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RPVCCA_SR_2010_04_06_15_Charter_CityCrrYOF MEMORANDUM RANCHO PALOS VERDES TO:HONORABLE MAYOR AND CITY COUNCIL MEMBERS DATE: FROM:CAROL W.LYNCH,CITY ATTORNEY and SHIRl KLIMA,ASSISTANT CITY ATTORNEY APRIL 6,2010 SUBJECT:CHARTER CITY REVIEWED:CAROLYN LEHR,CITY MANAGER RECOMMENDATION Receive and file this report and give Staff direction whether you wish to receive additional information about this topic. BACKGROUND The City Council adopted as one of the City's tactical goals that Staff should provide information about the advantages and disadvantages of becoming a charter city to the City Council by the end of April.This report was drafted in response to that direction. The following discussion includes general information about charter cities,the advantages and disadvantages of becoming a charter city,and the process for converting from a general law city to a charter city. DISCUSSION I.OVERVIEW OF CHARTER CITIES In California,there are two types of cities:general law cities and charter cities.The authority of a general law city is derived from the powers granted to it by the general laws adopted by the California Legislature and from the police power granted to it by the California Constitution.On the other hand,a charter city's powers are not defined or limited by the state's general laws.Instead,with respect to municipal affairs,a charter city's powers are defined by the city's own charter subject only to the limitations of the 15 - 1 Charter City Page 2 of 8 April 6,2010 state and federal constitutions.This is the primary advantage of becoming a charter city -as a charter city,a city would have the ability to adopt charter provisions or ordinances concerning its own municipal affairs without constraint by state statutes on the specific subjects covered in the charter. Article XI,section 5(a)of the California Constitution,provides: "It shall be competent in any city charter to provide that the city governed thereunder may make and enforce all ordinances and regulations in respect to municipal affairs,subject only to restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws." This is known as the "home rule"doctrine which reserves to a charter city the right to adopt and enforce its own laws,subject only to the conflicting provisions in the state or federal constitutions or preemptive state law on matters of statewide concern.Harman v.City and County of San Francisco,7 Cal.3d 150,161 (1972).Thus,a charter acts as an instrument of limitation on the broad power of charter cities over matters of municipal affairs.City of Glendale v.Tronsden,48 Cal.2d 93,98 (1957). The California Constitution does not define the term "municipal affair."For this reason, whether a particular subject is a "municipal affair"over which a charter city has authority or is a matter of "statewide concern"over which the Legislature has authority is a matter for the courts to decide on a case-by-case basis.Although the Legislature is neither empowered to determine what is a municipal affair nor to transform a municipal affair into one of statewide concern,the courts give the Legislature's intention great weight. Bishop v.City of San Jose,1 Cal.3d 56,64 (1969). The traditional approach by courts in defining a municipal affair is to categorize certain subjects as municipal affairs.The more recent trend,however,is to avoid "'compartmentalization,'that is,of cordoning off an entire area of government activity as either a 'municipal affair'or one of statewide concern."California Fed.Savings &Loan Assn.v.City of Los Angeles,54 Cal.3d 1,17 (1991).Accordingly,the concept of what is a municipal affair is fluid and changes over time,as issues of local concern may become statewide concerns.The task of determining whether a given activity is a municipal affair or one of statewide concern is an ad hoc inquiry in light of the facts and circumstances surrounding each case.Id.at 16. In California Fed.Savings &Loan,the California Supreme Court developed a four-step analysis to determining what is a municipal affair.First,the court must determine whether an actual conflict exists between the local law and the state statute.If it does not,a choice between the legal conclusions "municipal affair"and "statewide concern"is not required.Id.at 16.If a genuine conflict between the local and state legislation is found,then the court takes the second step of determining whether the local law 1213664-2 2 15 - 2 Charter City Page 3 of8 April 6,2010 implicates a municipal affair.Id.at 17.If the local law implicates a municipal affair,then the court must take the third step of examining whether the state statute involves extramural concerns that require paramount state control.Id.at 18.Finally,in evaluating the statewide concern under the Cal Fed case,the court must determine whether the state statute is reasonably related and narrowly tailored to the resolution of the statewide concern.Id.at 24.If a court finds that the state law posing the conflict fails to regulate an area of statewide concern,the charter city measure is a municipal affair and beyond the reach of state legislative enactment. Although not exhaustive,the following matters have been held to be of general or statewide concern,over which the Legislature has full authority:school systems (see Whisman v.San Francisco Unified School District,86 Cal.App.3d 782,789 (1978)); the regulation of traffic and vehicles (see California Vehicle Code section 21);franchises for telephone or telegraph lines (see Pacific Tel.&Tel.Co.v.City of Los Angeles,44 Cal.2d 272,280 (1955);licensing of members of a trade or profession (see City and County of San Francisco v.Boss,83 Cal.App.2d 445,449 (1948));tort claims against a governmental entity (see Helbach v.City of Long Beach,50 Cal.App.2d 242,247 (1942));the Ralph M.Brown Act (see California Government Code sections 54951 and 54953(a));and the exercise of the power of eminent domain (see Wilson v.Beville,47 Cal.2d 852,856 (1957)).Accordingly,the adoption of a charter by the City of Rancho Palos Verdes would generally not affect these or other matters that are determined to be of statewide concern. II.ADVANTAGES TO A CHARTER The main advantage to a becoming a charter city is that a charter allows a city more local control over its municipal affairs.Note,however,that a charter city is still subject to the general laws as passed by the Legislature on non-municipal affairs that are of statewide concern,such as traffic regulation and the other areas mentioned