CC SR 20190507 03 - Charter City01203.0001/542612.7
RANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 05/07/2019
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA DESCRIPTION:
Consider the implications of, possible advantages of, and possible disadvantages of the
City of Rancho Palos Verdes further exploring whether to become a charter city.
RECOMMENDED COUNCIL ACTION:
(1) Receive and file this staff report, consider the implications of, possible advantages
of, and possible disadvantages of the City of Rancho Palos Verdes further
exploring whether to become a charter city, and provide such direction to City Staff
and the City Attorney regarding the same as the City Council deems appropriate .
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: William W. Wynder, City Attorney
REVIEWED BY: Gabriella Yap, Deputy City Manager
APPROVED BY: Doug Willmore, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Previous report to Council for Ad Hoc Committee, dated May 14, 2018
SUMMARY & BACKGROUND:
The City of Rancho Palos Verdes (“RPV”) was incorporated as a “general law” city in
1973. The Constitution of California permits cities, with approval of the voters, to become
“charter” cities by adopting a local “constitution,” known as a charter, under the XI § 5
“home rule” powers of our Constitution (“Article XI § 5”).
Article XI § 5 vests in charter cities plenary authority over their own local “municipal
affairs,” while recognizing the law supremacy of state law that legislate over matters
deemed to be of “statewide concern.” Once approved by the voters, a city charter would
have the same local force and effect as a State law, subject only to the limitations and
restrictions contained in the charter itself, the State and Federal Constitutions , and
legislative (or judicial) determinations that certain matters are of statewide concern such
that they preempt any city charter provision to the contrary. As a practical matter, the
fundamental purpose of a charter is to retain for a local community as much authority
from state encroachment as is legally permissible.
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In 2010 the voters of RPV rejected a proposed charter due to vagueness and questions
raised over a number of provisions. In 2018, the RPV Citizens Charter Committee (the
“Committee”) undertook a community process which involved a number of meetings of
the Committee and workshops with the public with the goal of developing and then
presenting a draft charter for Council consideration and possible placement on the
November 2018 ballot.
When the Committee presented the draft charter in May 2018, there was a consensus
that the draft charter was extensive, complex, and likely needed further careful review.
Moreover, the question of whether Rancho Palos Verdes wanted to move toward
becoming a charter city remained unresolved following that presentation. The City Council
has now requested that Staff and the City Attorney provide a follow-on report that would
consider and discuss the implications of, the possible advantages of, and the possible
disadvantages of becoming a “charter city.”
This report considers some of the possible “pros and cons” of charter city status, and
considers recent judicial decisions that evidence a continuing tension between what, in
law, constitutes uniquely “municipal affairs” (over which charter cities have historically
been viewed as having plenary authority) and what, in law, constitutes matters of
“statewide concern” (declared by either the State Legislature or the Courts as being
applicable in charter cities regardless of whether such matters intrude into areas
traditionally reserved to local legislative bodies).
DISCUSSION:
I. Potential for Conflicts With State Laws Declared to be of “Statewide
Concern”
Article XI § 5 (“Section 5”) is subdivided as follows:
• Subdivision (a) states, in relevant part, that charter cities “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.”
• Subdivision (b) articulates that charter cities can provide for “in
addition to those provisions allowable by this Constitution, and by the laws
of the State” regulation of the city police force, “subgovernme nt in all or part
of a city,” “conduct of city elections,” and “plenary authority” over the
appointment, compensation, qualifications, tenure, and removal of
municipal officers and employees.
The challenge for cities with charter provisions or ordinances in conflict with state law is
to establish that the subject matter of the local legislation is a municipal affair, and not a
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matter of statewide concern that would justify state interference with local legislative and
regulatory authority. A declaration by the State Legislature that the legislation relates to
a statewide concern and trumps charter city authority is not, in and of itself, dispositive –
a court must make that determination, as the “decision as to what area of governance are
municipal concerns and what are statewide concerns is ultimately a legal one.” (California
Federal Savings and Loan Assn. v. City of Los Angeles (1991) 54 Cal. 3d 1 [“Saving &
Loan”].)
Because the notion, codified in our State Constitutional, of what constitute matters of
unique municipal affairs versus matters of statewide concern is “not a fixed or static
[concept] but . . . changes with the changing conditions upon which [it is] to operate,” the
courts generally use a four-part test to determine whether a state law intrudes into a
charter city’s home rule authority under the Constitution. (Id.)
