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CC - Item 6G - Possible Opposition to Senate Bill 231ROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: BILL R. MANIS, CITY MANAGER,,,4,<" DATE: MARCH 28, 2017 SUBJECT: POSSIBLE OPPOSITION TO SENATE BILL 231 (AGENDIZED BY COUNCILMEMBER CLARK) SUMMARY Councilmember Clark is requesting that the City Council oppose Senate Bill (SB) 231. This bill is similar to SB 1298 that the City Council opposed on August 23, 2016. The cities of Glendora, Claremont, Monrovia, and Duarte opposed the original SB 1298 bill as well. STAFF RECOMMENDATION That the City Council direct staff to send a letter opposing SB 231. FISCAL IMPACT — None STRATEGIC PLAN IMPACT — None PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: Marc Donohue, City Clerk Attachment A: Draft Opposition Letter Attachment B: Article — Howard Jarvis Taxpayers Association Attachment C: SB 231 Language Attachment D: SB 1298 Opposition Letter ITEM NUMBER: Attachment A Draft Opposition Letter MAYOR: SANDRA ARMENIA MAYOR PRO TEM: POLLY LDW COUNCIL MEMBERS: WILLIAM ALARCON MARGARET CLARK STEVENLY March 28, 2017 Members of the State Legislature California State Capitol 10t` and L Streets Sacramento, CA 95814 RE: SB 231 (Hertzberg) — Oppose Dear Members of the State Legislature: I 8838 E. VALLEY BOULEVARD P.O BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 We are asking you to join the City of Rosemead in opposing Senate Bill 231 (Hertzberg). This bill would remove the right of voters to vote on taxes for storm water simply by changing the definition of sewer. We feel that the voters were clearly exempting from voting charges for sanitary sewer that takes our sewage to treatment. They did not exempt charges for cleaning up the water from rainstorms. While we do appreciate the Senator's endeavors to help cities and counties that are facing enormous costs for storm water cleanup, a bill that makes such drastic changes needs to be voted on by the voters. Groups pushing for these taxes had proposed to put on last November's ballot a constitutional amendment to change Prop 218, but backed off when the Attorney General's summary said it would allow taxes "without voter approval". Knowing the voters would not like that, they withdrew it. We were led to believe that the current mandates upon cities were cost effective, satisfactory to the environmental groups, cleaned up the storm water, and were standard for all cities in California. We find this not to be accurate. Los Angeles County is faced with $20 billion in Efficient Water Management Practices (EWMPS) that no other county has to implement and which could actually pollute the ground water. There are also environmental groups' that are actually suing over the EWMPS. Because the bill would re -define sewer, which is exempt under Prop 218 to include storm water, SB 231 would allow virtually any storm water taxes to pass without going to the voters. So in essence, the County's 2013 "Clean Beaches" proposal, which imposed astronomical costs on businesses and non -profits but was withdrawn due to tremendous pressure by opponents, would pass easily. Thus, the $20 billion program that LA County is facing which has serious problems mentioned above could put a huge burden on our low-income families and struggling businesses. The City of Rosemead urges a no vote on this bill and asks that you uphold the right of voters to approve new taxes being placed upon them. Sincerely, Sandra Armenta Mayor CC: Rosemead City Council Assemblymember Ed Chau — Fax: (916) 319-2149 Assemblymember Chris Holden — Fax: (916) 319-2141 Senator Ed Hernandez Fax: (916) 319-2143 Jennifer Quan, Regional Public Affairs Manager (via email) Meg Desmond, League of California Cities, mdesmondeacities.org California Contract Cities — Fax: (562) 622-9555 Independent Cities Association — Fax: (310) 321-7810 Joe A. Gonsavles & Son (via email) California State Legislature Attachment B Article — Howard Jarvis Taxpayers Association Sen. Hertzberg targets homeowners with higher water and sewer rates Feb.11,2017 Updated Feb. 12, 2017 11:30 a.m. By JON COUPAL / Contributing writer It's no secret that tax -and -spend interests have hated Proposition 13 since its adoption by the voters in 1978. Immediately after passage, Prop. 13 was the target of numerous lawsuits and legislative proposals seeking to create loopholes that would allow government to grab more tax dollars from California citizens. These constant attacks compelled taxpayer advocates to go back to the voters with multiple initiatives to preserve the letter and spirit of Prop. 13. These included Prop. 62 in 1986 (voter approval for local taxes); Prop. 218 (closing loopholes for local fees and so-called "benefit assessments"); and Prop. 26 (requiring "fees" to have some nexus to the benefits conferred on the fee payers). However, the latest tax -grabber to treat homeowners as ATMs is state Senator Bob Hertzberg, D -Van Nuys. If he gets his way, Californians will be spending a lot more on water and sewer service. He seeks to do away with the critical "cost of service" requirements for water rates as well as treat "stormwater runoff' (the rain that runs down street gutters) the same as "sewer service," opening the door to virtually unlimited — and unvoted — sewer rates. As to the latter proposal, Hertzberg has introduced Senate Bill 231. This proposal would attempt to rewrite Prop. 218 with a statute to allow for stormwater to be included under the definition of "sewer," meaning that it would no longer be subject to a Prop. 218 election. This is