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HomeMy WebLinkAboutItem 8.5 AnalysisProp218 (2) .::;5tc ,...-'- ... .1":1,~"~~ ~t', .. CITY CLERK File # D@][I]~-[d]~ '. AGENDA STATEMENT CITY COUNCIL MEETING DATE: (February 4,1997) SUBJECT: Analysis of Issues Related To Implementation of Proposition 218 (Report Prepared By: Paul S. Rankin, Assistant City Manager) EXHIBITS ATTACHED: 1. League of California Cities Implementation Flow Charts 2. Text of Proposition 3. Staff Summary of Key Provisions Related To Assessments 4. Staff Summary of Key Provisions Related To Fees 5. Summary ofImpacts RECOMMENDATION: 1. Consider Whether a Special Tax should be placed on the June Ballot to make up the supplemental Emergency Medical Services Assessment levied in the City of Dublin. A special local tax of$10 per household is recommended to be included on the June ballot. This will represent an increase of $6.72 from the local assessment collected in FY 96/97. Direct the City Attorney to draft appropriate ballot language. Iv! , . :. 2. Direct Staff to proceed with all assessments at the same level as approved prior to November 6, 1996; or Direct Staff to provide additional information related to an alternate approach. 3. Direct Staff to proceed with the procedural requirements for establishing garbage collection fees. 4. Direct Staff to proceed with the procedural requirements for a reduced amount' of the NPDES Fees. This will reflect only those NPDES activities which are related to refuse services and is expected to reduce the Single Family Fee by $7.36. FINANCIAL STATEMENT: In the event that the recommended actions are implemented a typical single family household would recognize a 2.1 % decrease in the City-wide fees and assessments collected in Fiscal Year 1997/98 compared to 1996/97. DESCRIPTION: At the November 1996 election, voters approved Proposition 218, which was supported by the Howard Jarvis Taxpayers Association (RITA). The measure was a Constitutional Amendment which makes significant changes to the imposition and collection of taxes, ," ' asse,ssments, and property related fees. ..---~--------------------C()PIlfs~c):------------------------~--::- ITEM NO. 0,,5 HJcc-forms/agdastmt.d oc , , ~' As with many ballot propositions it is anticipated that there will be conflicts with the implementation of' the measure which may take years to resolve. Further, it is anticipated that there will be legislation to enact changes which coordinate the new provisions with existing laws. Also this would assist with clarification of a number of ambiguities and inconsistencies. The proponents have been meeting with government representatives to discuss areas of agreement for legislative changes. In addition there will . undoubtedly be legal challenges to actions taken by public agencies, which will lead to revised interpretations of the measure. As a voter qualified Constitutional Amendment, the measure did not have the benefit of the legislative process to clarify some of the ambiguities or conflicts of the measure. At this time Staff is presenting a recommended course of action based upon a review of the requirements with the City Attorney. The report will assess Taxes, Assessments, and Property Related Fees as defmed in Proposition 218. Given that there are differing interpretations among public officials on some issues, Staffhas presented recommended actions which appear reasonable. TAXES IMP ACTED Proposition 218 affects the way a local government levies taxes in the following ways: . Agencies which proceeded without voter approval, and imposed, extended or increased general taxes between January 1, 1995 and November 6, 1996, must submit the taxes for voter approval by November 6, 1998. · Unless an emergency is declared the general tax election must be scheduled with the general election for the members of the governing body proposing the tax. . DefInitions are added to the state constitution for "general taxes" and "special taxes". . The City of Dublin has not enacted any general or special taxes within the window period discussed in the Proposition. The limitations of the proposition would only be applicable to future taxes. ALAMEDA COUNTY EMERGENCY MEDICAL SERVICE (EMS) DISTRICT - Special Tax In 1982 Alameda County submitted to the voters a proposed EMS district which would provide coordinated emergency medical services throughout the communities in the District. This was an advisory measure which asked voters if a countywide Paramedic Emergency Medical Services program should be established. It was indicated that the system would provide pre-hospital advanced life support and would be funded through an assessment not to exceed $10.00 per household. The measure was approved by a greater than two-thirds vote. The original boundaries included all incorporated cities except the City of Alameda. The Dublin City Council adopted Resolution 39-83 consenting to be included in the County Service Area The Board of Supervisors took final action to form the district in November of 1983. As provided in the original measure adopted by the voters the assessment was not to exceed $10 per year. Approximately 78% of the voters in the City of Dublin voted in favor of the District. Prior to the establishment of the District the City was responsible for payment to the Ambulance Service Provider for any "dry runs", where an ambulance was summoned and services were not required. The implementation of the EMS District absorbed this City General Fund expense and provided the community with a higher level of serVices by having ambulances staffed by paramedics.. '. -, .-..... fir' ~. . :. :. ..,.,,;,,~~, . Since 1983, the scope of the services provided by the EMS District have been modified to inClude support for the operation of Regional Trauma centers and allow for local supplemental assessments to fund qualified expenditures. A partial list of approved expenditures included costs associated with the following: Fire Department EMS Coordinator; First Responder Defibrillation; EMS Training for Fire Staff; Paramedic services authorized by the County; EMS Community Training; and related equipment. The amount levied by the County in Fiscal Year 1996/97 is a base assessment of$21.14. The County Administrator has been working with representatives of the cities and the Emergency Medical Service District Staff to address the status of this charge under the requirements of Proposition 218. The County has determined that in order to levy these fees in the future it is necessary to adopt a special tax. This ,"ill be subject to 2/3 voter approval in order to levy a valid tax on July 1, 1997. The County is proceeding with plans for a June 3, 1997 election. If the voters do not approve the measure the status of emergency medical services for all residents in the County will be significantly affected. RECENT CHANGES IN COUNTY PARAMEDIC SERVICES AFFECTING SERVICE LEVELS The County has been dealing with the fmancial pressures of operating the EMS / Paramedic Services without significant growth in revenues. The EMS District negotiates the terms of the service agreement with American Medical Response (AMR), the ambulance/paramedic service responder. In order to fmance these services the County has had to modify some of the key terms of this service agreement. One change initiated is the response time allowed. This has been extended from eight minutes to ten minutes, which represents a reduction in service levels. This change has placed pressure on local fire departments to implement programs which allow for personnel responding to be trained in advanced life support. The provision of fire fighter / paramedics as part of the first response to medical emergencies provides the community with a higher level of service. AMR continues to provide transport services, however, typically fire personnel are at the scene. DRF A had adopted a program to train personnel as paramedics, which would increase the level of service to the community. This change resulted in a significant increase in the General Fund expenses associated with Fire Services. The full extent of these costs have not been experienced as the program is not fully implemented. In Fiscal Year 1997/98, the contract with Alameda County Fire Department also includes the provision of paramedics as part of the first response by fire personnel. This will increase the number of paramedic units located in the City of Dublin from 1 to 3, and also provide a corresponding reduction in response time. SUPPLEMENTAL PARAMEDIC ASSESSMENT The EMS District has developed a program to allow individual cities to add supplemental assessments to the Countywide base charge of $21.14. Several agencies fire departments, which added paramedic services used the supplemental assessment to finance some of the additional costs. Each year the entity providing emergency medical response was allowed an opportunity to request a supplemental assessment. The Dougherty Regional Fire Authority took the action for the service area which includes the City of Dublin. DRF A identified the use of the funds to support a portion of the costs associated with the EMS Coordinator position and EMS community training. With the dissolution of DRF A the decision related to this supplemental assessment falls to the Dublin City Council for Fiscal Year 1997/98. The'supplemental assessments levied by jurisdictions in Alameda County ranged from zero to $30.84. The City of Dublin supplemental assessment for 1996/97 is $3.28. The revenue from this assessment estimated for Dublin in Fiscal Year 1996/97 is approximately $27,330. This amount was primarily related to costs associated with the coordination of EMS services and community training. DRF A did not raise -::J~ r ~'~: .