BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 536 HEARING: 5/8/13
AUTHOR: Berryhill FISCAL: No
VERSION: 5/1/13 TAX LEVY: No
CONSULTANT: Weinberger
COUNTY DISTRICTS' PROPERTY RELATED FEES
States that a county does not need to provide subsidies to
cure service deficiencies in a county-dependent 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 fee, 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.
New or increased property-related fees also 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.
SB 536 -- 5/1/13 -- Page 2
The 2006 California 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 used
Proposition 218's procedures to reject proposals for new or
increased property-related fees. County 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 536 states that a county is not obligated to
provide subsidies to cure deficiencies in funding for
property-related services provided in a district if any of
the following apply:
The district's governing board proposed to impose,
extend, or increase property related fees or charges
for the services, the board fully complied 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 district's governing board proposed to impose,
extend, or increase property related fees or charges
for the services, the board fully complied with
Section 6 of Article XIII D of the California
Constitution, and the proposed imposition, extension,
or increase failed 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
that fully complied with Section 6 of Article XIII D
of the California Constitution were reduced or
SB 536 -- 5/1/13 -- Page 3
repealed by the voters by an initiative pursuant to
Section 3 of Article XIII C of the California
Constitution.
SB 536's provisions do not apply if the board of
supervisors undertook the obligation to subsidize the
services before the completion of a majority protest
proceeding or election.
SB 536 defines a "district" as a local governmental entity
created for the purpose of providing sidewalks, streets,
sewers, water, flood control, drainage systems, or vector
control services within its jurisdiction with a governing
board that has the same members as the board of supervisors
for the county in the overlapping geographical area.
SB 536 states that "fully complied 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 district 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 district 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
SB 536 -- 5/1/13 -- Page 4
hearings.
State Revenue Impact
No estimate.
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 536 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 or privatizing service delivery.
If a local government is not required to provide
subsidies, SB 536's provisions may simply restate existing
law while doing nothing to address local elected officials'
SB 536 -- 5/1/13 -- Page 5
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 536
may unintentionally imply that local governments would be
obligated to provide subsidies for services to properties,
absent the bill's provisions.
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 ex-clusio
alterius). Because SB 536's provisions apply only to
property-related fees imposed by a county-dependent
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 sewer services provided directly by a county
or independent special district might point to SB 536's
provisions to argue that the Legislature expects the county
or district to maintain sewer services by using other
revenue sources. To avoid any such implication, the
Committee may wish to consider amending SB 536 to apply to
all property related fees.
4. Similar legislation . SB 536 is nearly identical to SB
1120 (Berryhill, 2012), which the Senate Governance &
Finance Committee approved last year by a 9-0 vote. SB
1120 died on the Senate Floor.
Support and Opposition (5/2/13)
Support : Madera County; Rural County Representatives of
California.
Opposition : Unknown.