Bill Text: CA AB2618 | 2013-2014 | Regular Session | Chaptered
Bill Title: Property and business improvement areas: benefit assessments.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2014-08-21 - Chaptered by Secretary of State - Chapter 240, Statutes of 2014. [AB2618 Detail]
Download: California-2013-AB2618-Chaptered.html
BILL NUMBER: AB 2618 CHAPTERED
BILL TEXT
CHAPTER 240
FILED WITH SECRETARY OF STATE AUGUST 21, 2014
APPROVED BY GOVERNOR AUGUST 21, 2014
PASSED THE SENATE AUGUST 7, 2014
PASSED THE ASSEMBLY AUGUST 11, 2014
AMENDED IN SENATE AUGUST 4, 2014
AMENDED IN SENATE JUNE 24, 2014
AMENDED IN SENATE JUNE 11, 2014
AMENDED IN ASSEMBLY MAY 5, 2014
AMENDED IN ASSEMBLY APRIL 21, 2014
INTRODUCED BY Assembly Member John A. Pérez
(Coauthors: Assembly Members Dickinson and Ting)
FEBRUARY 21, 2014
An act to amend Sections 36601, 36602, 36603.5, 36621, 36622,
36624, 36625, 36628.5, 36650, and 36651 of, to amend and renumber
Sections 36606, 36611, 36612, 36613, 36614, and 36614.5 of, and to
add Sections 33609.4, 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, John A. Pérez. 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 law.
The law 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, to
be determined as prescribed, the total amount of all special benefits
to be conferred on the properties located within the property-based
district, the total amount of any general benefit, and a detailed
engineer's report, as specified.
This bill would define the term "special benefit" for purposes of
that law to mean a particular and distinct benefit over and above
general benefits, as defined, conferred on real property located in a
district or to the public at large, and would specify that special
benefit includes incidental or collateral effects that arise even if
those effects benefit property or persons not assessed.
The law 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 a finding that the property within the
district will receive a special benefit and the total amount of all
special benefits to be conferred on the properties within the
property-based district.
The bill would make various conforming changes to specify that
the provisions described above apply to maintenance as well as
improvements and activities.
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 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 business districts 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 business districts
to fund business related improvements, maintenance, and activities
through the levy of assessments upon the businesses or real property
that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special
benefit upon the real property or businesses in a business district
are not taxes for the general benefit of a city, even if property or
persons not assessed receive incidental or collateral effects that
benefit them.
(e) Property and business improvement districts formed throughout
this state have conferred special benefits upon properties and
businesses within their districts and have made those properties and
businesses more useful by providing 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 even
more important tools with which communities can 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 added Article XIII D to the
Constitution in order 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
provides that property-based districts may only levy assessments for
special benefits.
(h) The act amending this section is intended to provide the
Legislature's guidance with regard to this act, its interaction with
the provisions of Article XIII D of the Constitution, and the
determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty
and inconsistent application of this act, which discourages the use
of assessments to fund needed improvements, maintenance, and
activities in property-based districts, contributing to blight and
other underutilization of property.
(2) Activities undertaken for the purpose of conferring special
benefits upon property to be assessed inherently produce incidental
or collateral effects that benefit property or persons not assessed.
Therefore, for special benefits to exist as a separate and distinct
category from general benefits, the incidental or collateral effects
of those special benefits are inherently part of those special
benefits. The mere fact that special benefits produce incidental or
collateral effects that benefit property or persons not assessed does
not convert any portion of those special benefits or their
incidental or collateral effects into general benefits.
(3) It is of the utmost importance that property-based districts
created under 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.
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 property and business improvement districts, to ensure that
those assessments conform to all constitutional requirements and are
determined and assessed in accordance with the guidance set forth in
this act. 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 36603.5 of the Streets and Highways Code is
amended to read:
36603.5. Any provision of this part that conflicts with any other
provision of law shall prevail over the other provision of law, as
to districts created under this part.