The analytical framework for resolving whether or not a matter falls within the home rule
authority of charter cities was well settled in Savings & Loan case. (Id.) First, a court
must determine whether the city charter provision or ordinance regulates an activity that
can be characterized as a “municipal affair.” (Id. at p. 16.) Second, the court “must satisfy
itself that the case presents an actual conflict between [local and state law].” (Id.)
Third, the court must decide whether the state law addresses a matter of “sta tewide
concern.” (Id. at p. 17.) Finally, the court must determine whether the law is “reasonably
related to . . . resolution” of that concern and “narrowly tailored” to avoid unnecessary
interference in local governance (Id. at p. 24.)
If a court finds that a particular state law does address a matter of statewide concern, in
a manner that is narrowly tailored to address such concern, then the conflicting charter
city provisions or ordinance ceases to be a “municipal affair” and the State Legislature is
not Constitutionally prohibited from addressing the statewide dimension by its own
tailored enactments. (Id. at p. 17.)
II. Recent Cases Illustrating the Potential For Conflicts Between Charter
Provisions and State Laws of “Statewide Concern”
A. City of Huntington Beach v. State of California, et al. (“Huntington
Beach case”)
• In October 2018, Huntington Beach was successful in pushing back against
the State regarding Senate Bill 54’s restrictions, which prohibit California law enforcement
agencies from using agency money or personnel to assist or cooperate with federal
authorities in the enforcement of Federal Immigration and Naturalization laws. (Gov’t
Code § 7284.6; City of Huntington Beach v. State et al., No. 30-2018-00984280, 2018
WL 7569064 (Cal. Super. Oct. 05, 2018).) However, this decision is of limited value
because it is an unpublished opinion of the Orange County Superior Court and not a
published opinion by a Court of Appeals.
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• In the Huntington Beach case, the charter city argued that the governance
and regulation of its police force is a per se municipal affair, based on its enumeration in
Article XI § 5(b). The superior court agreed, citing Supreme Court precedent that applied
the four-part test to the undefined municipal affair category of municipal activities
articulated in subdivision Article XI § 5(a), but not to the categories of activities
enumerated in subdivision Article XI § 5(b).
• The superior court also agreed with the City’s arguments that (1) the city’s
use of general fund dollars and city assets are municipal affairs; and (2) since the field of
immigration and naturalization is exclusively occupied by the federal government, the
state cannot claim a sufficient statewide interest to justify intruding on the charter city’s
home rule authority.
• The Huntington Beach case has been appealed to the Court of Appeals,
Fourth Appellate District, and it will most likely be many months before a final decision by
the courts is made, especially if the case is appealed to the California Supreme Court and
that Court accepts the case for final review.
B. City of Redondo Beach v. State of California, et al. (“Redondo
Beach case”)
In September 2018, Redondo Beach was successful in pushing back
against the State regarding application of the California Voter Participation Rights Act,
which mandates that cities align the dates of municipal elections with statewide elections,
to the charter city. (Elec. Code §§ 14050-14057; City of Redondo Beach v. State of
California, No. BS172218, (LASC, Sept. 26, 2018).) The city’s charter provides for
municipal elections in March of each odd-numbered year.
In that case, the city argued that the times at which municipal officers are
elected is not a matter of statewide concern, and that the act was not reasonably related
to or narrowly tailored to address the statewide interest in addressing low voter turnout.
The superior court agreed with the city’s arguments, ruling that the date of
local elections is a municipal affair, and granted the city’s writ of mandate enjoining the
state from enforcing the act against the city. Again, this decision is of limited value
because it is an unpublished opinion of the Los Angeles County Superior Court and not
a published opinion by a Court of Appeals. The Redondo Beach case has, likewise, been
appealed Court of Appeals, Second Appellate District.
C. Wendy Marquez, et al v. City of Long Beach (“Long Beach”)
Unlike in the Huntington Beach and Redondo Beach cases, in February
2019, the City of Long Beach was unsuccessful in pushing back against the State
regarding statewide minimum wage requirements for certain city employees. (Labor Code
§§1182.12, 1194; 8 CCR §§11040, 11100; Wendy Marquez, et al v. City of Long Beach,
(2019) 32 Cal. App. 5th 552.)
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In that case, the city argued that Article XI § 5 gives the charter city the
authority to set wages as a municipal affair, not subject to state regulation. Note that the
city’s constitutional authority to set compensation for its employees is enumerated in
Article XI § 5(b), similar to regulation of the police force in the Huntington Beach case.