~ the assessment when the paramedic program was adopted. As previously noted the implementation of a paramedic program will result in an increased level of service to the community, which is only possible with significant increases in operating costs. Of the fourteen agencies levying a supplemental assessment, $10.28 represents the median point. Staff has discussed with Chief McCanunon the costs of paramedic related services under the Alameda County proposal accepted by the City. ChiefMcCarnmon has indicated that the cost proposal assumed that there would support a supplemental assessment of $1 0.00. This is the amount levied in the area served by the Alameda County Fire District. The City of San Leandro which also contracts with Alameda County Fire levied a $9.90 supplemental assessment for Fiscal Year 1996/97. .' Due to the fact that the County is now structuring the EMS program as a special tax, the City must make a determination as to whether it intends to submit a local measure to the voters to account for the supplemental amount. In addition the amount of the tax would need to be determined. Ifreplacement revenues are not secured, the City would incur a greater general fund expense than anticipated for EMS services provided by fire department personnel. This change in the amount levied will not fully offset the additional general fund fire service costs in Fiscal Year 1997/98 as a result of the dissolution of DRF A. The Fiscal Year 1997/98 gross Contract County Fire Service costs are projected to be over $436,000 more than the amount budgeted by DRFA in Fiscal Year 1996/97. This represents an increase of approximately 15% and it does not include one-time costs associated with the transition, or any contribution to equipment replacement reserves. Staff will be developing a budget for equipment replacement once the City is aware of the inventory to be transferred from DRF A. ELECTION ISSUES The City Council will need to determine whether they desire to have a local measure submitted to Dublin V oters to authorize a special tax. This measure would appear on the same June ballot as the County-wide . measure. The City Council would need to direct the City Attorney to prepare the necessary ballot language. Staffwould recommend that the amount of the tax be established at $10.00 per household. This would generate approximately $83,000 towards the cost of the improved local paramedic services to be provided by Fire personnel. In drafting the measure the Staff will also evaluate the desirability and impacts of including either an escalation factor and/or a cap on the amount of the tax. In addition, the City would incur a proportionate share of the election costs. It is estimated that the City of Dublin proportionate share of an election would cost between $10,000 and $12,000. A Budget change will be presented at the time that the City Council considers action on a ballot measure. Meetings are continuing between the county and cities as this report is being prepared. Staff will provide any additional information related to the steps required at the City Council Meeting. In order to comply with the requirements of the Election Code, the County Board of Supervisors is expected to take action on its ballot measure on February 27, 1997, with a need for local election items to be submitted by March 6, 1997. ASSESSMENTS IMP ACTED Proposition 218 also imposes changes to the requirements related to imposing a special assessment. A special assessment is a charge generally levied upon parcels to pay for benefits received from local improvements. The major areas of change are as follows: · Assessments may be repealed or reduced by initiative. ..~ 1..1 __ --- , r' ';~ . New procedural requirementS are imposed related to the levy of assessments.'1bis includes: mailed notices 45 days prior to the hearing to each owner of a parcel; specific content for the notice is stated; a mail ballot to express support or opposition to the assessment; votes are weighted based upon the proportional financial obligation; City Council may not override a majority protest. This refers to the percentage of ballots received and not a majority of the total ballots. . Unless there is evidence that publicly owned parcels receive no special benefit, public property must be included in the calculation of assessments owed. (This would include City owned property, i.e. parks, etc.; DSRSD property; BART; Federal Government; State Government; School District property; County Property; etc.). Current laws do not address a mechanism for collection of these assessments and in some cases they are barred (i.e. on federal property). This means the City must absorb from other funds, amounts which cannot be levied on public entities. . . The burden of proof in legal actions contesting the validity of an assessment is placed upon the agency. . Certain exemptions from the new requirements are provided, as long as the current assessment is not increased. Attached as Exhibit 3 is a summary which discusses in more detail the provisions noted above. It is important to understand that there remain varying legal interpretations and conflicts between Proposition 218 and other laws related to the enactment of assessments. . ASSESSMENTS CURRENTLY LEVIED BY CITY OF DUBLIN This section will summarize the assessments currently levied by the City of Dublin. As identified in Exhibit 3 certain exemptions exist regarding the requirement to fully comply with all provisions of Proposition 218. The applicable exemption is noted following the discussion of each assessment. It is important to note that in all but one case the exemptions only apply provided that the assessment amount is not increased. Increased costs would need to be funded by reserves, to the extent they are available, or from another funding source. The estimated net collections are based upon the Fiscal Year 1996/97 gross levy less the County Tax Collector collection fees. In addition, estimated delinquencies have been included and they are based on delinquency rates from Fiscal Year 1995/96. . City-wide Street Lighting Assessment District (City Fund #710) Estimated 1996/97 Net Collections - $129,857 1997/98 Assessment Rates Single Family Homes: Condominium: Apartment: Commercial / Industrial: $ 13.60/ unit $ 13.60/ unit $ 81.60/ parcel $ 74.80/ acre . This District includes assessments on all parcels in the City, except publicly owned parcels. The assessments have been used to fund expenses related to street light maintenance and operations. This includes repairs to street light poles and fixtures as well as the energy costs. In addition the District has been used to fund the acquisition of the Street Light system from PG&E. The assessments are levied in accordance with the Landscaping and Lighting Act of 1972. r .