not a minor issue and, in fact, when the city of Salinas attempted to charge residents for "storm water runoff' as part of their sewer bill, the Howard Jarvis Taxpayers Association sued and won. The published decision in HJTA v. City of Salinas was a significant victory for homeowners as the city was attempting to load up its "sewer" service with all kinds of costs unrelated to sewer service including street sweeping. Of course, the real problem with SB231 is that it attempts to rewrite part of the California Constitution with a mere statute. This is a big no -no. The city of Salinas decision was an interpretation of Prop. 218 which added Articles XIIIC and MID to the California Constitution. Courts are likely to take a dim view of a legislative override of their interpretation of the state constitution. To add insult to injury, Hertzberg has also introduced Senate Constitutional Amendment 4. While this bill is basically intent language and needs to be refined, the point of this bill will be to undermine Prop. 218's proportionality and cost of service requirements. Under. the state Constitution, rates for property related fees (water/sewer/refuse) need to be equivalent to the cost of providing the service. Taxpayers fear that SCA 4 will ultimately overrule another taxpayer court victory in the city of San Juan Capistrano which upheld the concept of "cost of service." This decision has been misinterpreted by Gov. Brown and the media as prohibiting the ability of water districts to create tiered water rates. In truth, tiered water rates — charging more for higher levels of water use — can be legal if the municipality can demonstrate that the extra water costs more. What Hertzberg and big government bureaucrats want to do, however, is to use water rates as another opportunity to engage in social engineering. They wish to charge those water users they perceive as "bad" more per gallon than those users they perceive as "good." The beauty of "cost of service" rates, however, is that they are fair for everyone: You pay for what you use. More importantly, when government deviates from "cost of service" requirements, it expands the opportunity for them to do what they do best — extract more money from citizens. Jon Coupal is president of the Howard Jarvis Taxpayers Association Attachment C SB 231 Language 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 introduced, 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 XII C and Article XIII D of 4 the California Constitution and this article: article, the following 5 words have the following meanings, and shall be read and M SB 231 —2- 1 interpreted in light of the findings and declarations contained in 2 Section 53751: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 (a) "Agency" means any local government as defined in subdivision (b) of Section 1 of Article XIII C of the California Constitution. (b) "Assessment" means any levy or charge by an agency upon real property that is based upon the special benefit conferred upon the real property by a public improvement or service, that is imposed to pay the capital cost of the public improvement, the maintenance and operation expenses of the public improvement, or the cost of the service being provided. "Assessment" includes, but is not limited to, "special assessment," "benefit assessment," "maintenance assessment," and "special assessment tax." (c) "District" means an area that is determined by an agency to contain all of the parcels that will receive a special benefit from a proposed public improvement or service. (d) "Drainage system" means any system of public improvements that is intended to provide for erosion control, for landslide abatement, or for other types of water drainage. (e) "Extended," when applied to an existing tax or fee or charge, means a decision by an agency to extend the stated effective period for the tax or fee or charge, including, but not limited to, amendment or removal of a sunset provision or expiration date. (f) "Flood control" means any system of public improvements that is intended to protect property from overflow by water. (g) "Identified parcel" means a parcel of real property that an agency has identified as having a special benefit conferred upon it and upon which a proposed assessment is to be imposed, or a parcel of real property upon which a proposed property -related fee or charge is proposed to be imposed. (h) (1) "Increased," when applied to a tax, assessment, or property -related fee or charge, means a decision by an agency that does either of the following: (A) Increases any applicable rate used to calculate the tax, assessment, fee, or charge. (B) Revises the methodology by which the tax, assessment, fee, or charge is calculated, if that revision results in an increased amount being levied on any person or parcel. (2) A tax, fee, or charge is not deemed to be "increased" by an agency action that does either or both of the following: 99 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 -3— SB 231 (A) Adjusts the amount of a tax, fee, or charge in accordance with a schedule of adjustments, including a clearly defined formula for inflation adjustment that was adopted by the agency prior to November 6, 1996. (B) Implements or collects a previously approved tax, fee, or charge, so long as the rate is not increased beyond the level previously approved by the agency, and the methodology previously approved by the agency is not revised so as to result in an increase in the amount being levied on any person or parcel. (3) A tax, assessment, fee, or charge is not deemed to