above.. Typically,a city charter will reserve for the city the greatest amount of power it can when it adopts a charter.To do so,the charter must include a declaration that the city intends to avail itself of the full power provided to charter cities by the California Constitution.If a city does not want to extend its power to the fullest extent granted by the California Constitution,that city may determine the breadth of its power according to its wishes. Although this memorandum does not discuss every area in which a charter city would be able to legislate,a charter city may legislate in the following areas:municipal elections,municipal initiative,referendum and recall,procedures for the adoption of ordinances,compensation for city officers and employees,public contracts and public financing.A few of those areas are discussed below. Form of Government.As a charter city,the City of Rancho Palos Verdes would be able to establish any form of government,including mayor/city manager form of government. 1213664-2 3 15 - 3 Charter City Page 4 of8 April 6,2010 City Elections.City charters may set forth unique criteria for city office so long as the criteria are not discriminatory.City charters may also establish election dates,rules and procedures,including requiring a majority number of votes in order to win an election.1 A charter city is not bound by state election laws or recall elections,but may adopt the general election law by reference.Either a general law or charter city may create voting districts pursuant to Government Code section 34871,2 but a city charter may also establish the process for selecting officers and the method for enacting local ordinances,and it may provide term limits,which Rancho Palos Verdes voters already adopted,and the requirements for a quorum. Compensation.The city charter may set salaries,expense reimbursement and benefit for its council members.However,Government Code section 53208.5 provides as a matter of statewide concern that the health and welfare benefits of any member of a legislative body of any city,including a charter city,shall be no greater than that received by non-safety employees of that public agency.Furthermore,pursuant to Government Code sections 53234 and 53235,if a charter city provides any type of compensation to members of its legislative body,then these officials must receive at least two hours of ethics training,just like their general law city counterparts. Public Contracts and Prevailing Wages.Charter cities are subject to the Public Contracts Code unless the charter city expressly provides that the Code does not apply. As for prevailing wages,charter cities are likely not currently subject to the prevailing wage laws unless they elect to be subject to such laws 3 ,if the project involves work out of the city limits,or if the project is otherwise of significant state interest.However,this rule is not without doubt.In December 2004,the California Supreme Court issued its decision in City of Long Beach v.Department of Industrial Relations,34 Cal.4th 942 (2004),a case in which it had the opportunity to reaffirm the long-standing rule that charter cities are substantially free from the requirement of paying prevailing wages on "public works"projects.In that case,the court of appeal held that the state's prevailing wage laws addressed matters of "statewide concern"and therefore applied to projects funded or subsidized by all public agencies,including charter cities.Upon review,the California Supreme Court reversed the decision of the court of appeal but decided the case on an alternative ground.Unfortunately,the Court avoided the issue of whether the prevailing wage law is a matter of such "statewide concern"that it would override a charter city's interests in conducting its municipal affairs. Property Transfer Tax.The courts have held that the subject of property transfer taxes is not one of statewide concern and is a municipal affair "which lies 'beyond the reach of 1 Pursuant to Elections Code section 10263,the candidate with the highest number of votes wins the election in a general law city.Alternatively,a charter city may choose to require a majority of votes to win, thus requiring a "run-off'election between the two candidates with the highest number of votes. 2 The creation of districts may limit:the election of members of the city council by voters of particular areas of the city;the candidates by requiring that they reside in the particular district;or both. 3 Discussions among city attorneys in the state indicate that several cities that became charter cities still required the payment of prevailing wages as a result of lobbying by unions. 1213664-2 4 15 - 4 Charter City Page 5 of 8 April 6,2010 legislative enactment'in the case of charter cities."Fielder v.City of Los Angeles,14 Cal.App.4th 137,146 (1993). School Funding.Charter cities may render financial assistance to schools.Berkeley Sch.Dist.v.City of Berkeley,141 Cal.App.2d 841,846-847 (1956).The amount or form of the financial assistance may be spelled out in the city charter,or the charter may simply grant the city council the discretion to provide the amount of assistance it sees fit.Madsen v.Oakland Unified Sch.Dist.,45 Cal.App.3d 574,579-80 (1975). III.DISADVANTAGES TO A CHARTER Along with the advantages,there are also perceived disadvantages to converting from a general law city to a charter city.First,formulating a charter requires a significant expenditure of time and effort.Second,the professional services utilized in drafting a charter may be costly,and conducting an election to consider the adoption of the charter is likewise time-consuming and expensive.Third,there is a transition period from the many years of municipal operation under the general law,and this may require procedural changes and staff training.Fourth,uncertainties may arise as to wh~ther specific matters are municipal concerns governed by the charter or statewide concerns governed by statute.This could result in exposure to legal challenges if an issue should arise in a "gray"area where the charter and general law may differ.There is also limited case law from which to evaluate legal exposure when applying charter language. Fifth,the city would not have the benefit of any new state legislation on matters of municipal concern unless action was taken by the city council to adopt that legislation, thus imposing a greater requirement on the city council.Finally,charter amendments require a vote of city residents,thus they are time-consuming and costly. Often