~ ./ f'" ~' : Applicable Exemption: Article xm D Section S(a) Assessments used exclusively for capital costs and maintenance and operation of streets. Note: The authors of the proposition issued a statement dated January 2, 1997, which states that "The reference to streets does not include street lighting." This statement, which was not included in the ballot materials, appears to conflict with other provisions of Proposition 218. The Proposition defines .'; maintenance and operation expenses as: "cost of repair, replacement, fuel, power, electrical current, care, and supervision necessary to properly operate and maintain a permanent public improvement." Staff believes that the inclusion of street lighting in the "street" category can be reasonably supported. . Stagecoach Road Landscaping Assessment District (City Fund #711) Estimated 1996/97 Net Collections - $54,029 1997/98 Assessment Rates Single Family Homes: $ 228.72 Condominium!Apartment: $ 38.68 Tract 4719 was originally approved by Alameda County in 1981, prior to incorporation of the City of Dublin. The final tract map approved by the Board of Supervisors included a requirement that a homeowners association be established to maintain certain landscaping. In 1983, the City of Dublin processed a Planning Application for the Amador Lakes project, which was included in Tract 4719. As part of the conditions it was agreed that the City would attempt to establish a Landscaping and Lighting Assessment District to maintain landscaping and related slope easements. City records indicate that one property owner owned all of the property within the District when the assessments were initiated. Mr. Larry Lee owned both the Amador Lakes parcel and the 150 Single Family lot subdivision. Mr. Lee signed an application requesting and consenting to the establishment of the district and the levying of assessments. Assessments are used to maintain landscape improvements along Stagecoach Road and landscaped slope areas adjacent to Coral Way and Agate Way. Included in the maintenance cost are all related utilities and repairs necessary to maintain the irrigation system within the landscaped areas. The assessments are levied in accordance with the Landscaping and Lighting Act of 1972. .'" , ' Applicable Exemption: Article XIII D, section S(b) Assessment was initially imposed upon petition by all property owners. · Dougherty Road Assessment District (City Fund #713) Estimated 1996/97 Net Collections - $ 53,705 1997/98 Assessment Rates Single Family Homes: Condominium! Apartment: Commercial Lot: $ 84.72/unit $ 42.36/unit $ 338.88 / 1 parcel Tentative Map 5511 was approved by the City of Dublin in 1986. The project was designed as a single development with 7 "villages," containing different housing types. There are currently apartments, condominiums and single family houses within the development. The Developer who originally processed the development application was the fIrm ofRafanelli & Nahas. The original Tentative Map contained a condition to require establishment of a homeowners association. In 1986 the City established an assessment district which eliminated the need for a master homeowners ,. association to maintain areas adjacent to public streets. City records indicate that two property owners owned all of the property within the District when the assessment district proceedings were initiated. I 1.>:: ~,. " ":(:~)~~Wiiers signed an: application requeStmg 'and consenting to the eStablishment 'of the district and the levying of assessments. . The district maintains landscaped areas adjacent to public streets including: median and roadside landscaping along Willow Creek Drive; roadside landscaping along Shady Creek Drive; pathway, wall, landscaping, and fence improvements along Dougherty Road and Amador Valley Boulevard; landscaping, fence and pathway improvements along Wildwood Road and Fall Creek Road; and landscaping and emergency access surfacing at the north end of Crossridge Road. The assessments are levied in accordance with the Landscaping and Lighting Act of 1972. Applicable Exemption: Article XIIID, section 5(b) Assessment was initially imposed upon petition by all property owners. . Santa Rita Assessment District (No Assessments Have Been Levied - Estimated 1997/98 Assessments are $39,400 depending on the status of the installation of landscaping.) In July of 1996, the City Council responded to a petition from the Alameda County Surplus Property Authority to establish an assessment district pursuant to the Landscaping and Lighting Act of 1972. The area covered by this district covers all of the property originally owned by the Alameda County Surplus Property Authority and excluding the parcels designated for governmental use. The purpose of the assessments were to maintain landscaping along public streets and Tassajara Creek trails. The Surplus Property Authority petitioned for the formation of the district and the levy of assessments. The first year that assessments would be levied is Fiscal Year 1997/98. At the time the district was formed a formula was established to identify the basis for future increases in assessments. .,. Applicable Exemption: Article XIII D, section 5(b) Assessment was initially imposed upon petition by all property owners. . Dublin Boulevard Extension Assessment District (City Fund #515) 1996/97 Assessments Levied $ 235,534 Outstanding Bonds As of 6/30/96 $ 2,208,000 This assessment district was formed in 1991, to fmance the construction of a portion of the Dublin Boulevard Extension project. Bonds were sold to finance the project and the properties which benefited from the improvements are assessed each year to collect money necessary to payoff the bonds. The bonds will be completely paid off in 2012 as long as assessments are collected and paid as scheduled. The City has a fiduciary responsibility to levy and collect the assessments for the benefit of the bondholders. In addition, the City is required to proceed with foreclosure in the event that assessments are delinquent. As of June 30, 1996, all assessments were current. Applicable Exemption: Article XIII D, section 5(c) Assessment proceeds are used to repay bonded indebtedness. (Changes in annual assessments are not subject to the act.) PROPOSED PLAN FOR FISCAL YEAR 1996/97 ASSESSMENTS It appears that if the City were to freeze all assessments, that the noticing and majority protest proceeding discussed in Exhibit 3 would not need to be addressed. This is the approach recommended by Staff. In ::." " the ~ase of the Santa Rita ~is~ct, the property owner consented to an assessment which could fluctuate as , the nnprovements to be mamtamed were developed. J~, ~ {~', J. At this time the Engineer's Reports have not been prepared, and a determination has not been made~'U; the impact of allocating any special benefits attributable to publicly owned properties. Staff will be + preparing the assessments to be imposed prior to the July 1, 1997 deadline, which may eliminate the need for the consideration of this factor for the 1997/98 assessments. However, it should be noted that assessments levied after July 1, 1997 will clearly need to incorporate this factor. which could require other funds to contribute towards costs previously paid for by special assessments. . As stated earlier, the City would need to rely on reserves in the Assessment District Funds to absorb any increased operating cost. Other alternatives would include the use of another funding source (i.e. general fund or gas tax fund) or a reduction in the services provided. Neither of these alternatives are desirable as there "ill already be significant pressure on the Fiscal Year 1997/98 General Fund Budget to finance the increased Fire and Police Service costs. Further, for services such as street lights it is difficult to reduce services without compromising public safety. Staff proposes to proceed with the preparation of the Engineer's report and to conclude a levy of assessments under the 1972 Landscaping and Lighting Act by May 31, 1997. This will require the information and mailed notices to be available by approximately April 1 st. The conclusion of the proceeding in May allows for the statute oflimitations to run before July 1, 1997. It should be noted that there are different opinions related to the effective date among attorneys and others professionals preparing implementation plans for dealing with Proposition 218. Section 5 of the new Article XIII D reads in part: ...the provisions of this article shall become effective the day after the election unless otherwise provided. Beginning July 1. 