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CC SR 20170606 E - SB 231 OppositionRANCHO PALOS VERDES CITY COUNCIL AGENDA REPORT AGENDA DESCRIPTION: MEETING DATE: 06/06/2017 AGENDA HEADING: Consent Calendar Consideration and possible action to oppose Senate Bill No. 231 regarding local government storm drain fees RECOMMENDED COUNCIL ACTION: (1) Authorize the Mayor to sign a letter to Senator Hertzberg in opposition to Senate Bill No. 231 (SB 231) regarding local government storm drain fees. FISCAL IMPACT: None Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: Kit Fox, AICP, Senior Administrative Analyst" REVIEWED BY: Gabriella Yap, Deputy City Manager APPROVED BY: Doug Willmore, City ManagerV1 ATTACHED SUPPORTING DOCUMENTS: A. Draft letter in opposition to SB 231 (page A-1) B. California Contract Cities Association letter in opposition to SB 231 (page B-1) C. SB 231 (page C-1) BACKGROUND AND DISCUSSION: At the May 16, 2017, City Council meeting, Council Member Misetich asked for Senate Bill No. 231 (SB 231) to be agendized for a possible letter of opposition. The California Contract Cities Association (CCCA) has taken a position in opposition to SB 231 (Attachment B). As currently proposed, SB 231 would effectively redefine the term "sewer" as referenced in Proposition 218 (Prop 218) to include storm drains (Attachment C). This action would permit local governments to impose storm drain - related fees without voter approval, which is otherwise required under the prevailing interpretation of Prop 218. As the City Council is aware, the City's storm drain use fee has been allowed to expire. Rancho Palos Verdes is one of many cities facing daunting costs in complying with the Los Angeles Regional Water Quality Control Board's municipal separate storm sewer system (MS4) requirements for stormwater capture and treatment. Although Senator 1 Hertzberg's attempt to find solutions for cities looking for funding sources to comply with these regulations is appreciated, CCCA argues that simply passing the costs onto homeowners without a vote is the wrong way to go about doing it. Prop 218 guarantees citizens the right to vote on local taxes, fees, and assessments, but carves out exceptions for trash, water, and sewer fees. The measure did not fully define these exceptions, leading an appellate court to determine in 2002 that property fees for stormwater collection were not covered by the water or sewer exceptions. CCCA argues that SB 231, while well-intentioned, violates the intent of Prop 218 to only include limited exceptions to the requirement of a vote on most taxes to maintain a baseline level of public health and safety services. Carving out new exceptions by changing the definitions of the original exceptions would set an unfortunate precedent and undermine the longstanding right of residents to vote on their own local taxes and fees. Staff has prepared a letter in opposition to the bill for the Mayor's signature (Attachment A). If approved, Staff will immediately transmit this letter to Senator Hertzberg and CCCA. ALTERNATIVES: In addition to the Staff recommendation, the following alternative action is available for the City Council's consideration: Do not authorize the Mayor to sign the letter in opposition to SB 231. 2 June 6, 2017 The Honorable Robert Hertzberg California State Senate, 18t" District State Capitol, Rm. 4038 Sacramento, CA 95814 Via FAX: (916) 651-4918 SUBJECT: SB 231 (Hertzberg). Local Government: Fees and Charges Notice of Opposition Dear Senator Hertzberg: The City of Rancho Palos Verdes respectfully expresses its opposition to your SB 231. Rancho Palos Verdes is one of many cities facing daunting costs in complying with the Los Angeles Regional Water Quality Control Board's municipal separate storm sewer system (MS4) requirements for stormwater capture and treatment. We do appreciate your attempt to find solutions for cities looking for funding sources to comply with these regulations. However, we believe that simply passing the costs on homeowners without a vote is the wrong way to go about doing it. Proposition 218 guarantees citizens the right to vote on local taxes, fees, and assessments, but carves out exceptions for trash, water, and sewage fees. The measure did not fully define these exceptions, leading an appellate court to determine in 2002 that property fees for stormwater collection were not covered by the water or sewer exceptions. Including stormwater