times,a charter is supported if there is a particular problem that can be solved by adopting the charter city form of government.The adoption of a charter,however,can be divisive in a community.Charter provisions can be used by some in the community to limit the role of the city or to pursue a particular viewpoint that may not be similar to that of the city or city council.Also,as the courts review the powers of a charter city (as demonstrated by the Long Beach decision)there is the possibility of the "erosion"of those powers.Many of the differences or perceived advantages of a charter city may ultimately disappear. IV.PROCEDURE FOR BECOMING A CHARTER CITY There are two means by which a city may adopt a charter.The first is to elect a charter commission,which has the responsibility of debating over the provisions and drafting the charter.Alternatively,the city council may draft the charter.In either case,the charter is not adopted by the city until it is ratified by a majority vote of the city's voters. 1213664-2 5 15 - 5 Charter City Page 6 of8 April 6,2010 A.Charter Drafted by Elected Charter Commission Government Code sections 34450 through 34457 specify the procedures for when a charter commission proposes a charter.When using the charter commission option,the first step is to elect the charter commission.The election for choosing charter commissioners may be called either by a majority vote of the city council or by a petition signed by not less than fifteen percent (15%)of the registered voters within the city. See Cal.Gov't Code §34452(a).If a petition requests the formation of a charter commission,the authority in charge of the city's registration records must verify the signatures on the petition.See Cal.Gov't Code §34452(a).The expense of this verification must be provided by the city council.See Cal.Gov't Code §34452(a).If the petition is verified,the city council must call an election pursuant to California Elections Code sections 1000 and 10403.See Cal.Gov't Code §34452(a). Once it has been decided that a charter commission election will take place,candidates for commissioners must be nominated.Candidates for the office of charter commissioner are nominated either in the same manner as officers of the city or by petition.See Cal.Gov't Code §34454.A candidate for charter commissioner must be a registered voter of the city.See Cal.Gov't Code §34451. At an election for charter commission members,the voters will vote first on the following question:"Shall a charter commission be elected to propose a new charter?"See Cal. Gov't Code §34453.After voting on this question,the voters will then vote for the charter commission candidates.See Cal.Gov't Code §34453.If a majority of the voters vote for the formation of a charter commission,then the top fifteen (15) candidates for the office of charter commissioner will be organized as the city's charter commission.See Cal.Gov't Code §34453.No commission will be formed if less than a majority of voters votes for the election of a charter commission.See Cal.Gov't Code §34453.If any vacancy arises in a charter commission,it shall be filled by a mayoral appointment.See Cal.Gov't Code §34452(b). Once formed,the charter commission will have the responsibility of developing the city's charter.After a simple majority of commissioners has decided that the proposed charter is appropriate,the members of that majority must sign and file the charter with the city clerk's office in preparation for a vote by the city's electorate.See Cal.Gov't Code §34455.The charter commission does,however,have the option of submitting portions of the charter to the city's voters periodically instead of sending the whole charter at once.See Cal.Gov't Code §34462(b). After the charter (or portions of it)has been filed,it must be copied in type greater than 1O-point font and either mailed to all the voters of the city or made available to those citizens who wish to review it before the election.See Cal.Gov't Code §34456.The city may show the difference between existing provisions of law and the new charter through the use of distinguished type styles,but this is not required.See Cal.Gov't 1213664-2 6 15 - 6 Charter City Page 7 of8 April 6,2010 Code §34456. After the charter has been filed with the city clerk,the city council must decide whether to call a special election or to wait until the next established municipal election to submit the charter to the voters.See Cal.Gov't Code §34457.If the city council determines that a special election should be held,then it must call for that special election within 14 days of the charter being filed.See Cal.Gov't Code §34457.The special election must be set at least 95 days after the date from which the special election was called. See Cal.Gov't Code §34457.In any case,the charter must be sent to the voters within two years of the vote that formed the charter commission.See Cal.Gov't Code § 34462. B.Charter Drafted by City Council Alternatively,on its own motion,the city council may propose a charter and submit it to the voters for adoption.See Cal.Gov't Code §34458.In this approach,it becomes the responsibility of the city council to develop and draft the charter. The city council may then call a special election or allow the charter to be voted on at any established election date,as long as that election date is at least 88 days after the proposed charter was filed with the city clerk.See Cal.Gov't Code §34458;see also Cal.Elec.Code §9255. In either case (i.e.,the charter is drafted by a charter commission or the city council), the majority of voters must vote in favor of the proposed charter for the charter to be ratified.See Cal.Gov't Code §34459.Once an election date is set,the charter must be prepared for the ballot.The city council must then direct the city attorney's office to prepare an impartial analysis of the charter according to Elections Code Section 9280.4 Arguments for and against the charter may also be filed.See Cal.Elec.Code §§9281, 9282. Once the voters vote in favor of the charter proposal,it will be deemed ratified.The charter will not go into effect,however,until it has been filed and accepted by the Secretary of State.See Cal.Gov't Code §34459.After a charter is approved by a majority vote of the voters,the mayor and city clerk shall certify that the charter was submitted to the voters of the city and that it was approved by a majority vote.See Cal. Gov't Code §34460. Three copies of the ratified charter must be certified and authenticated by the mayor and the city clerk.One copy of the approved charter shall be filed with the county recorder's office and a second copy shall be kept in the city's archive.See Cal.Gov't Code §34460.These two copies shall include:(1)certified copies of all publications 4 If the charter affects the organization or salaries of the City Attorney's office,then the City Council may direct the City's elections official to prepare the analysis instead.Cal.Elec.Code §9280. 