BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2567 HEARING: 6/13/12
AUTHOR: Carter FISCAL: No
VERSION: 3/26/12 TAX LEVY: No
CONSULTANT: Weinberger
PROPERTY-RELATED FEES
Allows a local wastewater service provider to adopt a
schedule of fees authorizing automatic adjustments for
increases in wholesale wastewater treatment charges.
Background and Existing Law
Proposition 218 (1996) defines a property-related fee or
charge as, any levy other than an ad valorem tax, a special
tax, or an assessment, imposed by an agency upon a parcel
or upon a person as an incident of property ownership,
including a user fee or charge for a property-related
service.
Before a local government can charge a new property-related
fee, or increase an existing one, Proposition 218 requires
local officials to:
Identify the parcels to be charged.
Calculate the fee for each parcel.
Notify the parcels' owners in writing about the
fees and the hearing.
Hold a public hearing to consider and count
protests.
Abandon the fees if a majority of the parcels'
owners protest.
Property-related fees for sewer, water, or refuse
collection services are exempt from the additional
requirement that registered voters or property owners must
vote to approve property-related fees.
The 2006 Supreme Court decision in Bighorn Desert-View
Water Agency v. Verjil found that a water agency's charges
for on-going water delivery are property-related fees that
are subject to Proposition 218's notice, protest, and
hearing requirements. The Bighorn decision created
uncertainty among some local agencies about how to comply
AB 2567 -- 3/26/12 -- Page 2
with some of Proposition 218's property-related fee
provisions. In response, the Legislature passed new laws
governing how a public agency should provide notice and
tabulate written protests for new or increased
property-related fees or charges (AB 1260, Caballero,
2007).
The Legislature also allowed an agency providing water,
sewer, or refuse collection service to adopt a schedule of
fees or charges for a property-related service for a period
not to exceed five years pursuant to statutory notice and
protest requirements (AB 3030, Brownley, 2008). The
schedule of fees or charges can include a schedule of
adjustments, including a clearly defined formula to adjust
for inflation. The schedule of fees or charges for an
agency that purchases wholesale water from a public agency
can provide for automatic adjustments that pass through the
adopted increases or decreases in the wholesale charges for
water established by the other agency.
The Ross Valley Sanitary District (Marin County) provides
wastewater collection and conveyance services to residents
and businesses in: Fairfax, San Anselmo, Ross, Larkspur,
Bon Air, Sleepy Hollow, Kentfield, Kent Woodlands, Oak
Manor, Greenbrae, Murray Park, and San Quentin Prison. The
District operates and maintains approximately 200 miles of
collection sewer lines and 20 pumping stations which
collect, pump, and transport approximately five million
gallons of wastewater per day to the Central Marin
Sanitation Agency (CMSA) for treatment. District officials
want to be able to adopt a five year schedule of wastewater
fees that pass through adjustments in CMSA's wholesale
charges for wastewater treatment or adjustments for
inflation.
Proposed Law
Assembly Bill 2567 allows an agency providing wastewater
service to adopt a schedule of fees or charges authorizing
automatic adjustments that pass through increases in
wholesale charges for wastewater treatment or adjustments
for inflation, if it complies with all of the following:
The agency adopts the schedule of fees or charges
for a property-related service for a period not to
exceed five years pursuant to state law.
AB 2567 -- 3/26/12 -- Page 3
The schedule of fees or charges may include a
schedule of adjustments, including a clearly defined
formula for adjusting for inflation. Any inflation
adjustment to a fee or charge for a property-related
service cannot exceed the cost of providing that
service.
The schedule of fees or charges for an agency that
purchases wholesale wastewater treatment from a
public agency may provide for automatic adjustments
that pass through the adopted increases or decreases
in the wholesale charges for wastewater treatment
established by the other agency.
Notice of any adjustment pursuant to the schedule
must be given pursuant to state law, not less than 30
days before the effective date of the adjustment.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Public agencies that provide
wastewater collection services must go through a new
rate-approval process every time they adjust their
property-related fees in response to unanticipated
inflationary costs, such as increases in the wholesale cost
of wholesale wastewater treatment. Requiring frequent
rate-approval proceedings can cause delays, produce
additional costs to ratepayers, and complicate long-term
financial planning. By allowing local wastewater agencies
to adopt five-year fee schedules that pass through
adjustments in inflation and wholesale costs, AB 2567
grants local wastewater agencies the same authority that AB
3030 (Brownley, 2008) granted to local water agencies. The
bill simplifies the process of adjusting wastewater service
rates in response to inflation or wholesale cost increases
while maintaining the fundamental rate-payer protections of
Proposition 218. As a result, agencies that provide
wastewater collection services will benefit from lower
costs and greater revenue predictability.
2. Let's be clear . The statute enacted by the 2008
Brownley bill refers to agencies that provide water, sewer,
AB 2567 -- 3/26/12 -- Page 4
or refuse collection services. AB 2567 would allow
agencies that provide wastewater services to adopt fee
schedules that pass through wholesale costs for wastewater
treatment, but does not make any reference to wholesale
costs for sewer treatment. This omission may generate some
confusion by implying that agencies that provide "sewer"
services, as opposed to "wastewater" services, cannot pass
through their wholesale costs. To avoid this confusion,
the Committee may wish to consider amending AB 2567 to
include references to "sewage treatment" in addition to the
references to "wastewater treatment" that the bill adds to
the current statute.
Assembly Actions
Assembly Local Government Committee: 8-0
Assembly Floor: 74-1
Support and Opposition (6/7/12)
Support : Ross Valley Sanitary District; Association of
California Water Agencies.
Opposition : Unknown.