However, in this case, the court concluded that the legislation setting a
statewide minimum wage, generally applicable to both private and public employees,
narrowly addresses the state’s interest in protecting the health and welfare of workers,
and is reasonably related to its purpose.
The court differentiated this case from a number of prevailing wage cases,
which the courts found to be in violation of Article XI § 5 for not being reasonably related
or narrowly tailored to a statewide interest. The court reasoned that the prevailing wage
laws had a greater impact on local control by requiring the payment of prevailing wages
(salary setting), whereas the minimum wage only sets the floor for compensation.
The Long Beach decision, unlike the two Superior Court decisions, is a
published opinion from the Second Appellate District, of the Court of Appeals (the district
which oversees the development of the law in the City of Rancho Palos Verdes).
III. Discussion of Possible Advantages & Disadvantages of Being a Charter City
A. Possible Advantages of Becoming a Charter City
Generally, Article XI § 5 grants charter cities control over “municipal affairs,” which
includes land use and zoning decisions. Local control over land use was one of the
primary reasons RPV incorporated in 1973 and is a motivating factor in the Council’s
decision to explore the option of becoming a charter city. Specifically, a city charter could
constrain the state from “borrowing” local funds to balance its budget shortfalls like it has
in the past (e.g. protecting RPV’s transient occupancy tax, provided for in Chapter 3.16
of the RPVMC).
Additionally, city charters can include provisions to prevent abuses of power, such
as limiting council and staff compensation, regulating gifts of public funds, and providing
expanded public review of new ordinances, etc. City charter provisions can provide
specific requirements and/or a general set of guidelines and an opportunity to make
community-specific decisions regarding different issues deemed to be “municipal affairs.”
Some advantageous ways a charter city may exercise its independence from the state
include:
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Form of Government State law provides for the city council form of government
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May establish
alternative forms of
government
and authorizes a city manager form of government.
A city charter can provide for any form of government
including “strong mayor,” “city manager” or hybrid forms.
See Cal. Const. Art. XI, § 5(b), Cal. Gov’t Code § 34450,
et seq.
City Elections
May establish own
election dates, rules
and procedures
May establish public
financing of
campaigns
A charter city may establish its own election dates, rules,
and procedures, including:
the number of signatures required on an initiative or
referendum;
the majority number of votes in order to win a council
seat at an election;
procedures for selecting officers; and
city council member qualifications.
See Cal. Const. art. Xl, § 5(b); Elec. Code § 10101 et seq.
Charter cities may provide for public financing of election
campaigns. See Johnson v. Bradley, 4 Cal. 4th 389 (1992).
City Council Procedures
May establish
procedures for
enacting ordinances
and resolutions
May establish quorum
requirements
City council procedures are generally considered municipal
affairs, and charter cities may adopt certain procedures
that allow for more efficient and cost-effective city
operations, including:
The mode and manner of passing ordinances and
resolutions, such as requiring a second reading.
See Adler v. City Council of City of Culver City, 184
Cal. App. 2d 763, 768 (1960); Brougher v. Board of
Public Works, 205 Cal. 426;
quorum requirements.
Certain supermajority voting requirements apply to
charter cities. See Gov’t Code §§ 3500, 1245.240.
Employment and
Compensation
May establish vacancy
and termination rules
May establish council
member salaries
The appointment, qualifications, compensation and
removal of city employees are generally municipal affairs.
Cal. Const. Art. XI, § 5(b). A charter city may establish its
own rules and procedures for vacating and terminating city
officers.
However, if a charter city provides any type of
compensation to members of its legislative body, it must
abide by ethics training requirements. Gov’t Code §§
53234, 53235. Additionally, the health and welfare benefits
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More freedom to
establish employment
rules
of any city council member shall be no greater than those
received by non-safety employees of that public agency.
Gov’t Code § 53208.5.
However, charter cities must comply with state minimum
wage requirements, which is a matter of statewide
concern. Marquez v. City of Long Beach, 32 Cal. App. 5th
552 (2019).
Taxing Power
Broader Assessment
Powers
State law provides the mechanisms by and limitations for
which a city can impose taxes and assessments. See Cal.
Gov't Code § 37100.5. For instance, a city may impose
business license taxes for limited purposes only, and may
not impose real property transfer taxes. See Cal. Const. art.
XIIIA, § 4: Cal. Gov’t Code §§ 37101, 53725.