1213664-2 7 15 - 7 Charter City Page 8 of8 April 6,2010 and notices in connection with the calling of the election to propose the charter;(2) certified copies of any arguments for or against the charter proposal which were mailed to the voters;and (3)certified abstracts of the vote at the election on the charter proposal.See Cal.Gov't Code §34460.A third copy of the charter must be submitted to the Secretary of State.See Cal.Gov't Code §34460. CONCLUSION Whether a charter should be adopted is a policy question that should be resolved by the City Council in the light of its own perceptions about the importance of the various factors to be weighed in determining what is in the best interests of the City of Rancho Palos Verdes. To further assist the City of Rancho Palos Verdes in considering whether to convert from a general law city to a charter city,are several attached documents that provide additional information regarding charter cities.Exhibit 1 is a copy of a comparison chart obtained from the League of California Cities'website,which is entitled "General Law City v.Charter City."Exhibit 2 is a copy of the California statutes that relate to the enactment of a city charter,which have been cited in this memorandum.Exhibit 3 identifies charter cities in the State of California. We would be pleased to provide additional information in connection with the City's consideration of becoming a charter city. Attachments: Exhibit 1 -General Law City v.Charter City Exhibit 2 -Relevant California Statutes Exhibit 3 -California Charter Cities Exhibit 4 -Article dated March 4,2010 distributed recently in the City's Weekly Report 1213664-2 8 15 - 8 Exhibit 1:General Law City v.Charter City Ability to Govern Municipal Affairs Form of Government Elections Generally Methods of Elections R6876-0001\1214913vl.doc Bound by the state's general law,regardless of whether the subject concerns a municipal affair. State law describes the city's form of government For example,Government Code section 36501 authorizes general law cities be governed by a city council of five members,a city clerk,a city treasurer,a police chief,a fire chief and any subordinate officers or employees as required by law. City electors may adopt ordinance which provides for a different number of council members.Cal.Gov't section 34871.The Government Code also authorizes the "city manager"form of government.Cal.Gov't Code §34851. Municipal elections conducted in accordance with the California Elections Code.Cal.Elec. Code §§10101 et seq.. Generally holds at-large elections whereby voters vote for any candidate on the ballot. Cities may also choose to elect the city council "by"or "from"districts,so long as the election system has been established by ordinance and approved by the voters.Cal. Gov't Code §34871.Mayor may be elected by the city councilor by vote of the people. Cal.Gov't Code §§34902. Has supreme authority over "municipal affairs."Cal.Const.art.XI,§5(b). Charter can provide for any form of government including the "strong mayor," and "city manager"forms.See Cal.Const. art.XI,§5(b);Cal.Gov't Code §34450 et seq. Not bound by the California Elections Code. May establish own election dates,rules,and procedures.See Cal.Const.art.XI,§5(b); Cal.Elec.Code §§10101 etseq.. May establish procedures for selecting officers.May hold at-large or district elections.See Cal.Const.art.XI,§5(b). 15 - 9 City Council Member Qualifications Public Funds for Candidate in Municipal Elections Term Limits Vacancies and Termination of Office Council Member Compensation and Expense Reimbursement R6876-0001 \1214913vl.doc Minimum qualifications are: 1.United States citizen 2.At least 18 years old 3.Registered voter 4.Resident of the city at least 15 days prior to the election and throughout his or her term 5.If elected by or from a district,be a resident of the geographical area comprising the district from which he or she is elected. Cal.Elec.Code §321;Cal.Gov't Code §§ 34882, 36502;87 Cal.Op.Att'y Gen.30 (2004). No public officer shall expend and no candidate shall accept public money for the purpose of seeking elected office.Cal.Gov't Code §85300. May provide for term limits.Cal.Gov't Code §36502(b). An office becomes vacant in several instances including death,resignation, removal for failure to perform official duties, electorate irregularities,absence from meetings without permission,and upon non- residency.Cal.Gov't Code §§1770,36502, 36513. Salary-ceiling is set by city population and salary increases set by state law except for compensation established by city electors. See Cal.Gov't Code §36516.If a city provides any type of compensation or payment of expenses to council members, then all council members are required to have two hours of ethics training.See Cal. Gov't Code §§53234 -53235. Can establish own criteria for city office provided it does not violate the U.S. Constitution.Cal.Const.art.XI,§5(b),82 Cal.Op.Att'y Gen.6,8 (1999). Public financing of election campaigns is lawful.Johnson v.Bradley,4 Cal.4th 389 (1992). May provide for term limits.Cal.Const.art. XI,§5(b);Cal Gov't Code Section 36502 (b). May establish criteria for vacating and terminating city offices so long as it does not violate the state and federal constitutions. Cal.Const.art.XI,§5(b). May establish council members'salaries. See Cal.Const.art.XI,§5(b).If a city provides any type of compensation or payment of expenses to council members, then all council members are required to have two hours of ethics training.See Cal. Gov't Code §§53234 -53235. 