1997. all existing. new. or increased assessments shall comply with this article. Notwithstanding the foregoing, the following assessments existing on the effective date ofthis article shall be exempt from the procedures and approval process set forth in Section 4:... :. Some agencies are proceeding with efforts to comply with the "substantive sections" of section 4 [4( a) and 4(b)] and utilizing an authorized exemption to forego the noticing and protest proceeding. The so called "substantive sections" relate to the requirement to identify the special benefit conferred on the property. In addition, Section 4(a) includes the requirement to assess government owned parcels unless clear and convincing evidence demonstrates that the publicly owned parcels receive no special benefit. The requirements of Section 4(b) relate to the requirement that the assessments be supported by a detailed Engineers report. The Engineer's report is also required as part of the 1972 Landscape & Lighting Act and has been prepared by a registered engineer in the past. Other Approaches Available There are other alternatives available for City Council consideration. If there is interest in evaluating any of these measures, Staff could evaluate further the pros and cons and present a report at the next City Council meeting. Special Tax: The City Council could prepare a ballot measure to enact a special tax to replace any of the current assessments. A special tax would require a 2/3 voter approval. Eliminate the Use of the Assessment Districts: The City would need to utilize other funds in order [mance expenditures at the current level or identify reductions in service levels. This would present an on-going operating expense which would impact the ability to [mance other services and high priority projects. ,:. --: .... >' ~' f'~':\ . , . ~. ","1'J.~... ' . . 'Proceed With Increased 'Assessments If Required To Meet Increased Costs: ' '.,', . ."' This would require the adherence to both the "substantive" and the "procedural" requirements discussed in Section 4, for the amounts in excess of the amount levied in 1996/97. In this scenario, the City would consider increases over the 1996/97 assessment in the event that increased costs needed to be recovered. There are a number of unresolved issues related to interpretations of Proposition 218. Therefore, this option is not recommended at this time. It may be beneficial to allow time for consideration of legislative clarifications prior to proceeding with actions which require implementation of all sections of the proposition. Proceed With A Measure to Receive Majority Voter Approval of Current Assessments: Assessments which previously received majority voter approval fall under an exemption category. As previously discussed Staff has established that exemptions exist without the expense of an election. Further, it is not clear that the elections held after November 6, 1996 will satisfy the exemption. In the event that the City Council desires to pursue any of these alternatives it would be appropriate to provide Staff with further direction. FEES IMP ACTED Proposition 218 establishes a separate subset of revenues labeled "Property - Related Fees and Charges". As with the provisions for assessments this results in new procedures for certain fees and charges. In addition to establishing this new category of fees, Proposition 218 requires the following: . E>..iensive requirements are imposed for notifying property owners of new or increased property- related fees. This adds an additional administrative cost to the provision of services funded by such fees. ',.. Property related fees may be rejected by a "majority protest" at a public hearing. This majority protest provision differs from the process defined for assessments. A majority of Rll property owners must protest the proposed fee. . A voter approval requirement is added for certain fees in addition to the "majority protest" procedure. An exception is granted for sewer, water, and refuse collection fees. For those fees subject to the voter approval, the City may select one of two options: 1) A majority vote of property owners; or 2) a two-thirds vote of the general electorate. . Local agencies are prohibited from using such fees to fund general governmental services. These services are defined to include but not be limited to fees for: police, fire, ambulance, or library services, which are available to the public at large in substantially the same manner as they are to the property owners. City of Dublin Property Related Fees Staffhas identified two fees which appear to fit the definition of "property related fees" and would be subject to certain provisions of Proposition 218. . Garbage Rates Pursuant To A Franchise Agreement With Livermore Dublin Disposal: Annual Cost of All Services Which City Sets Fees For ( Includes Residential/Commercial / ':. Drop Box): $2,865,000 c- t;i'.' I~'.' ~ . , , , "~.Il.!lIlF' The City has an exclusive franchise agreement with Liverinore Dublin Disposal, which provides'for. removal of all solid waste services in the City. In addition, the Municipal Code provides for mandatory garbage subscription for all parcels within the City. State law allows the City to enact these provisions in order to protect the public health, safety, and welfare. In the case of residential service the City collects fees on the property tax bill and makes payments to the Company for these serVIces. .. Section 6.6 of current agreement with Livermore Dublin Disposal provides in part the following responsibilities: "City shall calculate those rates that it deems appropriate so long as the revenues forecasted to be received by Company from charging such rates can reasonably be expected to generate sufficient revenues to provide Company Compensation as calculated by Company." The revenue requirement is based upon a negotiated cost and the total revenue is allowed to increase based upon a formula which incorporates changes in the consumer price index. The rates are established by the City as they apply to residential customers as well as commercial rates and drop box services. Staff believes that the requirement in the municipal code for all properties to obtain garbage service, strengthens the obligation to utilize the Proposition 218 approval requirements when establishing garbage collection rates. In order to attempt to structure an exemption entirely from Proposition 218, Staff believes that it would be necessary to address both the issue of whether it is a property related fee and whether the fee is one set by the City. Publications by the League of California Cities acknowledge the benefit of laws which address the improper accumulation and disposal of solid waste which presents issues of public health. It is suggested by the League of Cities that any proposal to weaken mandatory service requirements should also take into account these competing public policy issues. The issue of rate setting would need to be explored further with representatives of Livermore Dublin Disposal and Staff. Obviously uncontrolled rates could also impact subscribership and the ability of the City to meet State mandated goals related to waste reduction. . Non-Source Point Discharge Elimination System (NPDES)- Storm Water Fees (Including Street Sweeping and Storm Drain Clearing) Estimated 1996/97 Net Fees To Be Collected: 1997/98 Assessment Rates Single Family Homes: Condominium! Apartment: CommercialJIndustriall Apartments: Example of Fee on 100,000 sq. ft parcel $ 171,093 $ 14.72/unit $ 8.83/unit Lot Size in sq. ft / 4,840 x $14.72 $ 304.12 In accordance with the Federal Clean Water Act agencies are required to obtain permits for flows into waterways, which cannot be traced to a specific source. A significant portion of the "non-point source discharge" is related to storm drain flows from public streets. The cities and Alameda County have jointly obtained a permit based upon a plan to implement certain programs. The City of Dublin has imposed fees on each parcel to cover the cost of this program. The fees collected by the City are used for four general categories of activities. The costs shown are., as included in the adopted 1996/97 budget. fi'/-'. r;::'; ;~ei-aI arlmiriistratlonofthe program.. '1996/97 Budget: $ 5,986 .,p, ."."~ . do ~ ~'1t...t".~ "..> 2) Removal of debris from streets, gutters, and storm drain catch basin. This includes the regularly scheduled contract street sweeping service and storm drain maintenance services. 1996/97 Budget: $ 81 ,21 0 "'. 3) Staff time associated with inspections of commercial businesses which may contribute contaminants to storm run-off. 1996/97 Budget: $ 34,817 4) Alameda County coordinates the permit requirements and reporting and prepares certain public information items. These costs are shared by the participating agencies. 