collection in the definition of sewers would, therefore, allow cities to impose large fees on property owners without a direct vote of our residents. We believe that SB 231, while well-intentioned, violates the intent of Proposition 218 to only include limited exceptions to the requirement of a vote on most taxes to maintain a baseline level of public health and safety services. Carving out new exceptions by changing the definitions of the original exceptions would set an unfortunate precedent and undermine the longstanding right of residents to vote on their own local taxes and fees. While our city appreciates assistance in complying with our MS4 requirements for stormwater management, we believe that passing the costs on to property owners without a vote is not the right or sustainable way to do it. For these reasons, the City of Rancho Palos Verdes must express its opposition to this bill. Sincerely, Brian Campbell Mayor A-1 2016-2017 EXECUTIVE BOARD Lou La Monte President Malibu Michael Davitt Vice President La Canada Flintridge Sandra Armenta Secretary/Treasurer Rosemead Sam Pedroza Director -at -Large Claremont Jorge Morales Legislative Director -at -Large South Gate Mark Waronek Marketing Director -at -Large Lomita Gustavo Camacho Immediate Past President Pico Rivera Frank Zerunyan Associate Member Committee Rolling Hills Estates Nancy Tragarz Budget & Audit Committee Walnut Liz Reilly By -Laws Committee Duarte Reva Feldman City Manager/Administrative Committee Malibu Ana Maria Quintana Legal/City Contract Committee Bell Ali Sajjad Taj Membership Committee Artesia Mitch Englander Resolutions Committee Los Angeles Lindsey Horvath Selection Committee West Hollywood James Bozajian Special Events Committee Calabasas Jeff Wood Ambassadors Committee Lakewood Marcel Rodarte Executive Director April 11, 2017 CALIFORNIA CONTRACT CITIES ASSOCIATION 17315 Studebaker Rd., Suite 210, Cerritos, CA 90703 (562) 622-5533 www.contractcities.org The Honorable Robert Hertzberg California State Senate State Capitol Room 4038 Sacramento, CA 95814 RE: SB 231 (Hertzberg). Local Government: Fees and Charges Notice of Opposition Dear Senator Hertzberg, California Contract Cities Association (CCCA) respectfully expresses its opposition to your SB 231. CCCA is a collection of member cities who contract for municipal services to provide residents with the best services at the lowest cost. Founded in 1957, today CCCA represents 72 member cities with more than 7 million residents. Many of our member cities face daunting costs in complying with the Los Angeles Regional Water Quality Control Board's municipal separate storm sewer system (MS4) requirements for stormwater capture and treatment, and we do appreciate your attempt to find solutions for cities looking for funding sources to comply with these regulations. However, we believe that simply passing the costs onto homeowners without a vote is the wrong way to go about doing it. Proposition 218 guarantees citizens the right to vote on local taxes, fees, and assessments, but carves out exceptions for trash, water, and sewage fees. The measure did not fully define these exceptions, leading an appellate court to determine in 2002 that property fees for stormwater collection were not covered by the water or sewer exceptions. Including stormwater collection in the definition of sewers would therefore allow cities to impose large fees on property owners without a direct vote of our residents. We believe that SB 231, while well-intentioned, violates the intent of Proposition 218 to only include limited exceptions to the requirement of a vote on most taxes to maintain a baseline level of public health and safety services. Carving out new exceptions by changing the definitions of the original exceptions would set an unfortunate precedent and undermine the longstanding right of residents to vote on their own local taxes and fees. While our member cities certainly need assistance in complying with our MS4 requirements for stormwater management, we believe that passing the costs on to property owners without a vote is not the right or sustainable way to do it. For these reasons, CCCA must express its opposition to this bill. If you have any questions regarding our position, please contact our Legislative Analyst Ilissa Gold at (562) 217-4703. As Sincerely, Lou La Monte Mayor, City of Malibu President, California Contract Cities Association Jorge Morales Council Member, City of South