15 - 10 Legislative Authority Resolutions Quorum and Voting Requirements Rules Governing Procedure and Decorum R6876-0001 \1214913vl.doc Ordinances may not be passed within five days of introduction unless they are urgency ordinances.Cal.Gov't Code §36934. Ordinances may only be passed at a regular meeting,and must be read in full at time of introduction and passage except when,after reading the title,further reading is waived. Cal.Gov't Code §36934. May establish rules regarding the procedures for adopting,amending or repealing resolutions. A majority of the city council constitutes a quorum for transaction of business.Cal. Gov't Code §36810. All ordinances,resolutions,and orders for the payment of money require a recorded majority vote of the total membership of the city council.Cal.Gov't Code §36936. Specific legislation requires supermajority votes for certain actions. Ralph Brown Act is applicable.Cal.Gov't Code §§54951,54953(a). Conflict of interest laws are applicable.See Cal.Gov't Code §87300 et seq.. May establish procedures for enacting local ordinances.Brougher v.Bd.of Public Works, 205 Cal.426 (1928). May establish procedures for adopting, amending or repealing resolutions.Brougher v.Bd.of Public Works,205 Cal.426 (1928). May establish own procedures and quorum requirements.However,certain legislation requiring supermajority votes is applicable to charter cities.For example, see California Code of Civil Procedure section 1245.240 requiring a vote of two-thirds of all the members of the governing body unless a greater vote is required by charter. Ralph Brown Act is applicable.Cal.Gov't Code §§54951,54953(a). Conflict of interest laws are applicable.See Cal.Gov't Code §87300 et seq.. May provide provisions related to ethics, conflicts,campaign financing and incompatibility of office. 15 - 11 Personnel Matters Contracting Services Public Contracts R6876-0001\1214913vl.doc May establish standards,requirements and procedures for hiring personnel consistent with Government Code requirements. May have "civil service"system,which includes comprehensive procedures for recruitment,hiring,testing and promotion. See Cal.Gov't Code §45000 et seq. Meyers-Milias-Brown Act applies.Cal.Gov't Code §3500. Cannot require employees be residents of the city,but can require them to reside within a reasonable and specific distance of their place of employment.Cal.Const.art.XI,§ 10(b). Authority to enter into contracts to carry out necessary functions,including those expressly granted and those implied by necessity.See Cal.Gov't Code §37103; Carruth v.City of Madera,233 Cal.App.2d 688 (1965). Competitive bidding required for public works contracts over $5,000.Cal.Pub.Cont.Code §20162.Such contracts must be awarded to the lowest responsible bidder.Pub.Cont. Code §20162.If city elects subject itself to uniform construction accounting procedures, less formal procedures may be available for contracts less than $100,000.See Cal.Pub. Cont.Code §§22000, 22032. Contracts for professional services such as private architectural,landscape architectural, engineering,environmental,land surveying, or construction management firms need not be competitively bid,but must be awarded on basis of demonstrated competence and professional qualifications necessary for the satisfactory performance of services.Cal. Gov't Code §4526. May establish standards,requirements,and procedures,including compensation,terms and conditions of employment for personnel. See Cal.Const.art.XI,§5(b). Meyers-Milias-Brown Act applies.Cal.Gov't Code §3500. Cannot require employees be residents of the city,but can require them to reside within a reasonable and specific distance of their place of employment.Cal.Const.art.XI, section 1O(b). Full authority to contract consistent with charter. May transfer some of its functions to the county including tax collection,assessment collection and sale of property for non- payment of taxes and assessments.Cal. Gov't Code §§51330,51334,51335. Not required to comply with bidding statutes provided the city charter or a city ordinance exempts the city from such statutes,and the subject matter of the bid constitutes a municipal affair.Pub.Cont.Code §1100.7; see R &A Vending Services,Inc.v.City of Los Angeles,172 Cal.App.3d 1188 (1985); Howard Contracting,Inc.v.G.A.MacDonald Constr.Co.,71 Cal.App.4th 38 (1998). 15 - 12 Payment of Prevailing Wages Finance and Taxing Power R6876-0001 \1214913vl.doc In general,prevailing wages must be paid on public works projects over $1,000.Cal.Lab. Code §1771.Higher thresholds apply ($15,000 or $25,000)if the public entity has adopted a special labor compliance program. See Cal.Labor Code §1771.5(a)-(c). May impose the same kinds of taxes and assessment as charter cities.See Cal.Gov't Code §37100.5. Imposition of taxes and assessments subject to Proposition 218.Cal.Const.art.xIlIC. Examples of common forms used in assessment district financing include: •Improvement Act of 1911.Cal.Sts. &High.Code §22500 et seq.. •Municipal Improvement Act of 1913. See Cal.Sts.&High.Code §§ 10000 et seq.. •Improvement Bond Act of 1915.Cal. Sts.&High.Code §§8500 et seq.. •Landscaping and Lighting Act of 1972.Cal.Sts.&High.Code §§ 22500 et seq.. •Benefit Assessment Act of 1982. Cal.Gov't Code §§54703 et seq.. May impose business license taxes for regulatory purposes,revenue purposes,or both.See Cal.Gov't Code §37101. May not impose real property transfer tax. See Cal.Const.art.XIIIA,§4;Cal.Gov't Code §53725;but see authority to impose documentary transfer taxes under certain circumstances.Cal.Rev.&Tax.Code § 11911(a),(c). Historically,charter cities have not been bound by state law prevailing-wage requirements so long as the project is a municipal affair,and not one funded by state or federal grants.Vial v.City of San Diego, 122 Cal.App.3d 346,348 (1981).However, there is a growing trend on the part of the courts and the Legislature to expand the applicability of prevailing wages to charter cities under an analysis that argues that the payment of prevailing wages is a matter of statewide concern.The California Supreme Court declined an opportunity to resolve the issue.See City of Long Beach v.Dept.of Indus.Relations,34 Cal.4th 942 (2004). Have the power to tax. Have broader assessment powers than a general law city,as well as taxation power as determined on a case-by case basis. Imposition of taxes and assessments subject to Proposition 218,Cal.Const.art.XIIIC,§ 2,and own charter limitations May proceed under a general assessment law,or enact local assessment laws and then elect to proceed under the local law. See J.W.Jones Companies v.City of San Diego,157 Cal.App.3d 745 (1984). May impose business license taxes for any purpose unless limited by state or federal constitutions,or city charter.See Cal.Const. art.XI,§5. May impose real property transfer tax;does not violate either Cal.Const art.XIIiA or California Government Code section 53725. See Cohn v.City of Oakland,223 Cal.App. 3d 261 (1990);Fielder v.City of Los Angeles,14 Cal.App.4th 137 (1993). 