BILL ANALYSIS �
AB 2403
Page 1
Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2403 (Rendon) - As Amended: April 10, 2014
SUBJECT : Local government: assessments, fees, and charges.
SUMMARY : Expands the definition of "water" in the Proposition
218 Omnibus Implementation Act. Specifically, this bill :
1)Makes changes to the Proposition 218 Omnibus Implementation
Act to add that the current definition of "water" includes,
but is not limited to, recycled water and reclaimed stormwater
for the provision of water service.
2)Finds and declares that this act is declaratory of existing
law, including the decision of the Sixth District Court of
Appeals in Griffith v. Pajaro Valley Water Management Agency
(2013) 220 Cal.App.4th 586 and Howard Jarvis Taxpayers
Association v. City of Salinas (2002) 98 Cal.App.4th 1351.
3)Makes other technical and conforming changes.
4)Finds and declares that the provisions of the Proposition 218
Omnibus Implementation Act shall be liberally construed to
effectuate its purposes of limiting local government revenue
and enhancing taxpayer consent.
EXISTING LAW :
1)Defines, for purposes of Article XIII C and Article XIII D of
the California Constitution and the Proposition 218 Omnibus
Implementation Act, "water" to mean "any system of public
improvement intended to provide for the production, storage,
supply, treatment, or distribution of water".
2)"Recycled water" means, pursuant to the Water Code, "water
which, as a result of treatment of waste, is suitable for a
direct beneficial use or a controlled use that would not
otherwise occur and is therefore considered a valuable
resource."
3)Provides notice, protest, hearing, and election procedures for
the levying of new or increased assessments or
AB 2403
Page 2
property-related fees or charges by local government agencies
pursuant to Proposition 218.
FISCAL EFFECT : None
COMMENTS :
1)Current law and purpose of this bill . Under the Proposition
218 Omnibus Implementation Act, current law defines "water" to
mean "any system of public improvement intended to provide for
the production, storage, supply, treatment, or distribution of
water." This bill makes changes to that definition to add
"including, but not limited to, recycled water and reclaimed
stormwater for the provision of water service." This bill is
author-sponsored.
2)Author's statement . According to the author, "This bill would
put the new Griffith decision into statute and allow public
agencies to apply the simpler protest process to their
approval of stormwater management fees, where the management
programs address both water supply and water quality.
Specifically, the bill clarifies the statutory definition of
'water' to include recycled water and stormwater intended for
water supply.
In 2002, the Court of Appeal interpreted this exception for
water/sewer rates to exclude costs for stormwater drains. The
service in the 2002 case emphasized flood control, moving
water to the ocean as quickly as possible. That program had
nothing to do with water supply. Those fees had developed to
address the water quality challenges presented by stormwater.
Stormwater management has changed since 2002. Since
Proposition 218 passed in 1996, managing stormwater has become
more about water supply, as agencies develop methods to
'capture' stormwater, clean it, and recharge groundwater
aquifers for water supply. In 2013, the Court of Appeals
again considered stormwater in a Proposition 218 context, for
a program that charged fees for groundwater recharge,
including stormwater capture.
This bill offers one alternative to address the evolving
nature of California's stormwater management programs,
especially the growing development of 'stormwater recapture'
programs for recharging groundwater aquifers."
AB 2403
Page 3
3)Proposition 218 . Proposition 218 (1996) distinguishes among
taxes, assessments and fees for property-related revenues, and
requires certain actions before such revenues may be
collected. Counties and other local agencies with police
powers may impose any one of these options on property owners,
after completing the Proposition 218 process. Special
districts created by statute, however, must have specific
authority for each of these revenue sources.
The Constitution defines a fee (or charge) as any levy other
than an ad valorem tax, special tax, or assessment that is
imposed by a local government on a parcel or on a person as an
incident of property ownership, including a user fee for a
property-related service. The fee imposed on any parcel or
person cannot exceed the proportional cost of the service that
is attributable to the parcel. Prior to imposing or
increasing a property-related fee, the local government is
required to identify the parcels, mail a written notice to all
the property owners subject to the fee detailing the amount of
the fee, the reason for the fee, and the date, time, and
location of a public hearing on the proposed fee. No sooner
than 45 days after mailing the notice to property owners, the
agency must conduct a public hearing on the proposed fee. If
a majority of owners of the identified parcels provide written
protests against the fee, it cannot be imposed or increased by
the agency.