Gate Legislative Director At -Large, California Contract Cities Association AMENDED IN SENATE APRIL 19, 2017 SENATE BILL No. 231 Introduced by Senator Hertzberg February 2, 2017 An act to amend Section 53750 of, and to add Section 53751 to, the Government Code, relating to local government finance. LEGISLATIVE COUNSEL'S DIGEST SB 231, 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. This bill would define the term "sewer" for these purposes. The bill would also make findings and declarations relating to the definition of the term "sewer" for these purposes. Vote: majority. Appropriation: no. Fiscal committee: no. State -mandated local program: no. The people of the State of California do enact as follows: 1 SECTION 1. Section 53750 of the Government Code is 2 amended to read: 3 53750. For purposes of Article XIII C and Article XIII D of 4 the California Constitution and this article, the following words 98 C-1 SB 231 —2— I 2- 1 have the following meanings, and shall be read and interpreted in 2 light of the findings and declarations contained in Section 53751: 3 (a) "Agency" means any local government as defined in 4 subdivision (b) of Section I of Article XIII C of the California 5 Constitution. 6 (b) "Assessment" means any levy or charge by an agency upon 7 real property that is based upon the special benefit conferred upon 8 the real property by a public improvement or service, that is 9 imposed to pay the capital cost of the public improvement, the 10 maintenance and operation expenses of the public improvement, 11 or the cost of the service being provided. "Assessment" includes, 12 but is not limited to, "special assessment," "benefit assessment," 13 "maintenance assessment," and "special assessment tax" 14 (c) "District" means an area that is determined by an agency to 15 contain all of the parcels that will receive a special benefit from a 16 proposed public improvement or service. 17 (d) "Drainage system" means any system of public 18 improvements that is intended to provide for erosion control, for 19 landslide abatement, or for other types of water drainage. 20 (e) "Extended," when applied to an existing tax or fee or charge, 21 means a decision by an agency to extend the stated effective period 22 for the tax or fee or charge, including, but not limited to, 23 amendment or removal of a sunset provision or expiration date. 24 (f) "Flood control" means any system of public improvements 25 that is intended to protect property from overflow by water. 26 (g) "Identified parcel" means a parcel of real property that an 27 agency has identified as having a special benefit conferred upon 28 it and upon which a proposed assessment is to be imposed, or a 29 parcel of real property upon which a proposed property -related 30 fee or charge is proposed to be imposed. 31 (h) (1) "Increased," when applied to a tax, assessment, or 32 property -related fee or charge, means a decision by an agency that 33 does either of the following: 34 (A) Increases any applicable rate used to calculate the tax, 35 assessment, fee, or charge. 36 (B) Revises the methodology by which the tax, assessment, fee, 37 or charge is calculated, if that revision results in an increased 38 amount being levied on any person or parcel. 39 (2) A tax, fee, or charge is not deemed to be "increased" by an 40 agency action that does either or both of the following: 98 C-2 — 3 — SB 231 1 (A) Adjusts the amount of a tax, fee, or charge in accordance 2 with a schedule of adjustments, including a clearly defined formula 3 for inflation adjustment that was adopted by the agency prior to 4 November 6, 1996. 5 (B) Implements or collects a previously approved tax, fee, or 6 charge, so long as the rate is not increased beyond the level 7 previously approved by the agency, and the methodology 8 previously approved by the agency is not revised so as to result in 9 an increase in the amount being levied on any person or parcel. 10 (3) A tax, assessment, fee, or charge is not deemed to be 11 "increased" in the case in which the actual payments from a person 12 or property are higher than would have resulted when the agency 13 approved the tax, assessment, fee, or charge, if those higher 14 payments are attributable to events other than an increased rate or 15 revised methodology, such as a change in the density, intensity, 16 or nature of the use of land. 17 (i) "Notice by mail" means any notice required by Article XIII C 18 or XIII D of the California Constitution that is accomplished 19 through a mailing, postage prepaid, deposited in the United States 20 Postal Service and is deemed given when so deposited. Notice by 21 mail may be included in any other mailing to the record owner 22 that otherwise complies with Article XIII C or XIII D of the 23 California Constitution and this article, including, but not limited 24 to, the mailing of a bill for the collection of an assessment or a 25 property -related fee or charge. 