15 - 13 Streets &Sidewalks State has preempted entire field of traffic control.Cal.Veh.Code §21. Penalties &Cost Recovery May impose fines,penalties and forfeitures, with a fine not exceeding $1,000.Cal.Gov't Code §36901. Public Utilities/Franchises May establish,purchase,and operate public works to furnish its inhabitants with electric power.See Cal.Const.art.XI,§9(a);Cal. Gov't Code §39732;Cal.Pub.Util.Code § 10002. May grant franchises to persons or corporations seeking to furnish light,water, power,heat,transportation or communication services in the city to allow use of city streets for such purposes.The grant of franchises can be done through a bidding process,under the Broughton Act, Cal.Pub.Uti I.Code §§6001-6092,or without a bidding process under the Franchise Act of 1937,Cal.Pub.Util.Code §§6201-6302. State has preempted entire field of traffic control.Cal.Veh.Code §21. May enact ordinances providing for various penalties so long as such penalties do not exceed any maximum limits set by the charter.County of Los Ange/es v.City of Los Angeles,219 Cal.App.2d 838,844 (1963). May establish,purchase,and operate public works to furnish its inhabitants with electric power.See Cal.Const.art.XI,§9(a);Cal. Apartment Ass'n v.City of Stockton,80 Cal. App.4th 699 (2000). May establish conditions and regulations on the granting of franchises to use city streets to persons or corporations seeking to furnish light,water, power,heat,transportation or communication services in the city. Franchise Act of 1937 is not applicable if charter provides.Cal.Pub.Util.Code § 6205. Zoning R6876-0001 \1214913vl.doc Zoning ordinances must be consistent with general plan.Cal.Gov't Code §65860. Zoning ordinances are not required to be consistent with general plan unless the city has adopted a consistency requirement by charter or ordinance.Cal.Gov't.Code § 65803. 15 - 14 Exhibit 2:Relevant California Statutes Government Code §34450.Authorization Any city or city and county may enact,amend,or repeal a charter for its own government according to this article or Article 3 (commencing with Section 9255)of Chapter 3 of Division 9 of the Elections Code. Government Code §34451.Charter commission;proposals;eligibility of candidates The charter may be proposed by a charter commission chosen by the voters of the city or city and county,at any general or special election,but no person shall be eligible as a candidate for the commission unless he or she is a registered voter of the city or city and county. Government Code §34452.Election of charter commissioners;vacancies (a)An election for choosing charter commissioners may be called by a majority vote of the governing body of a city or city and county,or on presentation of a petition signed by not less than 15 percent of the registered voters of the city or city and county.The petition shall be verified by the authority having charge of the registration records of the city or city and county and the expenses of the verification shall be provided by the governing body thereof.The governing body shall call an election pursuant to Sections 1000 and 10403 of the Elections Code. (b)If any vacancy arises in a charter commission established for a city or city and county pursuant to this chapter,the vacancy shall be filled by an appointment by the mayor of the city or city and county. Government Code §34453.Questions submitted;effect of vote At an election the voters shall vote first on the question "Shall a charter commission be elected to propose a new charter?"and,secondly,for the candidates of the office of charter commissioner.If the first question receives a majority of the votes of the qualified voters voting thereon at the election,the 15 candidates for the office of charter commissioner receiving the highest number of votes shall forthwith organize as a charter commission.However,if the first question receives less than a majority of the votes of the qualified voters voting thereon at the election no charter commission shall be deemed to have been elected. Government Code §34454.Nomination of candidates for charter commission Candidates for the office of charter commissioner shall be nominated either in the same manner provided for the nomination of officers of the municipal or city and county government,or by petition substantially in the same manner provided by general laws R6876-0001 \1215667vl.doc 15 - 15 for the nomination by petition of candidates for public offices to be voted for at general elections. Government Code §34455.Proposed or amended charter;signatures;filing The charter commissioners shall propose a charter and may propose amendments to a charter,for the government of the city or city and county.The charter so prepared shall be signed by a majority of the charter commissioners and shall be filed in the office of the clerk of the governing body of the city or city and county. Government Code §34456.Printing and mailing of copies of charter;type styles In any city or city and county,the governing body shall cause copies of the charter to be printed in type of not less than 10-point.If the governing body causes copies of the proposed charter to be mailed to the voters,the text of the proposed charter may show the difference from existing provisions of law by the use of distinguishing type styles. Government Code §34457.Proposed charter;submission to the voters After the charter prepared by the charter commission has been filed in the office of the clerk of the governing body of the city or city and county pursuant to Section 34455,the proposed charter shall be submitted to the voters of the city or city and county at either a special election called within 14 days by the governing body for that purpose to be conducted at least 95 days after the date the special election is called,or at the next established municipal election date or at the next established election date pursuant to Section 1000 of the Elections Code,provided there are at least 95 days before the election. Government Code §34458.Proposal of governing body;election As an alternative to the procedure provided for in Sections 34450 to 34457,inclusive, the governing body of any city or city and county,on its own motion may propose or cause to be proposed,amend or cause to be amended,or repeal or cause to be repealed,a charter and may submit the proposal for the adoption,or the amendments or repeal thereof,to the voters at either a special election called for that purpose or at any established municipal election date or at any established election date pursuant to Section 1000 of the Elections Code,provided there