BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1120 HEARING: 6/27/12
AUTHOR: Berryhill FISCAL: No
VERSION: 6/20/12 TAX LEVY: No
CONSULTANT: Weinberger
MAINTENANCE DISTRICTS' PROPERTY RELATED FEES (URGENCY)
States that a city or county does not need to provide
subsidies to cure service deficiencies in a maintenance
district if the district's voters reject or reduce a
property-related fee.
Background and Existing Law
The California Constitution 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 (Proposition 218, 1996).
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, and
Abandon the fees if a majority of the parcels'
owners protest.
Further, new or increased property-related fees require:
A majority-vote of the affected property owners, or
Two-thirds registered voter approval, or
Weighted ballot approval by the affected property
owners.
However, this election requirement doesn't apply to
property-related fees for sewer, water, or refuse
collection services.
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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 and can be reduced by voter-approved
local initiatives. In light of the Court's decision, it is
likely that fees for ongoing sewer and refuse collection
services are similarly subject to Proposition 218's
provisions.
In some communities, property owners or voters have
successfully used Proposition 218's procedures to reject
proposals for new or increased property-related fees.
Local officials worry that if they can't impose fees in an
amount that is sufficient to pay for the costs of providing
services to properties, they will be forced to either
reduce service levels or subsidize the costs of service
with general tax revenues.
Proposed Law
Senate Bill 1120 states that a board of supervisors or city
council that acts as a maintenance district's board of
directors is not obligated to provide subsidies to the
district to cure any deficiencies in funding for services
provided in the district, including water, sewer, and
refuse collection, if any of the following apply:
The board of supervisors proposes to impose,
extend, or increase property related fees or charges
for the services, the board fully complies with
Section 6 of Article XIII D of the California
Constitution, and a majority of parcel owners submit a
written protest against the proposed imposition,
extension, or increase, pursuant to subdivision (a) of
Section 6 of Article XIII D of the California
Constitution.
The board of supervisors proposes to impose,
extend, or increase property related fees or charges
for the services, the board fully complies with
Section 6 of Article XIII D of the California
Constitution, and the proposed imposition, extension,
or increase fails to get voter approval pursuant to
subdivision (c) of Section 6 of Article XIII D of the
California Constitution.
Property related fees or charges for the services
SB 1120 -- 6/20/12 -- Page 3
that comply with Section 6 of Article XIII D of the
California Constitution are reduced or repealed by the
voters via an initiative pursuant to Section 3 of
Article XIII C of the California Constitution.
SB 1120's provisions do not apply if the board of
supervisors undertook the obligation to subsidize the
district at the time of the initial creation of the
district, as provided for in specified statutes.
SB 1120 states that "full compliance with Section 6 of
Article XIII D of the California Constitution" means all of
the following:
Revenues derived from the proposed fee or charge do
not exceed the funds required to provide the
property-related service.
Revenues derived from the fee or charge are not
used for any purpose other than that for which the fee
or charge was imposed.
The amount of the fee or charge imposed on any
parcel or person as an incident of property ownership
does not exceed the proportional cost of the service
attributable to the parcel or person.
The fee or charge is not imposed for a service
unless and until that service is actually used by, or
immediately available to, the property owner in
question.
The fee or charge is not imposed for general
government services if the service is available to the
public at large in substantially the same manner it is
to property owners.
The public entity has identified all parcels upon
which the fee or charge is proposed and calculated the
amount of the fee or charge to be imposed upon each
identified parcel.
The public entity has provided a written notice by
mail of the proposed fee or charge to the record owner
of each identified parcel, in conformance with
subdivision (c) of Section 6 of Article XIII D of the
California Constitution, and provided for all required
hearings.
State Revenue Impact
No estimate.
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Comments
1. Purpose of the bill . When property owners or voters
reject or reduce property-related fees, local agencies are
left without any good options for continuing the projects
or services funded by those fees, including water, sewer,
and refuse collection services. If property-related fee
revenues are insufficient to cover a local agency's
maintenance and operations costs for providing a service,
it may have to reduce the level of service provided. If
reduced service levels would pose a risk to public health
or safety, the agency may be forced to use general tax
revenues to pay for the operations and maintenance costs of
those services. Many local governments' general fund
revenues are already stretched too thin to provide core
services that benefit all local taxpayers. Property owners
should not expect local governments to use scarce general
tax revenues to subsidize the costs of projects or services
that benefit only specific properties. SB 1120 clarifies
that local governments aren't obligated to provide
subsidies.
2. Different from existing law ? It is not clear that
current law requires local governments to subsidize public
services provided to properties when, as the result of a
successful initiative, vote, or protest pursuant to
Proposition 218, property-related fees cannot cover the
full costs of those services. Some local governments may
be obligated by federal law, or by court order, to provide
water or sewer service that meets certain standards. In
other cases, there may be no legal obligation for a local
agency to maintain a particular level of service. Some
local government officials may choose to subsidize services
to properties because of the political challenge involved
in reducing service levels. If local governments are
already under no obligation to provide subsidies, SB 1120's
provisions may simply restate existing law while doing
nothing to address local elected officials' reluctance to
face the political consequences of reducing services in
response to the rejection of new or increased
property-related fees. By restating existing law SB 1120
may unintentionally imply that local governments would be
obligated to provide subsidies for services to properties,
absent the bill's provisions.
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3. Too narrow . One rule of legal interpretation is that
if a law mentions some things, by implication the statute
excludes other things (expressio unius est exclusio
alterius). Because SB 1120's provisions apply only to
property-related fees imposed by a board of supervisors or
city council acting as a maintenance district's board of
directors, the bill may unintentionally imply that local
governments are obligated to subsidize the costs of
services funded by other types of property related fees.
For example, property owners who reject a fee increase for
water services provided directly by a city, county, or
special district might point to SB 1120's provisions to
argue that the Legislature expects the city, county, or
district to maintain water services by using other revenue
sources. To avoid any such implication, the Committee may
wish to consider amending SB 1120 to apply to all property
related fees.
4. Urgency clause . Regular statutes take effect on the
January 1 following their enactment; bills passed in 2012
take effect on January 1, 2013. The California
Constitution allows bills with urgency clauses to take
effect immediately if they're needed for the public peace,
health, and safety. SB 1120 contains an urgency clause
declaring that it is necessary for its provisions to go
into effect immediately so that public entities can ensure
the continued supply of reliable drinking water and prevent
the cessation of services relating to water, sewage, and
garbage.
5. Double-referral . Because an earlier version of SB 1120
related to local governments' legal liability when voters
reduce, repeal, or reject property related fees, the Senate
Rules Committee double-referred the bill, first to the
Senate Governance & Finance Committee, and then to the
Senate Judiciary Committee, which hears bills related to
liability.
Support and Opposition (6/21/12)
Support : Madera County.
Opposition : Unknown.
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