26 0) "Record owner" means the owner of a parcel whose name 27 and address appears on the last equalized secured property tax 28 assessment roll, or in the case of any public entity, the State of 29 California, or the United States, means the representative of that 30 public entity at the address of that entity known to the agency. 31 (k) "Sewer" includes 32 systems, all real estate, fixtures, and personal property owned, 33 controlled, operated, or managed in connection with or to facilitate 34 sewage collection, treatment, or disposition for sanitary or drainage 35 purposes, including lateral and connecting sewers, interceptors, 36 trunk and outfall lines, sanitary sewage treatment or disposal plants 37 or works, drains, conduits, outlets for surface or storm waters, and 38 any and all other works, property, or structures necessary or 39 convenient for the collection or disposal of sewage, industrial 40 waste, or surface or storm waters. "Sewer system" shall not include 98 C-3 SB 231 1 a sewer system that merely collects sewage on the property of a 2 single owner. 3 (l) "Registered professional engineer" means an engineer 4 registered pursuant to the Professional Engineers Act (Chapter 7 5 (commencing with Section 6700) of Division 3 of the Business 6 and Professions Code). 7 (m) "Vector control" means any system of public improvements 8 or services that is intended to provide for the surveillance, 9 prevention, abatement, and control of vectors as defined in 10 subdivision (k) of Section 2002 of the Health and Safety Code and 11 a pest as defined in Section 5006 of the Food and Agricultural 12 Code. 13 (n) "Water" means any system of public improvements intended 14 to provide for the production, storage, supply, treatment, or 15 distribution of water from any source. 16 SEC. 2. Section 53751 is added to the Government Code, to 17 read: 18 53751. The Legislature finds and declares all of the following: 19 (a) The ongoing, historic drought has made clear that California 20 must invest in a 21 st century water management system capable 21 of effectively meeting the economic, social, and environmental 22 needs of the state. 23 (b) Sufficient and reliable funding to pay for local water projects 24 is necessary to improve the state's water infrastructure. 25 (c) Proposition 218 was approved by the voters at the November 26 5, 1996, statewide re_era Eleetion. general election. Some court 27 interpretations of the law have constrained important tools that 28 local governments need to manage storm water and drainage runoff. 29 (d) Storm waters are carried off in storm sewers, and careful 30 management is necessary to ensure adequate state water supplies, 31 especially during drought, and to reduce pollution. But a court 32 decision has exelude found storm water4iontfhoz subject to the 33 voter -approval provisions of Proposition 218 that apply to 34 property -related fees for ..,.__ er and fees, preventing many 35 important projects from being built. 36 (e) The court of appeal in Howard Jarvis Taxpayers Ass'n v. 37 City of Salinas (2002) 98 Cal.App.4th 1351 concluded that the 38 term "sewer," as used in Proposition 218, is "ambiguous" and 39 declined to use the statutory definition of the term "sewer-sy: —' 9s C-4 — 5 — SB 231 1 system," which was part of the then -existing law as Section 230.5 2 of the Public Utilities Code. 3 (f) The court in Howard Jarvis Taxpayers Ass'n v. City of 4 Salinas (2002) 98 Cal.AppAth 1351 failed to follow long-standing 5 principles of statutory construction by disregarding the plain 6 meaning of the term "sewer." Courts have long held that statutory 7 construction rules apply to initiative measures, including in cases 8 that apply specifically to Proposition 218 (see People v. Bustamante 9 (1996) (1997) 57 Cal.AppAth-69 ,, 693; Keller v. Chowchilla 10 Water Dist. (2000) 80 Cal.App.4th 1006). When construing 11 statutes, courts look first to the words of the statute, which should 12 be given their usual, ordinary, and commonsense meaning (People 13 v. Mejia (2012) 211 Cal.AppAth 586, 611). The purpose of 14 utilizing the plain meaning of statutory language is to spare the 15 courts the necessity of trying to divine the voters' intent by 16 resorting to secondary or subjective indicators. The court in 17 Howard Jarvis Taxpayers Ass'n v. City of Salinas (2002) 98 18 Cal.AppAth 1351 asserted its belief as to what most voters thought 19 when voting for Proposition 218, but did not cite the voter pamphlet 20 or other accepted sources for determining legislative intent. Instead, 21 the court substituted its own judgment for the judgment of voters. 