BILL ANALYSIS �
AB 2194
Page 1
Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2194 (Mullin) - As Introduced: February 20, 2014
SUBJECT : Mello-Roos Community Facilities Act of 1982.
SUMMARY : Expands the services that may be financed with
Mello-Roos special taxes to include storm water management,
including, but not limited to, compliance with state and federal
storm water permit requirements.
EXISTING LAW :
1)Authorizes, under the Mello-Roos Community Facilities Act of
1992, a local agency to establish a Community Facilities
District (CFD) to finance public facilities and certain public
services through the imposition of special taxes and the
issuance of bonds.
2)Authorizes a CFD to finance the following types of services:
a) Flood and storm protection services, including, but not
limited to, the operation and maintenance of storm drainage
systems, plowing and removal of snow, and sandstorm
protection system;
b) Removal or remedial action for the cleanup of any
hazardous substances released or threatened to be released
into the environment;
c) Police protection services, fire protection and
suppression services, ambulance and paramedic services;
d) Recreation program services, library services,
maintenance services for elementary and secondary school
sites and structures; and,
e) Maintenance and lighting of parks, streets, roads, and
open space.
3)Authorizes a CFD to finance the purchase, construction,
expansion, improvement, or rehabilitation of facilities,
including:
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a) Facilities, publicly or privately owned, for flood and
storm protection purposes, including storm drainage systems
and sandstorm protection systems;
b) Facilities to transmit and distribute water, natural gas
pipeline facilities, and telephone lines;
c) Child care facilities and libraries;
d) Local park, recreation, parkway, and open space
facilities; and,
e) Elementary and secondary school sites and structures.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill . This bill expands the list of services
that may be financed with Mello-Roos special taxes to include
storm water management, including, but not limited to,
compliance with state and federal storm water permit
requirements. This bill is author-sponsored.
2)Author's statement . According to the author, "Numerous local
governments throughout California are facing increasingly high
costs associated with funding projects and mitigation efforts
associated with meeting the requirement of federal and state
storm water permits. This bill seeks to provide an additional
funding mechanism that is consistent with existing authority
already provided for Mello Roos Financing Districts.
"Municipal wastewater treatment has made significant progress
in reducing pollution discharges. For cities to now comply
with the Clean Water Act they will need to develop
comprehensive solutions to urban runoff. In order to comply
with municipal storm water permits, cities are looking at
projects across their cities that will cost millions and in
some cases billions of dollars over the next ten years."
3)Mello-Roos . The Mello-Roos Community Facilities Act allows
counties, cities, special districts, and school districts to
form a CFD and levy special taxes (parcel taxes) to finance a
wide variety of facilities and services, including parks,
recreation centers, schools, libraries, child care facilities,
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and utility infrastructure. Current law establishes the
process for the formation of a CFD, and requires two-thirds
voter approval for the Mello-Roos special tax. If there are
fewer than 12 registered voters, the affected landowners vote.
A CFD issues bonds secured by these special taxes to finance
the facilities and services.
In addition to financing public works such as park, school,
and library facilities, CFDs can pay for improvements on
privately owned buildings or real property. For example, CFDs
may pay for facilities, whether privately or publicly owned,
for flood and storm protection.
Mello-Roos is an important feature of the local fiscal
landscape, providing local officials with a key tool for
accumulating the public capital needed to pay for the public
works projects that make new residential development possible.
Mello-Roos is an attractive financial tool because it
provides more flexibility and can be used to finance
facilities that are not located in the district, and there is
no requirement that the special tax is apportioned on the
basis of benefit to the property.
4)Storm Water Permits . There has been a shift in the stated
goals of storm water management in California from earlier
efforts to control pollutants and implement good management
practices to a more holistic strategy. For example, the State
Water Board states that storm water is an important resource
and that capturing water that runs off concrete and
non-permeable surfaces and using it to encourage the
replenishment of groundwater supplies leads to less pollutants
that flow into our waterways.
