BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2618|
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THIRD READING
Bill No: AB 2618
Author: John A. Pérez (D)
Amended: 8/4/14 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/18/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu, Walters
ASSEMBLY FLOOR : 74-0, 5/8/14 - See last page for vote
SUBJECT : Property and business improvement areas: benefit
assessments
SOURCE : Central City Association
DIGEST : This bill amends the Property and Business
Improvement District (PBID) Law of 1994 to conform several of
its provisions to constitutional requirements established by
Proposition 218 (1996).
Senate Floor Amendments of 8/4/14 delete references to
"secondary" benefits and define the term "clerk."
ANALYSIS : Proposition 218 requires owners of real property to
approve benefit assessments in a weighted ballot election.
Property owners vote in proportion to their proposed
assessments, which reflect how much their property benefits from
the proposed public works or public services. The courts have
said that assessments on businesses, as opposed to real
property, are not subject to Proposition 218's provisions.
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The PBID Law allows property owners to petition a city or county
to set up an improvement district and levy assessments on
property owners to pay for promotional activities as well as for
physical improvements, subject to Proposition 218's approval
requirements (AB 3754, Caldera, Chapter 897, Statutes of 1994).
Local officials also may use the PBID Law to assess business
owners, provided that they follow statutory notice, hearing, and
protest procedures (AB 1208, Silva, Chapter 114, Statutes of
2007).
This bill defines a "property-based assessment" as any
assessment made pursuant to the PBID Law upon real property.
This bill defines a "property-based district" as any district in
which a city levies a property-based assessment.
Proposition 218 amended the California Constitution to define an
assessment as any levy or charge upon real property by a local
agency for a special benefit conferred upon the real property.
The Constitution defines a special benefit as a particular and
distinct benefit over and above general benefits conferred on
real property located in the district or to the public at large
and specifies that general enhancement of property value does
not constitute special benefit.
This bill defines "special benefit," for purposes of a
property-based improvement district, as a particular and
distinct benefit over and above general benefits conferred on
real property located in a district or to the public at large.
Special benefit includes incidental, or collateral effects that
arise from the improvements, maintenance, or activities of
property-based districts even if they benefit property or
persons not assessed. This bill specifies that special benefit
excludes general enhancement of property value.
This bill defines "general benefit," for purposes of a
property-based improvement district, as any benefit that is not
a "special benefit," as defined in statute.
This bill specifies that property-based assessments must be
levied in proportion to the special benefit conferred on the
real property, and must not exceed the reasonable cost of the
proportional special benefit conferred on the real property.
This bill specifies that costs associated with general benefits
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provided to real property may not be included in the amounts
assessed.
As part of the process to form an improvement district, the PBID
Law requires a city to develop a management district plan. That
plan must contain specified elements, including a statement of
the methodology for imposing the district's expenses upon
benefited real property or businesses in proportion to the
benefit received by the property or business.
This bill requires that, in a property-based district, the
proportionate special benefit derived by each identified parcel
must be determined exclusively in relationship to the entirety
of the capital cost of a public improvement, the maintenance and
operation expenses of a public improvement, or the cost of the
activities. This bill prohibits an assessment on any parcel
from exceeding the reasonable cost of the proportional special
benefit conferred on that parcel. Only special benefits are
assessable, and a property-based district must separate any
general benefits from the special benefits conferred on a
parcel. This bill directs that specified publicly-owned parcels
within a property-based district are not exempt from assessment
unless the governmental entity can demonstrate by clear and
convincing evidence that those publicly owned parcels in fact
receive no special benefit.
This bill prohibits the value of any incidental, or collateral
effects that arise from a district's improvements, maintenance,
or activities that benefit property or persons not assessed from
being deducted from the entirety of the cost of any special
benefit or affect the proportionate special benefit derived by
each identified parcel.
This bill requires that a management district plan for a
property-based district must include:
The total amount of all special benefits to be conferred on
the properties within the property-based district.
The total amount of general benefit, if any.
A detailed engineer's report prepared by a registered
professional engineer certified by the State of California
supporting all assessments contemplated by the management
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district plan.
This bill requires that a resolution of formation adopted to
form a property-based district must include:
A finding that the property within the district will receive a
special benefit from improvements, maintenance, and activities
funded by the proposed assessments.
The total amount of all special benefits to be conferred on
the properties within the property-based district.
The PBID Law declares that property zoned solely for residential
use is conclusively presumed not to benefit from improvements or
services funded by improvement districts' assessments and
exempts those properties from those assessments.
This bill defines the term "clerk" as the clerk of a legislative
body.
This bill replaces several references to improvements and
activities provided in a district with references to
improvements, maintenance, and activities provided in a
district.
This bill makes additional technical, non-substantive changes to
existing law.
Comments
Proposition 218's addition of Article XIIID to the California
Constitution created confusion around issues such as district
formation, the levying of assessments and the permissible
functions of PBIDs. Consequently, cities throughout the state
are using divergent methodologies to form PBIDs and impose
assessments. Litigation arising from this lack of clarity
threatens the viability of all of California's PBIDs and the
employment, public health and safety, and economic development
benefits they create. This bill will help ensure that PBIDs
comply with Article XIIID by providing PBIDs, cities, and the
courts with a consistent methodology for determining the amount
of "special" benefits associated with PBIDs. Without this
bill's clarifications, PBIDs will remain subject to litigation
challenges and the entire state may be subject to future court
decisions that severely impede - or even eliminate - PBIDs.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/5/14)
Central City Association (source)
Avison Young
Central City East Association
Central Hollywood Coalition
Chrysalis
City of Long Beach
City of San Diego
Downtown Center Business Improvement District
Downtown Industrial District Business Improvement District
Downtown Long Beach Associates
Downtown Sacramento Partnership
Downtown San Diego Partnership
Gateway to L.A. BID
Granada Village Improvement Association
Historic Core Business Improvement District
Hollywood Chamber of Commerce
Hollywood Property Owners Alliance
Hollywood United Methodist Church
Los Angeles City Attorney, Michael Feuer
Los Angeles Fashion District Business Improvement District
Larchmont Village Property Owners Association
Mack Road Partnership
Midtown Business Association
Old Pasadena Management District
Paramount Contractors and Developers
Power Inn Alliance
S. Carol Massie, Inc. dba McDonalds Hollywood
San Diego Regional Chamber of Commerce
San Pedro Property Owners' Alliance
South Park Business Improvement District
Studio City Improvement Association
Sunset and Vine BID
The Chamber Long Beach Area Chamber of Commerce
The River District
The Stockton Blvd Partnership
Union Square Business Improvement District
Uptown Property and Community Association
Village Improvement Association
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Westwood Village Improvement Association
Wilshire Center Business Improvement Corporation
ARGUMENTS IN SUPPORT : According to the author, "AB 2618 is
intended to help ensure that PBIDs comply with Article XIII D,
while providing PBIDs, cities and the courts with a consistent
methodology to determine the amount of "special" benefits."
ASSEMBLY FLOOR : 74-0, 5/8/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Fong, Fox, Frazier, Beth
Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Grove,
Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
Pérez
NO VOTE RECORDED: Donnelly, Eggman, Gorell, Mansoor, V. Manuel
Pérez, Vacancy
AB:k 8/5/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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