A charter city has broader assessment powers and its
taxation power may be determined on a case-by-case
basis. A charter city may enact and proceed under its own
local assessment laws, may impose business license taxes
for any purpose, and may impose real property transfer
taxes. See Cal. Const. art. Xl, § 5(b); J. W. Jones
Companies v. City of San Diego, 157 Cal. App. 3d 745
(1984).
Gifts of Public Funds
No Restrictions on
gifts of public funds
A charter city need not abide by Constitutional restriction on
gifts of public funds for private purposes. See Sturgeon v.
County of Los Angeles, 167 Cal. App. 4th 630, 637 (2008).
Planning and Land Use
Generally not bound
by State Planning and
Land Use law
The State Planning and Land Use Law (Gov't Code §
65000, et seq.) exempts charter cities from application of
its local planning and zoning requirements and regulations,
unless otherwise provided. See Gov't Code §§ 65700,
65803.
State laws and the courts have made certain specific land
use and zoning provisions applicable to charter cities.
Some of these efforts have been legally tested to
determine whether they are genuine matters of statewide
concern, and others have not.
However, charter cities are subject to the Cal. Building
Code, incorporated into the State Housing Law. Gov't
Code §§ 17922, 17950; Lippman v. City of Oakland, 19
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Cal. App. 5th 750 (2017).
However, a charter city's General Plan must contain all
mandatory elements. Gov't Code §§ 65300, 65302.1.
However, charter cities are bound by the consistency
requirement between the city’s General Plan and
specific development plans. See Gov't Code § 65860(d)
(recently changed after appeals court decision finding
that charter cities were excluded from consistency
requirement); The Kennedy Com. v. City of Huntington
Beach, 16 Cal. App. 5th 841, 859 (2017).
However, charter cities must follow the minimum
procedural standards for conducting zoning hearings
provided in Gov't Code § 65804. See O'Loane v.
O'Rourke, 213 Cal. App. 2d 774, 783 (1965).
However, charter cities must comply with requirements
for low and moderate income housing within coastal
zones. Gov't Code §§ 65700(b), 65590.
However, charter cities are prohibited from enacting
ordinances that discriminate against residential
development because of the method of financing, the
race, sex, color, religion, national origin, ancestry, age,
or economic status of a tenant occupant. Gov't Code §
65008(g).
However, charter cities are subject to and protected by
time limitations on actions challenging land use planning
and zoning decisions. Gov't Code § 65009(f); 1305
Ingraham, LLC v. City of Los Angeles - Feb. 15, 2019,
Second District, Div. Four (2019 S.O.S. 1171).
However, charter cities must comply with standards for
approving housing developments, including refraining
from imposing design criteria that inhibit the
development of affordable housing, and refraining from
imposing certain fees for public capital facility
improvements related to a development project. Gov’t
Code §§ 65913.2, 65913.8, 65913.9.
However, charter cities must provide density bonuses,
incentives, and other concessions for low and moderate-
income housing development. Gov't Code § 65918.
However, charter cities are subject to the provisions of
the Permit Streamlining Act, which governs the review
and approval of development projects. Gov’t Code §
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65921.
However, charter cities are subject to limits and
procedures regarding the adoption of interim zoning
ordinances. Gov't Code § 65858.
However, charter cities are subject to the provisions of
the development agreement statute. Gov't Code §
65864; Ctr. for Cmty. Action & Envtl. Justice v. City of
Moreno Valley, 26 Cal. App. 5th 689 (2018).
However, charter cities are subject to the Subdivision
Map Act. See Gov’t Code § 66410 et seq.; Santa Clara
County Contractors Ass'n v. City of Santa Clara, 232
Cal. App. 2d 564, 575-78 (1965).
However, charter cities are subject to the provisions of
the California Environmental Quality Act. Pub. Res.
Code § 21000 et seq..
City Property
More freedom to
acquire and dispose of
parkland
More freedom to set
lease terms for city
property
The acquisition, disposition and use of municipal property
is a municipal affair, and charter cities have authority to
control, govern and supervise their own parks. See Simons
v. City of Los Angeles, 63 Cal. App. 3d 455, 468 (1976).
A charter city may set its own conditions for granting a
lease of city property for a term longer than that provided
by state law (55 years). See Gov't Code § 37380.
Public Works/Utilities
More freedom for
granting franchises
A charter city may create its own procedures for granting
public utility franchises. City of Santa Cruz v. Pacific Gas &
Elec. Co., 82 Cal. App. 4th 1167 (2000).
