SB 1298, as amended, Hertzberg. Local government: fees and charges.
Articles XIII C and XIII D of the California Constitution generally require 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. Existing law, the Proposition 218 Omnibus Implementation Act, prescribes specific procedures and parameters for local jurisdictions to comply with Articles XIII C and XIII D of the California Constitution and defines terms for these purposes.
Existing statutory law establishes notice, protest, and hearing procedures for the levying of new or increased fees or charges by local government agencies pursuant to Article XIII D of the California Constitution.end delete
This bill would define the terms “proportional cost of the service attributable to the parcel” and “sewer
begin delete service,” and would recast the definition of “water” to mean “water service,”end delete for these purposes. begin delete The bill would additionally specify that one vote per parcel may be counted in determining whether a proposed fee or charge is approved by a majority vote, as specified. end delete
The bill would additionally authorize an agency to impose a conservation and efficiency fee or charge for water service, in addition to any property-related fee or charge imposed for water service, to achieve specified conservation and efficiency purposes. The bill would provide that a conservation and efficiency fee or charge may raise revenue as an incident to its regulatory purpose and would require the agency to use any revenue to pay the cost of providing the service or for lowering the rate or rate structure of the associated property-related fee or charge. The bill would require a conservation and efficiency fee or charge to bear a fair or reasonable relationship to the burdens imposed on the local agency or the benefits received from the water service based on the amount of water used by each customer or class of customers, as specified.end delete
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
3(a) The ongoing, historic drought has made clear that California
4must invest in a 21st century water management system capable
5of effectively meeting the economic, social, and environmental
6needs of the state.
7(b) Sufficient and reliable funding to pay for local water projects
8is necessary to improve the state’s water infrastructure.
9(c) Proposition 218, approved in 1996, was meant to improve
10transparency and accountability of local government fees. Some
11court interpretations of the law have constrained
begin delete threeend delete
12tools that local governments need to manage water
begin delete supplies andend delete
13 address water
begin delete pollution:end delete stormwater
begin delete management, rates to encourage water conservation, and assistance
15for low-income Californians.end delete
16(d) Stormwater is a key source of local water supply, and careful
17management is necessary to reduce pollution. But a court decision
18 has required stormwater and flood control programs to meet a
19higher standard than other water-related services to raise capital,
20preventing many important projects from being built.
P3 1(e) One important way to encourage water conservation is to
2charge higher rates to customers using excessive amounts of water.
3This is a common practice throughout the world and a requirement
4for California’s private water agencies. Unfortunately, a recent
5court decision has made it difficult and confusing for local agencies
6to implement this necessary tool.
7(f) The United States Environmental Protection Agency has
8found that water rates exceeding 2 percent of monthly income are
9unaffordable, which is the case for millions of Californians. Private
10water and energy utilities are required to offer programs to make
11rates affordable to low-income households. Local governments in
12California, however, are concerned that recent court decisions
13regarding Proposition 218 could prohibit them from providing the
27 15(g)end delete
16 This act is intended to provide guidance to local agencies
17and courts on the implementation of Articles XIII C and XIII D of
18the California Constitution and shall not be construed to amend
Section 53750 of the Government Code is amended
For purposes of Article XIII C and Article XIII D of
23the California Constitution and this article:
24(a) “Agency” means any local government as defined in
25subdivision (b) of Section 1 of Article XIII C of the California
27(b) “Assessment” means any levy or charge by an agency upon
28real property that is based upon the special benefit conferred upon
29the real property by a public improvement or service, that is
30imposed to pay the capital cost of the public improvement, the
31maintenance and operation expenses of the public improvement,
32or the cost of the service being provided. “Assessment” includes,
33but is not limited to, “special assessment,” “benefit assessment,”
34“maintenance assessment,” and “special assessment tax.”
35(c) “District” means an area that is determined by an agency to
36contain all of the parcels that will receive a special benefit from a
37proposed public improvement or service.
38(d) “Drainage system” means any system of public
39improvements that is intended to provide for erosion control, for
40landslide abatement, or for other types of water drainage.
P4 1(e) “Extended,” when applied to an existing tax or fee or charge,
2means a decision by an agency to extend the stated effective period
3for the tax or fee or charge, including, but not limited to,
4amendment or removal of a sunset provision or expiration date.
5(f) “Flood control” means any system of public improvements
6that is intended to protect property from overflow by water.
7(g) “Identified parcel” means a parcel of real property that an
8agency has identified as having a special benefit conferred upon
9it and upon which a proposed assessment is to be imposed, or a
10parcel of real property upon which a proposed property-related
11fee or charge is proposed to be imposed.
12(h) (1) “Increased,” when applied to a tax, assessment, or
13property-related fee or charge, means a decision by an agency that
14does either of the following:
15(A) Increases any applicable rate used to calculate the tax,
16assessment, fee, or charge.