22 (g) Neither the words "sanitary" nor "sewerage" are used in 23 Proposition 218, and the common meaning of the term "sewer 24 services " is not "sanitary sewerage." In fact, the phrase "sanitary 25 sewerage " is uncommon. 26 (h) Proposition 218 exempts sewer and water services from the 27 voter -approval requirement. Sewer and water services are 28 commonly considered to have a broad reach, encompassing the 29 provision of clean water and then addressing the conveyance and 30 treatment of dirty water, whether that water is rendered unclean 31 by coming into contact with sewage or by flowing over the built -out 32 human environment and becoming urban runoff. 33 (-g) 34 (i) Numerous sources predating Proposition 218 reject the notion 35 that the term "sewer" applies only to sanitary s, sewers and 36 sanitary sewerage, including, but not limited to: 37 (1) Section 230.5 of the Public Utilities Code. Code, added by 38 Chapter 1109 of the Statutes of 1970. 39 (2) Section 23010.3, whieh was added by Chapter 1193 of 40 the Statutes of 1963. 98 C-5 SB 231 1 (3) The Street Improvement Act of 1913 (repealed by Chapter 2 . 1913. 3 (4) L.A. 4 County Flood Control Distriet Dist. v. Southern-Galifomia Southern-GCal. 5 Edison Co. (1958) 51 Ca1.2d 331, where the California Supreme 6 Court stated that "no distinction has been made between sanitary 7 sewers and storm drains or sewers" 8 (5) TL.��Many other cases where the term "sewer" has 9 been used interchangeably to refer to both sanitary and storm 10 sewers in , ' , include, but are not limited 11 to, County of Riverside v. Whitlock (1972) 22 Cal.App.3d 863, 12 Ramseier v. Oakley Sanitary Dist. (1961) 197 Cal.App.2d 722, 13 and Torson v. Fleming (1928) 91 Cal.App. 168. 14 (6) Dictionary definitions of sewer, which courts have found to 15 be an objective source for determining common or ordinary 16 meaning, including V Webster's (1976), American Heritage 17 (1969), and Oxford English Dictionary (1971). 18 (11) 19 6) Prior legislation has affirmed particular interpretations of 20 words in Proposition 218, specifically Assembly Bill 2403 of the 21 2013-14 Regular Session (Chapter 78 of the Statutes of 2014). 22 (k) In Crawley v Alameda Waste Management Authority (2015) 23 243 Cal.App.4th 396, the Court of Appeal relied on the statutory 24 definition of "refuse collection services " to interpret the meaning 25 of that phrase in Proposition 218, and found that this interpretation 26 was further supported by the plain meaning of refuse. Consistent 27 with this decision, in determining the definition of "sewer" the 28 plain meaning rule shall apply in conjunction with the definitions 29 of terms as provided in Section 53750. 30 (i) 31 (l) The Legislature reaffirms and reiterates that the definition 32 found in Section 230.5 of the Public Utilities Code is the definition 33 of"sewer" or "sewer service" that should be used in the Proposition 34 218 Omnibus Implementation Act. 35 (m) Courts have read the Legislature's definition of "water" 36 in the Proposition 218 Omnibus Implementation Act to include 37 related services. In Griffith v Pajaro Valley Water Management 38 Agency (2013) 220 Cal.App.4th 586, the Court ofAppeal concurred 39 with the Legislature's view that "water service means more than 40 just supplying water" based upon the definition of water provided 98 C-6 — 7 — SB 231 1 by the Proposition 218 Omnibus Implementation Act, and found 2 that actions necessary to provide water can be funded through 3 fees for water service. Consistent with this decision, "sewer" 4 should be interpreted to include services necessary to collect, treat, 5 or dispose of sewage, industrial waste, or surface or storm waters, 6 and any entity that collects, treats, or disposes of any of these 7 necessarily provides sewer service. 31 9R C-7