Current law regulates discharges of pollutants in storm water
and urban runoff by regulating, through the National Pollutant
Discharge Elimination System (NPDES) Permit system, industrial
discharges, discharges through the municipal storm drain
systems and from industrial activity. According to the State
Water Resources Board, "The Water Boards draw authority for
storm water regulation from the federal Water Pollution
Control Act (Clean Water Act) and from direction within the
Clean Water Act which puts the framework for regulating storm
water discharges under the NPDES Permit system. Cities and
other jurisdictions that operate large and medium and small
storm water systems as well as specific industrial activity
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sites, including construction sites that disturb more than an
acre of land, must apply for storm water permits. The State
Water Board provides policy and regulatory oversight, on
behalf of the federal government."
5)Existing financial tools and Proposition 218 . Current law
authorizes counties and cities to impose special taxes,
benefit assessments, and property-related fees in order to
fund water pollution prevention and storm water services. The
California Constitution distinguishes among taxes, assessments
and fees for property-related revenues, and requires certain
actions before such revenues may be collected. A special tax
requires two-thirds voter approval and a benefit assessment
requires weighted majority property owner approval. For a
property- related fee, Proposition 218 requires local
officials to identify the parcels, calculate the fee for each
parcel, and conduct a majority protest proceeding 45 days
after mailing notice of a new fee to all fee payers.
Additionally, Article XIII D, Section 6, subdivision (c) of
the California Constitution provides that "Except for fees or
charges for sewer, water, and refuse collection services, no
property related fee or charge shall be imposed or increased
unless and until that fee or charge is submitted and approved
by a majority vote of the property owners of the property
subject to the fee or charge or, at the option of the agency,
by a two-thirds vote of the electorate residing in the
affected area."
6)Previous legislation . Several bills have expanded the list of
facilities and services that can be financed by Mello-Ross
taxes. Most recently, SB 555 (Hancock), Chapter 493, Statutes
of 2011, authorized the use of Mello-Roos taxes to help
finance renewable energy, water conservation, and energy
efficiency improvements on private property.
Additionally, a number of bills have addressed the broader
issue of financing for storm water management. AB 2403
(Rendon), pending in this Committee, expands the definition of
"water" in the Proposition 218 Implementation Act to water,
including, but not limited to, recycled water and reclaimed
storm water for the provision of water service. AB 2403 seeks
to codify the recent court decision in Griffith v. Pajaro
Valley Water Management Agency which found that a groundwater
augmentation charge is a fee for "water service" and is
therefore included in Proposition 218's exemption from
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election requirements for "water service".
AB 418 (Mullin), pending on the Assembly Floor for concurrence
in Senate amendments, would authorize the City/County
Association of Governments (C/CAG) of San Mateo County to
impose a special tax or a property- related fee, in compliance
with the California Constitution, to implement stormwater
management programs consistent with the joint powers agreement
of C/CAG's member agencies.
SB 790 (Pavley), Chapter 620, Statutes of 2009, authorized
grants for projects designed to implement or promote
low-impact development that will contribute to the improvement
of water quality or reduce storm water runoff and for projects
designed to implement specified storm water management plans.
SB 790 also authorized a city, county, or special district to
develop storm water management plans that meet certain
requirements.
SCA 18 (Liu) of 2009, which failed passage on the Senate
Floor, would have exempted new or increased storm water and
urban runoff management fees or charges from the California
Constitution's voter approval requirements for
property-related fees and charges.
SB 2058 (Morrow) of 2002 was never heard in a policy
committee, but would have required each regional water quality
board to allocate 25% of the industrial and construction storm
water permit fee revenues they receive each year to cities and
counties to carry out storm water management activities in the
region.
7)Policy considerations . The Committee may wish to consider in
light of the long list of services that may be associated with
storm water management and compliance with federal and state
permit requirements, if this bill should be narrowed to more
accurately specify the types of projects, facilities,
materials, and services the author intends to include. For
example, this bill would authorize the financing for
educational requirements that must be complied with in order
to obtain a storm water permit, but does not explicitly add
facilities for the purposes of storm water management to the
list of facilities and services that can be financed by
Mello-Roos.
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Additionally, the Committee may wish to ask the author in
moving forward to further clarify his intent and specify that
Mello-Roos special taxes should only be used for compliance
with state and federal municipal storm water requirements.
8)Arguments in support . Supporters argue that local governments
across the state continue to struggle to comply with state and
federal storm water permits, and that this bill will provide
them with an additional, modest tool to help them fund the
projects necessary to comply.
9)Arguments in opposition . None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association
Opposition
None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958