SEC. 4. Section 36606 of the Streets and Highways Code is amended
and renumbered to read:
36606.5. "Assessment" means a levy for the purpose of acquiring,
constructing, installing, or maintaining improvements and providing
activities that will provide certain benefits to properties or
businesses located within a property and business improvement
district.
SEC. 5. Section 36609.4 is added to the Streets and Highways Code,
to read:
36609.4. "Clerk" means the clerk of the legislative body.
SEC. 6. Section 36609.5 is added to the Streets and Highways Code,
to read:
36609.5. "General benefit" means, for purposes of a
property-based district, any benefit that is not a "special benefit"
as defined in Section 36615.5.
SEC. 7. Section 36611 of the Streets and Highways Code is amended
and renumbered to read:
36614.5. "Property and business improvement district," or
"district," means a property and business improvement district
established pursuant to this part.
SEC. 8. Section 36612 of the Streets and Highways Code is amended
and renumbered to read:
36614. "Property" means real property situated within a district.
SEC. 9. Section 36613 of the Streets and Highways Code is amended
and renumbered to read:
36606. "Activities" means, but is not limited to, all of the
following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(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) Other services provided for the purpose of conferring special
benefit upon assessed businesses and real property located in the
district.
SEC. 10. Section 36614 of the Streets and Highways Code is amended
and renumbered to read:
36611. "Management district plan" or "plan" means a proposal as
defined in Section 36622.
SEC. 11. Section 36614.5 of the Streets and Highways Code is
amended and renumbered to read:
36612. "Owners' association" means a private nonprofit entity
that is under contract with a city to administer or implement
improvements, maintenance, and activities 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 records relating to activities of the district.
SEC. 12. Section 36614.6 is added to the Streets and Highways
Code, to read:
36614.6. "Property-based assessment" means any assessment made
pursuant to this part upon real property.
SEC. 13. Section 36614.7 is added to the Streets and Highways
Code, to read:
36614.7. "Property-based district" means any district in which a
city levies a property-based assessment.
SEC. 14. Section 36615.5 is added to the Streets and Highways
Code, to read:
36615.5. "Special benefit" means, for purposes of a
property-based district, 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 those
incidental or collateral effects benefit property or persons not
assessed. Special benefit excludes general enhancement of property
value.
SEC. 15. Section 36621 of the Streets and Highways Code is amended
to read:
36621. (a) Upon the submission of a written petition, signed by
the property or business owners in the proposed district who will pay
more than 50 percent of the assessments proposed to be levied, the
city council may initiate proceedings to form a district by the
adoption of a resolution expressing its intention to form a district.
The amount of assessment attributable to property or a business
owned by the same property or business owner that is in excess of 40
percent of the amount of all assessments proposed to be levied, shall
not be included in determining whether the petition is signed by
property or business owners who will pay more than 50 percent of the
total amount of assessments proposed to be levied.
(b) The petition of property or business owners required under
subdivision (a) shall include a summary of the management district
plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district
plan can be obtained.
(3) Information specifying that the complete management district
plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall
contain all of the following:
(1) A brief description of the proposed improvements, maintenance,
and activities, the amount of the proposed assessment, a statement
as to whether the assessment will be levied on property or businesses
within the district, a statement as to whether bonds will be issued,
and a description of the exterior boundaries of the proposed
district, which may be made by reference to any plan or map that is
on file with the clerk. 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,
maintenance, and activities, and the location and extent of the
proposed district.
(2) A time and place for a public hearing on the establishment of
the property and business improvement district and the levy of
assessments, which shall be consistent with the requirements of
Section 36623.
SEC. 16. Section 36622 of the Streets and Highways Code is amended
to read:
36622. The management district plan shall include, but is not
limited to, 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 property and
businesses included, which may be made by reference to any plan or
map that is on file with the clerk. 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, maintenance, and activities proposed for
each year of operation of the district and the maximum cost thereof.
If the improvements, maintenance, and activities proposed for each
year of operation are the same, a description of the first year's
proposed improvements, maintenance, and activities and a statement
that the same improvements, maintenance, 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, or activities, 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.