17(B) Revises the methodology by which the tax, assessment, fee,
18or charge is calculated, if that revision results in an increased
19amount being levied on any person or parcel.
20(2) A tax, fee, or charge is not deemed to be “increased” by an
21agency action that does either or both of the following:
22(A) Adjusts the amount of a tax, fee, or charge in accordance
23with a schedule of adjustments, including a clearly defined formula
24for inflation adjustment that was adopted by the agency prior to
25November 6, 1996.
26(B) Implements or collects a previously approved tax, fee, or
27charge, so long as the rate is not increased beyond the level
28previously approved by the agency, and the methodology
29previously approved by the agency is not revised so as to result in
30an increase in the amount being levied on any person or parcel.
31(3) A tax, assessment, fee, or charge is not deemed to be
32“increased” in the case in which the actual payments from a person
33or property are higher than would have resulted when the agency
34approved the tax, assessment, fee, or charge, if those higher
35payments are attributable to events other than an increased rate or
36revised methodology, such as a change in the density, intensity,
37or nature of the use of land.
38(i) “Notice by mail” means any notice required by Article XIII C
39or XIII D of the California Constitution that is accomplished
40through a mailing, postage prepaid, deposited in the United States
P5 1Postal Service and is deemed given when so deposited. Notice by
2mail may be included in any other mailing to the record owner
3that otherwise complies with Article XIII C or XIII D of the
4California Constitution and this article, including, but not limited
5to, the mailing of a bill for the collection of an assessment or a
6property-related fee or charge.
7(j) “Proportional cost of the service attributable to the parcel,”
8when applied to a fee or charge for water or sewer service, means
9the share of the total cost of providing water or sewer service to
10water or sewer users within the service area reasonably attributable
11to the parcel. The total cost of providing water or sewer service
12includes all costs of acquiring water and water rights, costs of
13collecting, conveying, treating, and managing water and
14wastewater, costs of satisfying all regulatory requirements
15lawfully imposed on water and sewer service
begin delete providers, and costs
16of providing communitywide water service in an equitable manner,
17including the cost of lifeline water rates.end delete
18(k) “Record owner” means the owner of a parcel whose name
19and address appears on the last equalized secured property tax
20assessment roll, or in the case of any public entity, the State of
21California, or the United States, means the representative of that
22public entity at the address of that entity known to the agency.
23(l) “Sewer service” means services provided by all real estate,
24fixtures, and personal property owned, controlled, operated, or
25managed in connection with or to facilitate sewage collection,
26treatment, or disposition for sanitary or drainage purposes,
27including lateral and connecting sewers, interceptors, trunk and
28outfall lines, sanitary sewage treatment or disposal plants or works,
29drains, conduits, outlets for surface or storm waters, and any and
30all other works, property, or structures necessary or convenient
31for the collection or disposal of sewage, industrial waste, or surface
32or storm waters. “Sewer system” shall not include a sewer system
33that merely collects sewage on the property of a single owner.
34(m) “Registered professional engineer” means an engineer
35registered pursuant to the Professional Engineers Act (Chapter 7
36(commencing with Section 6700) of Division 3 of the Business
37and Professions Code).
38(n) “Vector control” means any system of public improvements
39or services that is intended to provide for the surveillance,
40prevention, abatement, and control of vectors as defined in
P6 1subdivision (k) of Section 2002 of the Health and Safety Code and
2a pest as defined in Section 5006 of the Food and Agricultural
begin delete“Water service”end delete
means begin delete services provided byend delete
5system of public improvements intended to provide for the
6production, storage, supply, treatment, or distribution of water
7from any source.
Section 53755 of the Government Code is amended
(a) (1) The notice required by paragraph (1) of
11subdivision (a) of Section 6 of Article XIII D of the California
12Constitution of a proposed increase of an existing fee or charge
13for a property-related service being provided to a parcel may be
14given by including it in the agency’s regular billing statement for
15the fee or charge or by any other mailing by the agency to the
16address to which the agency customarily mails the billing statement
17for the fee or charge.
18(2) The notice required by paragraph (1) of subdivision (a) of
19Section 6 of Article XIII D of the California Constitution of a
20proposed new fee or charge may be given in the manner authorized
21for notice of an increase of a fee or charge if the agency is currently
22providing an existing property-related service to the address.
23(3) If the agency desires to preserve any authority it may have
24to record or enforce a lien on the parcel to which service is
25provided, the agency shall also mail notice to the recordowner’s
26address shown on the last equalized assessment roll if that address
27is different than the billing or service address.
28(b) One written protest per parcel, filed by an owner or tenant
29of the parcel, shall be counted in calculating a majority protest to
30a proposed new or increased fee or charge subject to the
31requirements of Section 6 of Article XIII D of the California
33(c) One vote
per parcel, filed by an owner or tenant of the parcel,
34shall be counted in determining whether a proposed fee or charge
35is approved by a majority vote pursuant to subdivision (c) of
36Section 6 of Article XIII D of the California Constitution.
