California Assembly Bill AB2618 Introduced / Bill

 BILL NUMBER: AB 2618INTRODUCED BILL TEXT INTRODUCED BY Assembly Member John A. Prez (Coauthors: Assembly Members Dickinson and Ting) FEBRUARY 21, 2014 An act to amend Sections 36601, 36602, 36622, 36625, 36628.5, and 36632 of, to amend and renumber Sections 36606, 36611, 36612, 36613, 36614, and 36614.5 of, and to add Sections 36609.5, 36614.6, 36614.7, and 36615.5 to, the Streets and Highways Code, relating to benefit assessments. LEGISLATIVE COUNSEL'S DIGEST AB 2618, as introduced, John A. Prez. Property and business improvement areas: benefit assessments. The California Constitution generally requires that assessments, fees, and charges be submitted to property owners for approval or rejection after the provision of written notice and the holding of a public hearing. The Property and Business Improvement District Law of 1994 authorizes cities to form property and business improvement districts that may levy assessments within a district for the purpose of making improvements and promoting activities of benefit to the properties and businesses within the district, and defines various terms for purposes of the act. The act requires a management district plan to include, among other things, the name of the proposed district, a description of the boundaries of the district, and the total annual amount proposed to be expended for improvements, maintenance and operations, and debt service in each year of operation of the district. This bill would require a management district plan to additionally include, for districts that are property-based, the proportionate special benefit derived by each identified parcel, the sum of all special benefits to be provided to the properties located within the district, the sum of any general benefit being primarily provided to the public or any entity other than the properties located within the district, and a detailed engineer's report, as specified. This bill would define the term "special benefit" for purposes of that act to mean a particular and distinct benefit over and above general benefits, as defined, conferred on real property located in a property-based district, as defined, or the public at large, as specified. The act additionally requires the city council to adopt a resolution of formation containing, among other things, a statement that the improvements and activities to be provided in the district will be funded by the levy of the assessments and a finding that the property or businesses within the area of the district will be benefited by the improvements and activities funded by the assessments proposed to be levied. This bill would require, for a property-based district, a statement of the source of funding to pay for any general benefits, a finding that the property within the district will receive a special benefit, the sum of all special benefits to be provided to the properties within the district, and the sum of any general benefit being primarily provided to the public or any entity other than the properties located within the district. The act authorizes a city council to levy assessments on businesses or on property owners, or a combination of the 2, and requires the city council to structure the assessments on whatever manner it determines corresponds with the distribution of benefits from the proposed improvements and activities. This bill would require any property-based assessment to be proportional to the special benefit conferred on the assessed property, and would prohibit the assessment from exceeding the reasonable cost of the proportional special benefit conferred, as specified. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 36601 of the Streets and Highways Code is amended to read: 36601. The Legislature finds and declares all of the following: (a) Businesses located and operating within  the  business districts  in some  of this state's communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of the business districts of its cities in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow cities to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that  receive certain  benefits from those improvements. (d) Assessments levied for the purpose of providing improvements and promoting activities that benefit real property or businesses are not taxes for the general benefit of a city, but are assessments for the improvements and activities which confer special benefits upon the real property or businesses for which the improvements and activities are provided.  (e) Property and business improvement districts formed throughout this state have provided many benefits to this state's communities that have resulted in the following benefits:   (1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.   (2) Job creation.   (3) Business attraction.   (4) Business retention.   (5) Economic growth.   (6) New investments.   (f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become an even more important tool with which communities may combat blight, promote economic opportunities, and create a clean and safe environment.   (g) Since the enactment of this act, the people of California have adopted Proposition 218, which amended Article XIII D of the constitution to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the constitution requires that property-based districts may only levy assessments for special benefits.   (h) Various courts have considered how special benefits should be determined and assessed without guidance from the Legislature in regard to how the Legislature intends for the Property and Business Improvement District Law of 1994 to interact and comply with the provisions of Article XIII D of the Constitution and how special benefits are to be determined with regard to property-based districts.   (1) The lack of legislative guidance appears to have created uncertainty among various courts with regard to the determination of special benefits, which could be perceived as providing an unclear or inconsistent standard.   (2) It is of utmost importance that property-based districts created under the this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.   (3) Of the appellate cases in which this act has been interpreted Dahms v. Downtown Pomona Property and Business Improvement District (2009) 174 Cal. App. 4th 708, most squarely relates to property-based districts and its ruling provides clarity with regard to how special benefits are determined and assessed with regard to those districts.   (i) It is the intent of the Legislature that this act should reflect the provisions of Article XIII D of the Constitution and the guidance regarding the application of those provisions set forth in Dahms v. Downtown Pomona Property and Business Improvement District (2009) 174 Cal. App. 4th 708 including the manner in which special benefits should be determined.  SEC. 2. Section 36602 of the Streets and Highways Code is amended to read: 36602. The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within a  property and  business improvement  area   district, to assure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in Dahms v. Downtown Pomona Property and Business Improvement District (2009) 174Cal. App.4th 708  . This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. SEC. 3. Section 36606 of the Streets and Highways Code is amended and renumbered to read:  36606.   36606.5.  "Assessment" means a levy  or charge  for the purpose of acquiring, constructing, installing, or maintaining improvements and promoting activities  which   that  will  benefit the   provide certain benefits to  properties or businesses located within a property and business improvement district. SEC. 4. Section 36609.5 is added to the Streets and Highways Code, to read: 36609.5. "General benefit" means any benefit being primarily provided to the public or any entity other than the properties or businesses located within the property-based district. A general benefit does not include a collateral benefit that arises incidentally from a special benefit conferred on the properties or businesses located within the property-based district. SEC. 5. Section 36611 of the Streets and Highways Code is amended and renumbered to read:  36611.   36614.5.  "Property and business improvement district," or "district," means a property and business improvement district established pursuant to this part. SEC. 6. Section 36612 of the Streets and Highways Code is amended and renumbered to read:  36612.   36614.  "Property" means real property situated within a district. SEC. 7. Section 36613 of the Streets and Highways Code is amended and renumbered to read:  36613.   36606.  "Activities" means, but is not limited to, all of the following: (a) Promotion of public events which benefit businesses or real property in the district. (b) Furnishing of music in any public place within the district. (c) Promotion of tourism within the district. (d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Activities which benefit businesses and real property located in the district. SEC. 8. Section 36614 of the Streets and Highways Code is amended and renumbered to read:  36614.   36611.  "Management district plan" or "plan" means a proposal as defined in Section 36622. SEC. 9. Section 36614.5 of the Streets and Highways Code is amended and renumbered to read:  36614.5.   36612.  "Owners' association" means a private nonprofit entity that is under contract with a city to administer or implement activities and improvements specified in the management district plan. An owners' association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners' association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners' association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), for all documents relating to activities of the district. SEC. 10. Section 36614.6 is added to the Streets and Highways Code, to read: 36614.6. "Property-based assessment" means any levy or charge upon real property by a city. SEC. 11. Section 36614.7 is added to the Streets and Highways Code, to read: 36614.7. "Property-based district" means any district supported in part by any property-based assessment. SEC. 12. Section 36615.5 is added to the Streets and Highways Code, to read: 36615.5. "Special benefit" means a particular and distinct benefit over and above general benefits conferred on real property located in a property-based district or to the public at large. General enhancement of property value does not constitute "special benefit." To the extent a special benefit concomitantly produces a collateral benefit for properties generally or for the public at large, that collateral benefit is not a general benefit. SEC. 13. Section 36622 of the Streets and Highways Code is amended to read: 36622. The management district plan shall contain all of the following: (a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries. (b) The name of the proposed district. (c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected lands and businesses included. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements and activities proposed for each year of operation of the district and the maximum cost thereof. If the improvements and activities proposed for each year of operation are the same, a description of the first year's proposed improvements and activities and a statement that the same improvements and activities are proposed for subsequent years shall satisfy the requirements of this subdivision. (e) The total annual amount proposed to be expended for improvements, maintenance and operations, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision. (f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against his or her property or business. The plan also shall state whether bonds will be issued to finance improvements. (g) The time and manner of collecting the assessments. (h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k) (1)    A list of the properties or businesses to be assessed, including the assessor's parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof, including operation and maintenance.  (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined 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 property related service being provided. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be 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.   (l) In a property-based district, the sum of all special benefits to be provided to the properties located within the property-based district.   (m) In a property-based district, the sum of any general benefit being primarily provided to the public or any entity other than the properties located within the district. A general benefit does not include any collateral benefit that arises incidentally from the provision of a special benefit to properties located within the property-based district, and the amount of those collateral benefits need not be deducted from the sum of special benefits to be provided to the properties located within the property-based district.   (n) In a property-based district, a detailed engineer's report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan.   (  l  )  (3)    Any other item or matter required to be incorporated therein by the city council. SEC. 14. Section 36625 of the Streets and Highways Code is amended to read: 36625. (a) If the city council, following the public hearing, decides to establish the proposed property and business improvement district, the city council shall adopt a resolution of formation that shall contain all of the following: (1) A brief description of the proposed activities and improvements, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement about whether bonds will be issued, and a description of the exterior boundaries of the proposed district. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district. (4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received. (5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements and activities to be provided in the district will be funded by the levy of the assessments  ,   and, for a property-based district, to the extent that general benefits are provided, the source of funding to pay for those general benefits  . The revenue from the levy of assessments within a district shall not be used to provide improvements or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements and activities funded by the assessments proposed to be levied  , and, for a property-based district   , that property within the district will   receive a special benefit  .  (8) In a property-based district, the sum of all special benefits to be provided to the properties within the property-based district.   (9) In a property-based district, the sum of any general benefit being primarily provided to the public or any entity other than the properties located within the property-based district. General benefits do not include collateral benefits that arise incidentally from the provision of special benefits to the properties located within the property-based district, and the amount of those collateral benefits need not be deducted from the sum of special benefits to be provided to the properties located within the property-based district.  (b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan. SEC. 15. Section 36628.5 of the Streets and Highways Code is amended to read: 36628.5. The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements and activities  , provided that any property-based assessment is proportional to the special benefit conferred on the assessed property  . SEC. 16. Section 36632 of the Streets and Highways Code is amended to read: 36632. (a) The assessments levied on real property pursuant to this part shall be levied  on the basis of the estimated   proportionally with the distribution of a special  benefit to the real property  , and shall not exceed the reasonable cost of the proportional special benefit conferred on the real property. Any additional costs of providing general benefits shall not be included in the amounts assessed. However, a general benefit does not include collateral benefits that arise incidentally from special benefits conferred on the   properties or businesses located  within the  property and business improvement   property-based  district. The city council may classify properties for purposes of determining the  special  benefit  provided  to property  of   by  the improvements and activities provided pursuant to this part. (b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part. (c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.