BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2194 HEARING: 6/11/14
AUTHOR: Mullin FISCAL: No
VERSION: 2/20/14 TAX LEVY: No
CONSULTANT: Urquiza
MELLO-ROOS FINANCING FOR STORMWATER MANAGMENT
Expands the services that may be financed with Mello-Roos
special taxes to include storm water management.
Background and Existing Law
The Mello-Roos Community Facilities Act allows counties,
cities, special districts, and school districts to levy
special taxes (parcel taxes) to finance a wide variety of
public works, including parks, recreation centers, schools,
libraries, child care facilities, and utility
infrastructure. A Mello-Roos Community Facilities District
(CFD) issues bonds against these special taxes to finance
the public works projects. Like all special taxes,
Mello-Roos Act special taxes require 2/3-voter approval.
If there are fewer than 12 registered voters, the affected
landowners vote.
In addition to financing public or governmental capital
facilities, Mello-Roos act special taxes can fund a limited
list of public services: police services, fire protection,
recreation programs, library services, museum operations,
park maintenance, flood and storm protection, hazardous
waste cleanup, street and road maintenance, lighting of
parks, parkways, streets, roads, and open space, plowing
and removal of snow, and graffiti management and removal.
The Mello-Roos Act 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 that can be used to
finance facilities that are not located in the district.
Additionally, there is no requirement that the special tax
is apportioned on the basis of benefit to the property.
AB 2194 -- 2/20/14 -- Page 2
The federal Clean Water Act requires states to reduce
pollution from urban storm water runoff. In California,
the State Water Resources Control Board (SWRCB) and the
Regional Water Quality Control Boards (RWQCBs) are pushing
counties, cities, and special districts to reduce urban
runoff and storm water discharges. RWQCBs issue National
Pollutant Discharge Elimination System General Permits
(NPDES) for medium and large municipalities that require
public education and outreach, illicit discharge detection
and elimination, construction and post-construction, and
good housekeeping for municipal operations. Compliance
with permits sometimes requires comprehensive solutions to
urban runoff including low impact development, catchments,
water treatment, and other costly activities. In 2013,
SWRCB also adopted permits for smaller municipalities,
including military bases, public campuses, prisons and
hospital complexes. Local governments continue to struggle
to comply with permit requirements and want to be able to
use Mello-Roos taxes to help finance storm water
management.
Proposed Law
Assembly Bill 2194 adds to the list of services that a
Mello-Roos Community Facilities Districts can finance,
storm water management services, including, but not limited
to, compliance with state and federal storm water permit
requirements.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Numerous local governments
throughout California are facing increasingly high costs
associated with compliance with federal and state storm
water permit requirements. To comply with storm water
permits, cities need to fund projects that may cost
millions and even billions of dollars over the next ten
years. AB 2194 establishes an additional funding mechanism
AB 2194 -- 2/20/14 -- Page 3
to help local governments comply with storm water permit
requirements.
2. Growing disparities . 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. By adding storm water
management to the list of services that may be financed
through Mello-Roos special taxes, AB 2194 allows
communities to finance those services through a single
mechanism. The Committee may wish to consider whether
expanding the list of services financed by Mello-Roos
special taxes may widen disparities between services
supported by tax revenues from property owners within CFDs
and those not in CFDs.
3. Services but not Facilities ? AB 2194 authorizes
Mello-Roos financing for storm water management services,
but does not explicitly add facilities for the purposes of
storm water management to the list of facilities and
services that CFDs can finance. As a result, cities would
be able to finance services related to storm water permit
requirements, such as public education and outreach, but
not tangible infrastructure related to storm water
management, such as permeable concrete. The committee may
wish to consider amending the bill to ensure facilities for
the purposes of storm water management may be financed by
Mello-Roos.
4. Public and private facilities . The Mello Roos Act
authorizes a CFD to finance a wide range of public
facilities, as well as the construction, expansion,
improvement, or rehabilitation of a limited type of
privately owned facilities. If the bill is amended to add
facilities for stormwater management, and given that the
goal of AB 2194 is to help cities comply with municipal
storm water permits, the committee may wish consider
restricting the acquisition, improvement, rehabilitation,
or maintenance of any real or other tangible property to
only publicly-owned property.
5. Let's be clear . State and federal law requires many
storm water permits in addition to municipal ones,
including those for stormwater discharge associated with
industrial activity and permits and construction projects.
To reflect the author's intent, the committee may wish to
AB 2194 -- 2/20/14 -- Page 4
consider amending the bill to specify that Mello-Roos
special taxes may be used only for local agency's
compliance with state and federal stormwater permits.
6. Related Legislation . Several bills address the issue
of financing storm water management this legislative
session:
AB 2403 (Rendon, 2014) expands the definition of
"water" in the Proposition 218 Implementation Act to
add storm water.
AB 418 (Mullin, 2014) authorizes the City/County
Association of Government of San Mateo County to
impose a special tax or property-related fee to fund
stormwater management programs.
Assembly Actions
Assembly Local Government: 9-0
Assembly Floor: 75-1
Support and Opposition (6/5/14)
Support : California Building Industry Association;
California Special Districts Association; City/County
Association of Governments of San Mateo County.
Opposition : Unknown.