(2) In a property-based district, the proportionate special
benefit derived by each identified parcel shall 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. 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, if any, 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. The value of any incidental, secondary, or
collateral effects that arise from the improvements, maintenance, or
activities of a property-based district and that benefit property or
persons not assessed shall not be deducted from the entirety of the
cost of any special benefit or affect the proportionate special
benefit derived by each identified parcel.
(l) In a property-based district, the total amount of all special
benefits to be conferred upon the properties located within the
property-based district.
(m) In a property-based district, the total amount of general
benefits, if any.
(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.
(o) Any other item or matter required to be incorporated therein
by the city council.
SEC. 17. Section 36624 of the Streets and Highways Code is amended
to read:
36624. At the conclusion of the public hearing to establish the
district, the city council may adopt, revise, change, reduce, or
modify the proposed assessment or the type or types of improvements,
maintenance, and activities to be funded with the revenues from the
assessments. Proposed assessments may only be revised by reducing any
or all of them. At the public hearing, the city council may only
make changes in, to, or from the boundaries of the proposed property
and business improvement district that will exclude territory that
will not benefit from the proposed improvements, maintenance, and
activities. Any modifications, revisions, reductions, or changes to
the proposed assessment district shall be reflected in the notice and
map recorded pursuant to Section 36627.
SEC. 18. 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 a proposed property and business improvement
district, the city council shall adopt a resolution of formation that
shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance,
and activities, 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 on whether bonds will be
issued, and a description of the exterior boundaries of the proposed
district, which may be made by reference to any plan or map that is
on file with the clerk. The descriptions and statements need not be
detailed and shall be sufficient if they enable an owner to generally
identify the nature and extent of the improvements, maintenance, 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, maintenance, and activities
to be conferred on businesses and properties in the district will be
funded by the levy of the assessments. The revenue from the levy of
assessments within a district shall not be used to provide
improvements, maintenance, 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, maintenance, and activities funded by the proposed
assessments, and, for a property-based district, that property within
the district will receive a special benefit.
(8) In a property-based district, the total amount of all special
benefits to be conferred on the properties 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. 19. 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, maintenance, and activities, provided
that any property-based assessment conforms with the requirements
set forth in paragraph (2) of subdivision (k) of Section 36622.
SEC. 20. Section 36650 of the Streets and Highways Code is amended
to read:
36650. (a) The owners' association shall cause to be prepared a
report for each fiscal year, except the first year, for which
assessments are to be levied and collected to pay the costs of the
improvements, maintenance, and activities described in the report.
The owners' association's first report shall be due after the first
year of operation of the district. The report may propose changes,
including, but not limited to, the boundaries of the property and
business improvement district or any benefit zones within the
district, the basis and method of levying the assessments, and any
changes in the classification of property, including any categories
of business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to
the property and business improvement district by name, specify the
fiscal year to which the report applies, and, with respect to that
fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and
business improvement district or in any benefit zones or
classification of property or businesses within the district.
(2) The improvements, maintenance, and activities to be provided
for that fiscal year.
(3) An estimate of the cost of providing the improvements,
maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient
detail to allow each real property or business owner, as appropriate,
to estimate the amount of the assessment to be levied against his or
her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be
carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from
sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners'
association or may modify any particular contained in the report and
approve it as modified. Any modification shall be made pursuant to
Sections 36635 and 36636.
The city council shall not approve a change in the basis and
method of levying assessments that would impair an authorized or
executed contract to be paid from the revenues derived from the levy
of assessments, including any commitment to pay principal and
interest on any bonds issued on behalf of the district.
SEC. 21. Section 36651 of the Streets and Highways Code is amended
to read:
36651. The management district plan may, but is not required to,
state that an owners' association will provide the improvements,
maintenance, and activities described in the management district
plan. If the management district plan designates an owners'
association, the city shall contract with the designated nonprofit
corporation to provide services.