37(d) Any agency that bills, collects, and remits a fee or charge
38on behalf of another agency may provide the notice required by
39Section 6 of Article XIII D of the California Constitution on behalf
40of the other agency.
Section 53756.5 is added to the Government Code, to
(a) The Legislature finds and declares all of the
5(1) Water service may be used for purposes that are
6indispensable to the use of the property, including, but not limited
7to, cooking, sanitation, and reasonable irrigation.
8(2) Water service may also be used for purposes that are not
9indispensable to the use of property, including, but not limited to,
10excessive indoor use, unabated leakage, excessive irrigation, and
11other activities that constitute an inefficient use of the water.
12(3) The amount of water that is indispensable to the use of a
13property may vary depending on the use to which the property is
14put, local conditions, water shortages, environmental factors, and
15other factors affecting water demand and supply availability.
16(4) Local agencies should have the authority to determine the
17amount of water that is indispensable for property use, given the
19(5) Charges for water that is not indispensable for property use
20are not imposed as an incident of property ownership and therefore
21are not property-related charges as defined by Article XIII D of
22the California Constitution.
23(6) Charges for water that is not indispensable for property use
24may be either specific benefits or specific government services
25under Article XIII C of the California Constitution.
26(7) Article XIII C of the California Constitution does not identify
27the costs that may be associated with water service, define “a fair
28or reasonable relationship” between the costs of the service and
29the burdens or benefits associated with the service, or prescribe a
30particular method for allocating the costs of providing
31nonproperty-related water services or benefits.
32(b) An agency may, in addition to any property-related fee or
33charge imposed pursuant to Article XIII D of the California
34Constitution and this article for water service, impose or increase
35a separate and distinct conservation and efficiency fee or charge
36for the same service to create price signals to encourage
37conservation and increased efficiency in the use of water. A
38conservation and efficiency fee or charge imposed pursuant to this
39section may be imposed on water that is not indispensable for
40property use. A conservation and efficiency fee or charge imposed
P8 1pursuant to this section may be imposed for purposes including,
2but not limited to:
3(1) Deterrence of excess consumption of water, as determined
4by the local agency.
5(2) Encouragement of the adoption of technologies that support
6more efficient use of water.
7(3) To encourage compliance with the goals of avoiding waste
8and unreasonable use of water pursuant to Section 2 of Article X
9of the California Constitution.
10(c) (1) A conservation and efficiency fee or charge may raise
11revenue as an incident to its intended purpose. Any revenue
12produced shall only be used to pay the costs of providing water
13service, to lower the rate or rate structure of the associated
14property-related fee or charge for water service, or to provide lower
15rates or rebates for disadvantaged households. The total amount
16collected from the property-related fee or charge for water service
17and the conservation and efficiency fee or charge shall not exceed
18the reasonable costs incurred by the agency to provide the water
20(2) The rate of a conservation and efficiency fee or charge shall
21bear a fair or reasonable relationship to the burden imposed on the
22local agency or the benefits received from the water service based
23on the amount of water used by each customer or class of
24customers. The agency may determine that the burden on, or the
25benefits derived from, the provision of water service per unit of
26water used is greater for customers who use relatively large
27amounts of water for their type and size of real property. The
28agency may establish a rate structure for a conservation and
29efficiency fee or charge intended to encourage conservation and
30increased efficiency of water use in order to bring the burdens of
31providing water service to customers or classes of customers into
32reasonable balance. The charges may be structured in a tiered,
33ascending, or other incremental manner. In addition, the agency
34may determine that the fairness of the rate structure is enhanced
35if it provides for lower rates for disadvantaged households, also
36known as lifeline rates.
37(d) Consideration and imposition or increase of a conservation
38and efficiency fee or charge shall comply with the notice, hearing,
39protest, and election requirements, if any, required by Article
40XIII D of the California Constitution. However, the requirements
P9 1of paragraph (3) of subdivision (b) of Section 6 of Article XIII D
2shall not apply to any conservation and efficiency fee or charge
3levied pursuant to this section.
4(e) (1) For the purposes of this section, “reasonable costs” of
5the specific benefit or specific government service shall include,
6but are not limited to, costs that will, directly or indirectly, enable
7an agency to meet water demands, reduce water demands, conserve
8potable water supplies, procure water supplies to provide water
9that is not indispensable to the use of property, and provide
10communitywide water service in an equitable manner, including
11lifeline water rates. The determination of reasonable costs may
12consider the relative income of the payer of the fee or charge.
13(2) For the purposes of this section and Article XIII C of the
14California Constitution, “fair or reasonable relationship” may
15include a relationship consistent with principles of equity that hold
16that more affluent individuals benefit more from public services,
17including water service, than less affluent individuals receiving
18the same service.
The provisions of this act are severable. If any
20provision of this act or its application is held invalid, that invalidity
21shall not affect other provisions or applications that can be given
22effect without the invalid provision or application.