1996/97 Budget: $ 51,620 TOTAL BUDGET ITEMS 1- 4: $173,633 The requirement for the NPDES program is based upon Federal mandates incorporated in the Clean Water Act. Enforcement is handled by the Regional Water Quality Control Board. The Board has the ability to issue sanctions for non-compliance, which can include penalties of $10,000 per day and a requirement to comply with the program. PROPOSED PLAN FOR FISCAL YEAR 1996/97 PROPERTY RELATED FEES As outlined in Exhibit 4, refuse fees are required to comply with the notice requirements and are subject to a majority protest at a public hearing. However, they are not subject to voter approval. Staff recommends that this exemption be utilized in addressing the garbage rates and a portion of the NPDES '-:':: 0:, program costs. >. The noticing requirements will result in mailed notices to approximately 7,868 parcel owners, which will result in an additional cost to the City. In order to preclude the imposition of the fee or charge a majority of the parcel owners would need to submit a written protest. The process will result in additional administrative cost associated with mailed notices. A rough estimate of the postage, printing, and mailing costs to provide a single notice to the owners of all parcels is approximately $3,600. If the same mailing was used for a second fee the incremental costs may be less, provided that the mailing lists were identical. Proposed Process To Enact Garbage Fees Staff recommends that notices explaining changes in the garbage collection fees be mailed by April 1, 1997. A public hearing will be held in May to adopt the final fee schedule. The fees may be imposed unless a written protest is received from a majority of the parcel owners. Based upon the current number of parcels this would require over 3,500 protests. By following this process the City's solid waste fees established under the franchise agreement with Livermore Dublin Disposal, will be in full compliance with Proposition 218. In order to provide consistency among various classes of garbage customers (i.e. residential vs. commercial), the garbage notice costs will need to be absorbed by the City General Fund. The provision of proposed rates in the April Notice will substantially advance the timing for adoption of these fees. Proposed Process To Enact A Portion Of The Current NPDES Fees ,,00:.':'" The NPDES ~ees ~ll ne~d to be segregated into co~ponents which can b~ collec~ed.similar to the past , and those which Will reqUlre another revenue mechanism. The costs assocIated With Items 1 and 2 above, (I-Administrative Costs; and 2-Street Cleaning/Storm Drain Cleaning) totaling $ 87,196 are actually refuse services. Therefore, Staff would recommend that the fee be calculated to assess only these costs. tC " " The co~ associated with these refuse services account for approximately 50% of the total NPDES--J'~". Program co~. Therefore it is anticipated that the per unit fee would be reduced by approximately 50%. The exact calculation will need to account for any changes in the cost of these services. This would represent a savings to the property owner of approximately $7.36 for a single family household. If replacement funding cannot be identified and/or a reduction in services does not occur, the City would. need to incur an additional $86,437 in costs for the Commercial Inspection Program and the County charges to participating agencies. In all likelihood these costs would need to be absorbed by the General Fund, which may impact the provision of other discretionary City services. Unless the items supported by the County charges can be characterized as refuse fees, the County costs would need to be approved by the electorate, or, funded from another source. This would also be the case for the Engineering Staff costs associated with commercial inspections. In order to minimize the impact, Staff would recommend that efforts be made to encourage Alameda County to evaluate the services provided and their necessity in meeting the obligations under the Clean Water Permit Program. The cost of the NPDES notices will be incorporated into the recommended fee, since the fee is paid by all privately owned parcels. In order to comply with Proposition 218, the fees must be fully adopted by July 1, 1997. This will substantially advance the timing for adoption of these fees. Staff recommends that the City Council concur with this approach and direct Staff to proceed with implementation. CONCLUSION Exhibit 5 is a summary of the impacts as they have been addressed in this report. The following tables summarize the financial impacts as addressed in this report. The first Table shows the impact on the General Fund if Fees and assessments were eliminated. The second displays the additional General Fund expense estimated to occur if the Staff recommendation is fully implemented. The final table shows the reduction in costs to a typical single family household, if the Staff recommendations were implemented. ESTIMATED IMPACTS ON GENERAL FUND IN 1997/98 IF IMPLEMENTATION OF PROPOSITION 218 ELIMINATED ASSESSMENTS AND PROPERTY RELATED FEES ,'. Property Tax Assessments And Fees No EMS Replacement Revenue INCREASED GENERAL FUND EXPENSE -. FY 1997/1998 $ 27,330 .. Assume No Street Light Assessment 129,857 Assume No Stagecoach Road Assessments 54,029 Assume No Dougherty Road Assessments 53,705 Assume No NPDES Storm Water Fee TOTAL s 171,093 436,014 * * This is equivalent to approximately 3% of the 1996/97 General Fund Operating Budget. ". I ': - I ..-- J ~-'---"."-"'7):'?I~.:,- J., ESTIMATED GENERAL FUND ADDITIONAL EXPENSES TO IMPLEMENT PROPOSITION 218 . Cost of Local Election NET CHANGE IN GENERAL FUND EXPENSE $ (55,670) 12,000 3,600 3,600 86,437 $ 49,967 CHANGES IN EXPENSES AND REVENUES Increase in Local EMS Revenue From $10 Tax Cost of Mailed Notice For Garbage Fees Cost of Mailed Notice For NPDES Fees NPDES Expenses No Longer Covered By Property Fees TOTAL :. ESTIMATED IMPACTS TO HOMEOWNERS IF STAFF RECOMMENDATIONS ARE IMPLEMENTED (City-wide AssessmentslFees Typical Single Family Household) TOTAL Staff Proposed Current FY 97/98 FY 96/97 Prop 218 3.28 10.00 13.60 13.60 14.72 7.36 $ 31.60 $ 30.96 Difference City of Dublin Approved Property Tax Assessments And Fees DRFA Approved Supplemental EMS Assessment + $ 6.72 City-wide Street Light Assessment NPDES Storm Water Fee ( 7.36) ($ 0.64) * * This is equivalent to approximately a 2.1 % decrease in the total amount paid. Staff provides the following recommendations to fully implement Proposition 218.: . 1) , A local EMS Special Tax of$10.00 should be placed before the voters at the June election. The City Attorney will need to develop the necessary documents for presentation at the next City Council meeting. A budget change will be required to provide for the local election costs. : -,...., -- , . t, ~('" 2) Staff requests City Council concurrence with the freezing of all Landscaping and Lighting assessments at levels approved prior to November 6, 1996. The City Engineer will proceed with the preparation of the Engineer's Reports and the levy of assessments will be considered prior to May 31, 1997. 3) Garbage rates will be treated as property related fees. Notices will be mailed to all property owners with a hearing on the fees to be completed prior to May 31, 1997. 4) The City Engineer will prepare NPDES fees based upon a total levy which only covers refuse related services and the cost of collecting the fees. This is estimated to reduce the 1996/97 fees paid by property owners by approximately 50%. Efforts will be made to reduce program costs which can no longer be paid for with these fees. - / !.../ -- e: .'...''-- " ." ilO~ VL Attachmeau '. ~ co T""" N C- o s.. ~>- .J: ...... .- ~3: :,,:s,~ ::*<~ ~E o U o ..... 3: o J: .' " = Gl' :;' "c .. J!! Ii x.r::. ltl- ~.!! ID'O .r::. C ~ " ~ ~ ID \l':) L-....g; r-..2~ ~~~ UO),. .... c; ,"' ~~~ ~ 'x li UW.., 0= E _0_ -e. ~:Sjj; -....- ..c III tl) ::) =' CI III C)- Ill. "1:1 X -0) C ltl s:: " ~-'" Gl 'g tl) .cell':: ~ c..'2 .f!7ij!CD ep;:locn ;:lE';~ =;:l..c _ ~O)(CO 0>-1lI" 0-....(1) >-;:lellJ:l ltlJ:l.c e Eu-:'elI ::l ~ ~- 1; ~8EZ )( '<:T' ~c?> ~~~ -;eM U~o :. 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IV 0 iii 'S; III -0 r:::: 0 -0 Y E en cu Cll "0 ;2 l u c m III E c cu ..... "0 0 u ~ m iii III U 'fi - ~ 0 >- Cll ..0 ::l -0 C) CIl .... m I'll 0. Q) CD -oJ ... c.. ~ ...~ \ bll.~1 ...... ...... ~ Proposition Z18 Implementation Guide January 1997 VI. Att.chments A-3 .~' ~ PRoPosmON 218 TAXATION- VOTER APPROVAL OF LOCAL T.AJCES, ETC.