy or
water within the boundaries of the area within which
contractual assessments may be entered into. The bill also
expresses the intent of the Legislature that a public
agency in the process of establishing an assessment program
should use a good faith effort to provide advance notice of
the proposed program to water and electric service
providers in the relevant service area to allow the most
efficient coordination and collaboration between the public
agency and water and electric service providers.
AB 474 requires a legislative body levying a contractual
assessment to designate an office, department, or bureau of
the local agency to be responsible for:
Preparing the current roll of assessment
obligations by assessor's parcel number on property
subject to a voluntary contractual assessment,
Establishing procedures to promptly respond to
inquiries concerning current and future estimated
liability for a voluntary contractual assessment, and,
Furnishing a Notice of Voluntary Contractual
Assessment to any individual requesting the notice or
any owner of property subject to a voluntary
contractual assessment levied by the local agency
within five working days of receiving a request for
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the notice.
The bill disclaims the public agency's liability for any
estimate of future voluntary assessment liability that is
inaccurate, or for any failure of any seller to request
notice or provide notice to a buyer.
AB 474 prescribes the form and content of the Notice of
Voluntary Contractual Assessment and provides that sellers
can use the Notice to satisfy statutory notice
requirements. The local agency may charge a fee of up to
$15 for the service of furnishing a Notice of Voluntary
Contractual Assessment.
The bill identifies statutory provisions that apply to the
levy and collection of voluntary contractual assessments,
including provisions related to lien priority.
AB 474 specifies the form of the notice of the existence
and amount of each voluntary contractual assessment that a
clerk must record with the county recorder of the county in
which a lot or parcel subject to a voluntary contractual
assessment is located.
The bill contains a legislative finding and declaration
that voluntary contractual assessments are not subject to
the provisions of Articles XIIIC and XIIID of the
California Constitution or specified implementing statutes.
AB 474 bill replaces the term "contractual assessment" with
the term "voluntary contractual assessment" in numerous
statutes.
Comments
1. Local assistance for water efficiency . Building on the
precedent set by last year's Levine bill, local governments
want to offer benefit assessment financing programs to
promote water efficiency. Up-front installation costs can
deter property owners from making water efficiency
improvements. Using contractual benefit assessments, local
agencies can help finance these investments at low interest
rates. Property owners who voluntarily enter into a
contractual assessment agreement for water efficiency
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improvements will realize immediate savings on their water
bills while paying off their costs over time on their
property tax bills. By reducing water consumption, the
voluntary contractual benefit assessment programs
authorized by AB 474 will benefit residents throughout
California.
2. It's not your business . Local governments should not
be in the business of providing public financing for the
purchase of water efficiency technologies on private
property. If private property owners want to finance the
large up-front costs of water recycling systems, storm
water cisterns, and other water-saving projects, they ought
to rely on private sector lenders, just as they would
finance other types of property improvements. Tax-exempt
financing, backed by a priority government lien, to pay for
water efficiency projects that primarily benefit private
citizens and businesses, is inconsistent with the
fundamental purpose of issuing government debt.
Assembly Actions
Assembly Local Government Committee: 5-0
Assembly Floor: 61-14
Support and Opposition (6/25/09)
Support : California Municipal Utilities Association,
Metropolitan Water District of Southern California,
Association of California Water Agencies, Burbank Water and
Power, California Association of Realtors, California
Association of Sanitation Agencies, California Business
Properties Association, California Chamber of Commerce,
California Landscape Contractors Association, California
Special Districts Association, California Water
Association, Cities of Canyon Lake, Rosevill, and San
Diego, Corona Department of Water and Power, East Bay
Municipal Utility District, Eastern Municipal Water
District, Green Plumbers, Placer County Water Agency,
Inland Empire Utilities Agency, Irvine Ranch Water
District, Los Angeles Business Council, Planning and
Conservation League, PolyTurf Inc., Regional Council of
Rural Counties, Regional Legislative Alliance of Venture
and Santa Barbara Counties, Sacramento Municipal Utility
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District, Sierra Club, Sonoma County Water Agency, Three
Valleys Municipal Water District, Tree People, Valley
Industry and Commerce Association, Water Reuse Association,
Western Riverside Council of Governments, World Recycling
Surfacing Group.
Opposition : Unknown.