Additionally, Article XIII D, Section 6, subdivision (c) of
the California Constitution, provides election requirements,
" 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." The election for the fee is
required to be conducted no less than 45 days following the
public hearing.
The definition of "water" under the Proposition 218 Omnibus
Implementation Act is significant because the election
requirements are on fees for services other than water, sewer,
and trash services.
4)Griffith v. Pajaro Valley Water Management Agency . Prior to
the appellate decision in Griffith v. Pajaro Valley Water
AB 2403
Page 4
Management Agency, the issue of whether a charge for
groundwater augmentation was considered a water service and
therefore exempt from the election requirements was contested.
Under Griffith the court relied on the definition of "water"
in Proposition 218 Omnibus Implementation Act narrowly
construing an earlier decision in Howard Jarvis Taxpayers
Association v. City of Salinas, which did not apply the Act's
definitions to a storm water charge dispute. The Griffith
decision found that a groundwater augmentation charge is a fee
for "water service".
According to the Griffith decision, "Moreover, the Legislature
has endorsed the view that water service means more than just
supplying water. The Proposition 218 Omnibus Implementation
Act, enacted specifically to construe Proposition 218, defines
'water' as 'any systems of public improvements intended to
provide for the production, storage, supply, treatment, or
distribution of water'. Thus, the entity who produces,
stores, supplies, treats, or distributes water necessarily
provides water service. Defendant's statutory mandate to
purchase, capture, store, and distribute supplemental water
therefore describes water service." The Court made several
other decisions regarding Proposition 218, however, the
portions of the case that discuss "water service" are
especially pertinent to this bill.
5)Policy considerations . This bill does not directly insert
language from the Griffith decision into the definition of
"water" in the Proposition 218 Implementation Act. The
Committee may wish to consider if the changes made by this
bill to the definition of water lend clarity to the issue.
For example, it is not entirely clear what "recycled water and
reclaimed water for the provision of water service" actually
is. Due to the continuous development of stormwater
management, the Committee may wish to consider if it is the
best policy to try and update statute to reflect the evolution
of stormwater management absent a definition of the terms used
by this bill in current law.
The Committee may wish to consider following the appellate
decision in Griffith which has provided more guidance on
several issues under Proposition 218's provisions regarding
water, sewer, trash, and other property-related fees if it is
helpful for the Legislature to amend the definition of
"water". The Committee may wish to consider if it is the best
AB 2403
Page 5
policy to let stakeholders continue to rely on the court's
decision in light of the clarity provided by Griffith.
6)Arguments in support . Supporters argue that while
California's drought and efforts to provide a continued, safe,
reliable supply of water presents many challenges, that the
clarifying language in this bill provides an opportunity to
remove any confusion that may exist and will enable all of our
communities to get one step closer to attaining a sustainable
water future.
7)Arguments in opposition . None on file
REGISTERED SUPPORT / OPPOSITION :
Support
California Coastkeeper Alliance
Clean Water Action/Clean Water Fund
Climate Resolve
Coalition for Our Water Future
Councilmember Larry Forester, City of Signal Hill
David Nahai Consulting Service, LLC
Desert Water Agency
East Valley Water District
El Dorado Irrigation District
Heal the Bay
HOK Product Design
Horny Toad Outdoor Apparel
LA Conservation Corps
Los Angeles Waterkeeper
Natural Resources Defense Council
Richard Watson & Associates
Santa Monica Bay Restoration Commission
Seventh Generation Advisors
Southern California Watershed Alliance
Surfrider Foundation
The Energy Coalition
The River Project
TreePeople
Urban Semillas
Individual letters (3)
AB 2403
Page 6
Opposition
None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958