-INITIATIVE CONSTITIJ110NAL AMENDMENT This initiative measure is submitted to the people in accordance with the provisions of Article II, Section 8 of the Constitution. PROPOSED ADDmON OF ARTICLE XIII C AND ARTICLE XIII D RIGHT TO VOTE ON TAXES ACT SECTION 1. TITI..E. This act sball be known and may be cited as the "Right to Vote on Taxes Act." SECTION 2. FINDINGS AND DECLARA.TIONS. The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to ~ require voter approval of tax increases.' However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the pwposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local govenunents exact revenue from taxpayers without their consent. SECTION 3. VOTER APPROVAL FOR LOCAL TAX LEVIES. Article XIII C is added to the California Constitution to read: .. CaNST Prec. Art. xm C, S' 1 ARTICLE xm C SECTION 1. Definitions. As used in this article: ...' (a) "General tax" means any tax imposed for general governmental purposes. ~ .. -- .. (b) "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity. (c) "Special district" means an agency of the state, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functioDS with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies. (d) "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific pwposes, which is placed into a general fund. ,. PROPOSITION 218 . 1 .:' League of California Cities EXHIBIT 2 Proposition 218 Implementation Guide January 1997 Lf / J~. . '. :. , j .. '. ~?"". . A-4 VI. Amchments SEe. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution: ~ (a) All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose disnicts or agencies, including school districts, shall have no power to levy general taxes. (b) No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body. (c) Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the issue of the imposition. which election shall be held within two years of the effective date of this article and in compliance with subdivision (b). (d) No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. SEC. 3. Initiative Power for Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution. including, but not limited to, Sections 8 and 9 of Article IT. the initiative power shall not be prohibited or otherwise limited in matters of reducing or-4. repealing any local tax, assessment, fee or charge. The power of initiative to aff~t local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives. SECTION 4. ASSESSMENT AND PROPERTY RELATED FEE REFORM. Article xm D is added to the California Constitution to read: PROPOSITION 218 - 2 League of California Cities Proposition 218 Implementation Guide January 1997 .....r~ VI. Attachmcals A-5 ARTICLE xrn D .' SECTION 1. Application. Notwithstanding any other provision oflaw, the provisions of this article shall apply to all assessments, fees and charges, whether imposed punuant to state statute or local government charter authority. Nothing in this article or Article xm C shall be construed to: (a) Provide any new authority to any agency to impose a tax, assessment, fee. or charge. (\?) Affect existing laws relating to the imposition of fees or charges as a condition of property development. (c) Affect existing laws relating to the imposition of timber yield taxes. ~ ... SEC. 2. Definitions. As used in this article: (a) "Agency" means any local government as defined in subdivision (b) of Section I of Anicle xmc. (b) "Assessment" means any levy or charge upon real property by an agency for a special benefit conferred upon the real property. "Assessment" includes. but is not limited to, "special assessment," "benefit assessment," "maintenance assessment" and "special assessment tax." . (c) "Capital cost" means the cost of acquisition, installation. construction, reconstruction. or replacement of a permanent public improvement by an agency. (d) "District" means an area determined by an agency to contain all parcels which will receive a special benefit from a proposed public improvement or property~related service. (e) "Fee" or "charge" means 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. (f) "Maintenance and operntion expenses" means the cost ofrent. repair, replacement, rehabilitation, fuel, power, electrical current. care, and supervision necessary to properly operate and maintain a permanent public improvement. (g) "Property ownership" shall be deemed to include tenancies ofreal property where tenants are directly liable to pay the assessment, fee, 0: charge in question. ;. PROPosmON 218 - 3 e".: League of California Cities Proposition 218 Implementation Guide January 1997 fr ..-" .. ;.. ':. ~~. A-6 VI. Attachments (h) "Property-related service" means a public service having a direct relationship to property ownership. (i) "Special benefit" means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement ofpropeny value does not constitute "special benefit." SEC. 3. Property Taxes, Assessments, Fees and Charges Limited. (a) No tax. assessment, fee, or charge shall be assessed by any agency upon any parcel ofpropeny or upon any person as an incident of property ownership except: (1) The ad valorem property tax imposed pursuant to Article XIII and Article XIII A.. (2) Any special tax receiving a two-thirds vote pursuant to Section 4 of Article XIII A.. '.... (3) Assessments as provided by this article. (4) Fees or charges for property related services as provided by this article. (b) For purposes of this article, fees for the provision of electrical or gas service shall not be deemed charges or fees imposed as an incident of property ownership. SEe. 4. Procedures and Requirements for All Assessments. (a) An agency which proposes to levy an assessment shall identify all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed. The proportionate special benefit derived by each identified parcel shall be determined in relationship to the entirety of the capital cost ofa public improvement, the maintenance and operation expenses of a public improvement, or the cost of the property related service being provided. No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and an agency shall separate the general benefits from the special benefits conferred on a parcel. Parcels within a district that are owned or used by any agency. the State of California or the United States shall not be exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. (b) All assessments shall be supported by a detailed engineer's report prepared by a registered professional engineer certified by the State of California. ; PROPOSITION 218 - 4 League of California Cities Proposition 218 Implementation Guide January 1997 VI. Attachments A.7 '. ,-. (c) The amount of the proposed assessment for each identified parcel shall be calculated and the record owner of each parcel shall be given written notice by mail of the proposed assessment, the total amount thereof chargeable to the entire district, the amount chargeable to the owner's particular parcel, the duration of the payments, the reason for the assessment and the basis upon which the amount of the proposed assessment was calculated. together with the date, time, and location of a public hearing on the proposed assessment. Each notice shall also include, in a conspicuous place thereon., a summary of the procedures applicable to the completion., return. and tabulation of the ballots required pursuant to subdivision (d), including a disclosure statement that the existence of a majority protest, as defined in subdivision (e), will result in the assessment not being imposed. . (d) Each notice mailed to owners of identified parcels within the district pursuant to subdivision (c) shall contain a ballot which includes the agency's address for receipt of the ballot once completed by any owner receiving the notice whereby the owner may indicate his or her name, reasonable identification of the parcel, and his or her support or opposition to the proposed assessment. ~ '" (e) The agency shall conduct a public hearing upon the proposed assessment not less than 45 days after mailing the notice of the proposed assessment to record owners of each identified parcel. At the public hearing, the agency shall consider all protests against the proposed assessment and tabulate the ballots. The agency shall not impose an assessment if there is a majority protest. A majority protest exists it: upon the conclusion of the hearing, ballots submitted in opposition to the assessment exceed the ballots submitted in favor of the assessment. In