are at least 88 days before the election. Government Code §34459.Charter proposal,amendment or repeal;ratification; acceptance and filing If the voters vote in favor of the charter proposal,amendment,or repeal,it shall be deemed to be ratified,but shall not take effect until accepted and filed by the Secretary of State pursuant to Section 34460. R6876-0001 \1215667vl.doc 15 - 16 Government Code §34460.Certification;authentication;filing;contents Three copies of the complete text of a charter proposal or of any amended or repealed section ratified by the voters of a city or city and county shall be certified and authenticated by the chairperson and the clerk of the governing body and attested by the city clerk,setting forth the submission of the charter to the voters of the city,and its ratification by them.One copy shall be filed with the recorder of the county in which the city is located,and one in the archives of the city.In the case of a city and county,one copy shall be filed with the recorder thereof,and one in the archives of the city and county.The third copy shall be filed with the Secretary of State.Each copy filed with the recorder of the county or city and county and in the archives of the city or city and county shall be filed with the following: (a)Certified copies of all publications and notices required of the city by this chapter or by the laws of this state in connection with the calling of an election to propose,amend, or repeal a city charter. (b)Certified copies of any arguments for or against the charter proposal,amendment, or repeal which were mailed to voters pursuant to Sections 9281 and 13303 of the Elections Code. (c)A certified abstract of the vote at the election at which the charter proposal, amendment,or repeal was approved by the voters. Government Code §34461.Secretary of state;acceptance and filing;publication; judicial notice A charter proposal,amendment,or repeal by the voters of a city or city and county and submitted to the Secretary of State in compliance with this chapter shall be accepted and filed by the Secretary of State.The charter proposal,amendment,or repeal shall be published in the statutes in a charter chapter series under the designation "Statutes of (year),Charter Chapter ."Under the chapter number,the date of the ratification election and the date of filing with the Secretary of State shall be indicated. After a charter proposal,amendment,or repeal is accepted and filed by the Secretary of State,the courts shall take judicial notice thereof. Government Code §34461.5.Repealed by Stats.1988,c.357,§9 Government Code §34462.Cities and counties;proposed or amended charters; submission to voters (a)A charter commission established for a city and county pursuant to this chapter shall complete a proposed or amended charter and submit the charter to the voters of the city and county within two years of the date of the election of the charter commissioners,and at the expiration of that period is abolished. R6876-0001 \1215667vl.doc 15 - 17 (b)A charter commission may submit portions of the proposed or amended charter to the voters periodically. Elections Code §9255.Charter proposals;submission to voters (a)The following city or city and county charter proposals shall be submitted to the voters at either a special election called for that purpose,at any established municipal election date,or at any established election date pursuant to Section 1000,provided that there are at least 88 days before the election: (1)A charter proposed by a charter commission,whether elected or appointed by a governing body.A charter commission may also submit a charter pursuant to Section 34455 of the Government Code. (2)An amendment or repeal of a charter proposed by the governing body of a city or a city and county on its own motion. (3)An amendment or repeal of a city charter proposed by a petition signed by 15 percent of the registered voters of the city. (4)An amendment or repeal of a city and county charter proposed by a petition signed by 10 percent of the registered voters of the city and county. (5)A recodification of the charter proposed by the governing body on its own motion, provided that the recodification does not,in any manner,substantially change the provisions of the charter. (b)Charter proposals by the governing body and charter proposals by petition of the voters may be submitted at the same election. (c)The total number of registered voters of the city or city and county shall be determined according to the county elections official's last official report of registration to the Secretary of State that was effective at the time the notice required pursuant to Section 9256 was given. R6876-0001 \1215667vl.doc 15 - 18 Adelanto Alameda Albany Alhambra Anaheim Arcadia Bakersfield Berkeley Big Bear Lake Buena Park Burbank Carlsbad Cerritos Chico Chula Vista Compton Culver City Cypress Del Mar Desert Hot Springs Dinuba Downey Eureka Exeter Folsom Fortuna Fresno Gilroy Glendale Grass Valley Hayward Huntington Beach Indian Wells Industry Inglewood Irvine Irwindale Kingsburg La Quinta Lemoore Lindsay Loma Linda Long Beach Los Alamitos R6876-000I\12I492I vI.doc Exhibit 3:California Charter Cities Los Angeles Marina Marysville Merced Modesto Monterey Mountain View Napa Needles Newport Beach Norco Oakland Oroville Pacific Grove Palm Desert Palm Springs Palo Alto Pasadena Petaluma Piedmont Placentia Pomona Port Hueneme Porterville Rancho Mirage Redondo Beach Redwood City Richmond Riverside Roseville Sacramento Salinas San Bernardino San Diego San Francisco San Jose San Leandro San Luis Obispo San Marcos San Mateo San Rafael San Ramon Sand City Santa Ana Santa Barbara Santa Clara Santa Cruz Santa Maria Santa Monica Santa Rosa Santee Seal Beach Shafter Signal Hill Solvang Stockton Sunnyvale Temple City Torrance Truckee Tulare Vallejo Ventura Vernon Victorville Visalia Vista Watsonville Whittier Woodlake Total Cities:114 15 - 19 • Exhibit 4 CHARTER CITIES:CHARTING THEIR OWN PATHS ... BUT NOT WITHOUT OBSTACLES Writtell by JT LOllg March 4,2010 As California's state government struggles to solve budget deficits and other critical problems in the state,voters seem eager to give their communities a greater degree of independence from state laws. On November 4,voters in Palmdale and EI Centro overwhelmingly approved charters for their cities,thus creating the 115th and 116th charter cities in the state. The steady trickle of new charter cities in the state threatens to become a flood,as at least a dozen of the 362 remaining "general law"cities in the state are considering charters that would potentially supersede state laws concerning government structure,election management,and contracting out services. But even as general law cities move to free themselves from state control over their local affairs,powerful interest groups at the capitol are venturing into local politics to blunt the expansion oflocal authority. What is a Charter City? Charter city status is included as an option in the state constitution based on the principle that a city,rather than the state,is in the best position to know what it needs and how to satisfy those needs. According to the League of California Cities primer Charter Cities vs.General Law Cities,"The benefit of becoming a charter:city is that charter cities have supreme authority over 'municipal affairs.'" Municipal affairs are usually defmed as: •Regulation of the police •Subgovernment •Conduct of city elections •Manner in which municipal officers are elected •Local taxes. However,this is not an exhaustive list and a charter city can rule over any number of issues not specifically spelled out in the charter if it includes language that declares the city intends to avail itself ofthe full power provided by the California Constitution. 15 - 20 That langqage can be drafted by a city governing board or an elected charter commission and then ratified by a majority of voters. Only when there is determined to be a "paramount state control"do state regulations on issues such as traffic and school regulation take precedence. Not a Silver Bullet Ruben Duran,city manager ofEI Centro,which passed its charter measure last week with a 60 percent approval,warns a charter is not a cure~al1.It simply optimizes local government;it doesn't fix a dysfunctional one. "It is not a panacea,"Duran said. What a charter will do is hold local government accountable so council members can't blame the state for things like having to hire out of area contractors. Local control over bidding was the impetus for El Centro's task force.The rural city was looking for ways to save money on contracting. The charter commission explored all options for two years and discovered that any exception to the state prevailing wage provision will not impact 90 percent of projects. Any projects that include federal or state funding or require high~end skills will still require paying higher wages.However saving money on that 10 percent of projects could help the city make their dollars go farther. The city will also be able to use design~build contracts without the state's convoluted requirements.This can reduce the amount of time required for bidding. Duran,who has worked in three other charter cities,pointed to a park restroom project that would have cost the city $140,000 under prevailing wage and came in at $110,000 without the provision."That $30,000 could go toward building another restroom in another park,"Duran said. The loss of the prevailing wage requirement could also attract more local bidders because they would not have to meet all the reporting requirements or carry two payroll systems based on the proj ect,Duran reasoned. The commission's analysis of prevailing versus going wage for a new $26 million water treatment plant did not show a huge savings because the technical work would require paying higher wages."Although.saving even alittle bit can be the difference between doing a project and not doing it,"Duran said. El Centro still has to adopt the norms and procedures that will shape government in the city.Duran plans to start with the generic wording used in the City of Vista and in League of California Cities documents and adopt it to fit E1 Centro. 15 - 21 In the future,the charter,which includes a requirement for a council-city manager form of government,would require a 4/5 vote of the council to make significant changes. "Our goal was to better control how local dollars are spent,"Duran said. Built in Flexibility In Palmdale,the charter measure passed with 82 percent in favor.The Los Angeles suburb began exploring the pros,and cons of charter status in May after a city councilman was elected to the legislature and a state mandate forced the city to hold an expensive special election to replace him."We were looking for flexibility,ways to save money," said Saynne Redifer,assistant to the city manager. The city held dozens of public outreach meetings and concluded adopting the city charter language without some of the more controversial items like exemption of prevailing wage requirements was the best way to achieve that flexibility.They came to this conclusion specifically because regional labor unions threatened to oppose and defeat the proposed charter if it exempted Palmdale from state prevailing wage mandates. A Political Process The city of Elk Grove near Sacramento is nearing the end ofa two-year process that included a task force and charter commission. Commission chair and real estate broker Jake Allen said the group looked at the option of directly electing a mayor,redistricting,rural boundary protections and taxpayer protections in the form of indebtedness limits.The group made its recommendations to council.He then watched it change contrary to the work he and other citizen-volunteers invested. Allen worries that the charter that is finally presented to voters in June of 2010 will be much different than the one recommended by the resident commission. Although the council originally didn't ask the commission to address the issue of prevailing wage,during one of the final hearings,it adopted language drafted explicitly by the Sacramento SierraBuilding Trades Council that would require both prevailing wage and apprenticeship programs on all city'funded projects. "The language effectively clears the field of any non-union companies,"said Jake Rambo,a Charter commissioner. "Adopting that language without regular staff analysis or citizen feedback violated the council's own standard procedures,"Rambo said. Rambo blamed the insertion on labor's contribution to three councilmen's campaigns. "Other cities need to be prepared for the onslaught of special interest aligned with labor 15 - 22 eager to push the same agenda,"'Rambo said. "We didn't believe that language on prevailing wage belonged in the charter,"Allen said. "That politicized the whole thing." Allen is waiting to see what charter language ends up on the ballot to determine whether he will spend the next year campaigning for the measure -or not. JTLong can be reached at jtlongandco@gmaiLcom 15 - 23