Public Contracts
Not bound by lowest
bidder requirement
May use design-build
process
A charter city may, explicitly in its charter, exempt itself
from the Public Contract Code, thereby lifting the
requirements of the bidding statutes for project contracts
that cover municipal affairs. See Pub. Cont. Code § 1100.7.
This permits a charter city to select particular vendors from
which it elicits bids or opt to work with someone other than
the lowest bidder on a contract, unless the city obtains
funding from a source that requires adherence to state
bidding procedures.
Prevailing Wages
Historically, charter cities have not been bound by state
prevailing wage requirements, so long as the project is a
municipal affair, and not one funded by state or federal
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Not bound by
prevailing wage
requirements for
locally funded
municipal projects
grants. See State Bldg. & Constr. Trades Council of
California v. City of Vista, 54 Cal. 4th 547 (2012);
However, this exemption is not absolute, and the
legislature may use state funding or financial assistance to
require charter cities to comply with the prevailing wage
law. City of El Centro v. Lanier, 245 Cal. App. 4th 1494
(2016).
Municipal Contracting
Full authority to
contract out city
services
May transfer certain
functions to county
State law limits a general law city from contracting out
“special” services and prohibits contracting out for services
a general law city is able to provide itself.
See Gov’t Code § 37103; Costa Mesa City Employees’
Assn. City of Costa Mesa, 209 Cal.App.4th 298, 312-13
(2012).
A charter city may have full authority to contract out city
services. Municipal contracting procedures are municipal
affairs. First Street Plaza Partners v. City of Los Angeles,
65 Cal. App. 4th 650, 661 (1998).
A charter city may transfer some functions to the county
government, including tax collection, assessment collection
and sale of property for non-payment of taxes and
assessments. Cal. Gov’t Code §§ 51330, 51334, 51335.
Penalties
May exceed state law
max for penalties
A charter city may enact ordinances providing for penalties
beyond the maximum set by state law ($1,000). County of
Los Angeles v. City of Los Angeles, 219 Cal. App. 2d 838,
844 (1963).
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B. Possible Disadvantages of Becoming a Charter City
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Expense or Process Depending on the process used and the relative complexity of
the charter adopted, formulating a charter, educating the
public, and conducting an election may require significant
expenditure of time, effort, and the cost of an election.
A charter city may need to adopt new ordinances/resolutions
in order to comply with newly adopted charter provisions.
“Municipal Affairs” v.
Matters of “Statewide
Concern” Disputes
Uncertainties will certainly continue to arise as to whether
specific matters are “municipal affairs,” governed by the
charter or matters of “statewide concerns,” governed by state
law. This could result in exposure to legal challenges if an
issue should arise in a “gray” area where the charter and
general law may be incompatible.
Additionally, there is an ongoing trend by the state legislature
to enact laws that apply to charter cities notwithstanding that
such laws regulate matters that are uniquely “municipal
affairs.”
There is limited case law from which to evaluate legal
exposure or to interpret charter language and charter city
ordinances. The risk is lessened if the City is willing to comply
with general law provisions in the event of a conflict.
Charter Amendments
Can be expensive
and time
consuming
May result in
special interest
initiatives and
referendums
Charter amendments require the same process as charter
adoption (a vote of city residents). Gov’t Code § 34459,
Elections Code § 4080. Charter amendments can be time-
consuming and costly. Generally, the more basic the charter
is, the fewer amendments will be required.
A charter can be amended by initiatives signed by just 15% of
the city electorate. Cal. Elec. Code § 9255. This can lead to
special interest proposals.
May need to adopt
new legislation to gain
benefit of new state
laws.
New State laws may make certain city codes irrelevant or
outdated for a general law city.
A charter city may need to adopt a new ordinance or resolution
or even amend its charter to gain similar benefits. For example,
the State legislature changed the date of the Presidential
primary several years ago. If a charter city wanted to
consolidate its local elections with the primary, it needed to
amend its charter or ordinance setting a specific election date.
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C. Other Possible Implications
Charter cities are subject to state law on non-municipal affairs that are “naturally”
of statewide concern and on legislative enactments by the State that are expressly made
applicable to charter cities. General statutory schemes deemed to be of statewide
concern include, among others: the California Vehicle Code; the Brown Act; the Public
Records Act; franchises for telephone service; claims against public entities; and the
exercise of the power of eminent domain.
[END OR MEMORANDUM]
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