tabulating the ballots, the ballots shall be weighted according to the proportional financial obligation of the affected property. ...:..... . (f) In any legal action contesting the validity of any assessment, the burden shall be on the agency to demonstrate that the property or properties in question receive a special benefit over and above the benefits conferred on the public at large and that the amount of any contested assessment is proportional to, and no greater than, the benefits conferred on the property or properties in question. (g) Because only special benefits are assessable, electors residing within the district who do not own property within the district shall not be deemed under this Constitution to have been deprived of the right to vote for any assessment If a court determines that the Constitution of the United States or other federal law requires otherwise, the assessment shall not be imposed unless approved by a two.thirds vote of the electorate in the district in addition to being approved by the property owners as required by subdivision (e). SEe. 5. Effective Date. Pursuant to subdivision (a) of Section 10 of Micle II. the provisions of this wiele shall become effective the day after the election unless otherwise provided. , PROPOSITION 218 - 5 . League of California Cities Proposition 218 Implementation Guide January 1997 / -I'.' " -. oW. +., . ." 1 ,"'- A-8 VI. Attachments Beginning July I, 1997, all existing, new, or increased assessments shall comply with this article. Notwithstanding the foregoing, the following assessments existing on the effective date of this article shall be exempt from the procedures and approval process set forth in Section 4: ~ (a) Any assessment imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, w~er, flood control, drainage systems or vector control. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. (b) Any assessment imposed pursuant to a petition signed by the persons owning all of the parcels subject to the assessment at the time the assessment is initially imposed. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. (c) Any assessment the proceeds of which are exclusively used to repay bonded indebtedness of which the failure to pay would violate the ContraCt Impairment Clause of the Constitution of the United States. (d) Any assessment which previously received majority voter approval from the voters voting in an election on the issue of the assessment. Subsequent increases in those assessments shall be subject to the procedures and approval process set forth in Section 4. SEC. 6. Property Related Fees and Charges. (a) Procedures for New or Increased Fees and Charges. An agency shall follow the procedures pursuant to this section in imposing o~ increasing any fee or charge as defined pumIant to this article; including, but not limited to, the following: .-</.. (I) The parcels upon which a fee or charge is proposed for imposition shall be i~entified. The -amount of the fee or charge proposed to be imposed upon each parcel shall be calculated. The agency shall provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition. the amount of the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed fee or charge was calculated, the reason for the fee or charge, together With the date, time, and location of a public hearing on the proposed fee or charge. (2) The agency shall conduct a public hearing upon the proposed fee or charge not less than 45 days after mailing the notice of the proposed fee or charge to the record owners of each identified parcel up~n which the fee or charge is proposed for imposition. At the public hearing, the agency shall consider all protests against the proposed fee or charge. If written protests against PROPOSITION 218 - 6 League of California Cities Proposition 218 Implementation Guide January 1997 Vl. Attachments A-9 the proposed fee or charge are presented by a majority of owners of the identified parcels, the agency shall not impose the fee or charge. .:'- (b) Requirements for Existing, New or Increased Fees and Charges. A fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements: (1) Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service. (2) Revenues derived from the fee or charge shall not be used for any pwpose other than that for which the fee or charge was imposed. (3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel. (..,4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges. ~hether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4. (5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reliance by an agency on any parcel map, including, but not limited to, an assessor's parcel map, may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership for pwposes of this article. In any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance with this article. .':' (c) Voter Approval for New or Increased Fees and Charges. Except for fees or charges for sewer, water, and refuse, collection services, no property related fee or charge shall be imposed or increased unless and 'until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area. The election shall be conducted not less than 4S days after the public hearing. An agency may adopt procedures similar to those for increases in assessments in the conduct of elections under this subdivision. (d) Beginning July I, 1997, all fees or charges shall comply with this section. SECTION S. LIBERAL CONSTRUCTION. The provisions of this act shall be liberally construed to effectuate its pwposes of limiting local government revenue and enhancing taxpayer - - , consent. , .... ;. ... . :"(':>;.~i ,. , SECTION 6. SEVERABILITY. If any provision of this act, or part therrof, is for any reason held to be invalid or unconstitutional, the remaining sections shall not be affected. but shall remain in full force and effect, and to this end the provisions of this act are severable. .. " Ii... J : .. . STAFF SUMMARY OF KEY PROVISIONS OF :. " PROPOSITION 218 RELA TED TO ASSESSMENTS ~ '. .', i i J EXHIBIT 3 i' Ibis summary references key areas of change in the process and procedures enacted as part of Proposition 218. This does not address all requirements of the act and is intended to be background on the major issues faced with the levy of assessments. ASSESSMENT AUTHORITY EXTENDS TO ONLY SPECIAL BENEFITS . The initial test to be made on assessments is to ascertain whether the expenditures to be funded are of a general or special benefit to the properties being assessed. This finding was required prior to Proposition 218 under the assessment statutes. The first step is to identify all parcels which will have a special benefit conferred upon them. This must include property owned by governmental agencies. (Current laws do not have a clearly identified mechanism to collect from public agencies. In the case of the federal government, due to current laws, the federal government may ignore an assessment levied without authorization by an act of Congress.) In accordance with the League of California Cities' implementation guide, a "special benefit" means that the property receives a particular and distinct benefit over and above general benefits conferred on real property in the district or the public at large. Further, they state that general enhancement of property value is.....llQ[ a "special benefit." This standard must be kept in mind when a determination is made regarding the spreading of assessments by land use. The apportionment needs to be reasonable and justified in the required Engineer's report. Costs associated with "general" benefit must be paid from other resources of the local agency. The cost of preparing the Engineer's report will increase due to the complexity involved and the shift in the burden of proof. The Public Works Director has not determined whether he will seek the services of a consulting engineer or prepare the report with City Staff. .' '. ~ c ASSESSMENT NOTICING AND MAJORITY PROTEST PROCEEDING '. Under Proposition 218 a notice must be mailed to the owner of each parcel. At the present time, this is in addition to the notices and public hearings required under the statute governing an assessment and the Brown Act. For example, the Landscaping and Lighting Act of 1972 requires a published notice to appear at least 10 days prior to the date of the hearing. Therefore, there may be some duplication in order to comply with all applicable laws. The notice must be mailed 45 days prior to the public hearing and must provide the following information: (a) The total amount of the assessments to be collected from the entire district. (b) The amount of the assessment applicable to the specific owner's parcel. ( c) The duration of the proposed assessment. (d) The basis on which the amount of the proposed assessment was calculated. (e) The date, time, and location of the public hearing. (f) A summary of the voting procedures and the effect of a majority protest. The majority protest proceeding differs significantly from prior laws. The ballots submitted are counted to determine whether there is a majority protest. This increases the importance of obtaining affirmative ballots from property owners who support the particular assessment. If the only ballots returned were protest votes, the assessment could not be levied, as the criteria under Proposition 218 now examines only those submitted. The ballots are weighted based upon the proportional fmancial obligation of the affected property. In other words, a multi-family project which may pay $1,000 would have greater weight than a single family household paying $20. . 1 i) j'-- ? EXEMPTIONS FOR ASSESSMENTS TO COMPLY WITH ALL PROVISIONS. Section 5 of the new Article XIII D states that the provisions of the article shall become effective on the day after the election. This section then goes on to state that all existing, new, or increased assessments '.". ::. must comply with the act beginning July 1, 1997. However, an exemption from the procedures and approval process as stated in Section 4 of the act is provided in the event of the following circumstances: (a) Any assessment imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems, or vector control. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. (Bolding added.) (b) Any assessment imposed pursuant to a petition signed by the persons owning all of the parcels subject to the assessment at the time the assessment is initially imposed. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. (Bolding added. ) (c) Any assessment the proceeds of which are used to repay bonded indebtedness of which the failure to pay would violate the Contract Impairment Clause of the Constitution of the United States. (Bolding added. ) (d) Any assessment which previously received majority voter approval from the voters in an election on the issue of the assessment. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. (Bolding added.) ..' : :. i ~f-, I "./ i ... STAFF SUMMARY OF KEY PROVISIONS OF PROPOSITION 218 "PROPERTY RELATED FEES" / L( EXHIBIT 4 .:,'- .:~: ~ e- T" .,.",- This summary focuses on key areas of change related to the imposition of property related fees and charges. ',. FEES COMPLETELY EXEMPT FROM PROPOSITION 218 Proposition 218 specifically excludes fees or charges as a condition of development. Therefore, fees such as the East Dublin Traffic Impact Fee are exempt. In addition fees for the provision of electrical and gas service are exempt. Proposition 218 would also not apply to "regulatory fees" such as plan check and building inspection fees. Also, "facility user" fees would be exempt from the article. Both of these categories have no relationship to property ownership. The focus of the fee section requires that the fee be "...imposed upon a parcel or upon a person as an incident to property ownership...." SUBSTANTIVE RESTRICTIONS A property related fee must meet the following requirements: . Revenues from the fee must not exceed the funds required to provide the property related service. . The fees collected must not be used for any other purpose than that for which it is collected. . The amount of the fee shall not exceed the proportional cost attributable to the parcel. . The service must be used by or immediately available to the property owner. Fees based upon future use of a service are not permitted. ",. Fees may not be levied for general governmental purposes. :'. PROCEDURAL REOUIREMENTS The procedures to be followed begin with Noticing requirements including: . Identification of parcels upon which a fee or charge is proposed. . The amount of the fee or charge is to be calculated by the agency. . The agency must provide written notice of the proposed fee or charge to each owner of an identified parcel subject to the fee. . The notice must: a) state the amount of the fee or charge; b) state the basis upon which the fee or charge is calculated; c) state the reason for the fee or charge; and d) state the date time and location of the public hearing on the proposed fee or charge. The second area addressed by the Procedural Requirements relates to the provision of a public hearing, which must be held at least 45 days after the mailing of the notice. If a majority of the parcels submit a written protest the City cannot impose the fee. V oter Approval Requirements Except for sewer, water, and refuse collection fees; new or increased fees must be submitted to the , ' voters. Proposition 218 does not address the procedures to be used for elections related to property :'. related fees and charges. The City has two options in defining who will vote on the fee. 1) A Property Owner vote, which receives a majority vote approval; or 2) A two-thirds vote of the electorate. The two- thirds vote requirement is equivalent to the requirements for a "Special Tax". r) l ~""u.uu..n....."'''' 'V...' .u'l'.l.Ca~l;:) ,.. '" , PROPERTY CITY BUDGET OWNER ITEM EFFECT OF 218 IMPACT IMPACT - "":., County-wide EMS The COlUlty will If the EMS District If the measure .- Assessment pursue the current dissolves, residents may passes there is no $21.14 as a special seek changes in services change in the cost tax. a! the local level. to the property owner. This will require The City may be 2/3 voter approval required to absorb If the measure fails undetermined a significant 'The election will be additional general decrease in the in June. fund costs to assure level of emergency ambulance services are services will occur. available (i.e. operator subsidies) Local EMS Costs The City would If the current If the measure (Currently Partially need pursue the supplemental passes at a $10.00 Funded By A amount as a special assessment is not rate there is an Supplemental tax. replaced General Fund increase of $6.72 Assessment) Fire Service costs will per year. This will require increase by $27,330. 2/3 voter approval OR OR An election could If the measure fails ..'., be held in June. If a $10 tax is approved or there is no tax :. , the 97/98 General placed on the ballot Fund Fire Service costs the resident will : would be reduced have a $3.28 per $56,000. year savings. Election Costs for a local measure estimated at $10,000-$12,000 .. Street Light Provided the In FY 97/98 any There will be no " Assessment assessment rate is increased costs of the financial impact to the same as District will need to be the property owner. .- Stagecoach Road 1996/97 and absorbed either within -, Landscape enacted prior to the 96/97 assessment Assessment July 1st there will rates or absorbed by be no impact for FY another fund. 1997/98. Dougherty Road Beginning with Landscape Beginning with Assessments levied in Assessment Assessments levied 1998/99, the City may in 1998/99, they be required to will need to account contribute general :. .- for contributions fund monies related to associated with the share owed by ,- public property. public agencies. EXHIBIT 5 " ; ,-,' (page 1 of 2) ~I. ---... ;.'. { " ' :. ITEM Garbage Rates SUMMARY OF IMP ACTS EFFECT OF 218 As a property related refuse fee, established by the City, a written notice must be provided to all parcel owners. If there is a majority protest the fees cannot be levied. CITY BUDGET IMPACT The additional cost of providing a mailed notice to each property owner. (Estimated at 53,600. This could be reduced if shared with a NPDES Notice) PROPERTY OWNER IMPACT There will be no financial impact to the property owner. .. -, NPDES I Street and Stonn Drain Cleaning Only the portion of the fee related to street sweeping and storm drain cleaning would be collected as a refuse fee. A written notice must be provided to all parcel owners. If there is a majority protest the fees cannot be levied. The additional cost of providing' a mailed notice to each property owner. (Estimated at 53,600. This could be reduced if shared with a Garbage Rate Notice) Additional cost to General Fund of $86,437 for program elements not related to refuse. The annual cost is anticipated to decrease by ($7.36) per year. ':. r' II EXHIBIT 5 (page 2 of2)