be "increased" in the case in which the actual payments from a person or property are higher than would have resulted when the agency approved the tax, assessment, fee, or charge, if those higher payments are attributable to events other than an increased rate or revised methodology, such as a change in the density, intensity, or nature of the use of land. (i) "Notice by mail" means any notice required by Article XIIIC or XIII D of the California Constitution that is accomplished through a mailing, postage prepaid, deposited in the United States Postal Service and is deemed given when so deposited. Notice by mail may be included in any other mailing to the record owner that otherwise complies with Article X111 or XIIID of the California Constitution and this article, including, but not limited to, the mailing of a bill for the collection of an assessment or a property -related fee or charge. 0) "Record owner" means the owner of a parcel whose name and address appears on the last equalized secured property tax assessment roll, or in the case of any public entity, the State of California, or the United States, means the representative of that public entity at the address of that entity known to the agency. (k) "Sewer" means services and systems provided by all real estate, fixtures, andpersonalproperty owned, controlled, operated, or managed in connection with or to facilitate sewage collection, treatment, or disposition for sanitary or drainage purposes, including lateral and connecting sewers, interceptors, trunk and outfall lines, sanitary sewage treatment or disposal plants or works, drains, conduits, outlets for surface or storm waters, and any and all other works, property, or structures necessary or convenient for the collection or disposal ofsewage, industrial waste, or surface 99 SB 231 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 MWIM or storm waters. "Sewer system "shall not include a sewer system that merely collects sewage on the property of a single owner. (k� (l) "Registered professional engineer" means an engineer registered pursuant to the Professional Engineers Act (Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code). (lj— (m) "Vector control" means any system of public improvements or services that is intended to provide for the surveillance, prevention, abatement, and control of vectors as defined in subdivision (k) of Section 2002 of the Health and Safety Code and a pest as defined in Section 5006 of the Food and Agricultural Code. (rd) (n) "Water" means any system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water from any source. SEC. 2. Section 53751 is added to the Government Code, to read: 53751. The Legislature finds and declares all of the following: (a) The ongoing, historic drought has made clear that California must invest in a 21st century water management system capable of effectively meeting the economic, social, and environmental needs of the state. (b) Sufficient and reliable funding to pay for local water projects is necessary to improve the state's water infrastructure. (c) Proposition 218 was approved by the voters at the November 5, 1996, statewide General Election. Some court interpretations of the law have constrained important tools that local governments need to manage storm water and drainage runoff. (d) Storm waters are carried off in storm sewers, and careful management is necessary to reduce pollution. But a court decision has excluded storm water from those provisions of Proposition 218 that apply to property -related fees for sewer and water, preventing many important projects from being built. (e) The court of appeal in Howard Jarvis Taxpayers Ass'n v. City of Salinas (2002) 98 Cal.AppAth 1351 concluded that the term "sewer," as used in Proposition 218, is "ambiguous" and declined to use the statutory definition of the term "sewer system" 99 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 -5— SB 231 which was part of the then -existing law as Section 230.5 of the Public Utilities Code. (f) The court in Howard Jarvis Taxpayers Ass'n v. City of Salinas (2002) 98 Cal.App.4th 1351 failed to follow long-standing principles of statutory construction by disregarding the plain meaning of the term "sewer." Courts have long held that statutory construction rules apply to initiative measures, including in cases that apply specifically to Proposition 218 (see People v. Bustamante (1996) 57 Cal.App.4th 693, Keller v. Chowchilla Water Dist. (2000) 80 Cal.App.4th 1006). When construing statutes, courts look first to the words of the statute, which should be given their usual, ordinary, and commonsense meaning (People v. Mejia (2012) 211 Cal.App.4th 586, 611). The purpose of utilizing the plain meaning of statutory language is to spare the courts the necessity of trying to divine the voters' intent by resorting to secondary or subjective indicators. The court in Howard Jarvis Taxpayers Ass'n v. City of Salinas (2002) 98 Cal.App.4th 1351 asserted its belief as to what most voters thought when voting for Proposition 218, but did not cite the voter pamphlet or other accepted sources for determining legislative intent. Instead, the court substituted its own judgment for the judgment of voters. (g) Numerous sources predating Proposition 218 reject the notion that the term "sewer" applies only to sanitary sewers, including, but not limited to: (1) Section 230.5 of the Public Utilities Code. (2) Section 23010.3, which was first added by Chapter 1193 of the Statutes of 1963. (3) The Street Improvement Act of 1913 (repealed by Chapter 346 of the Statutes of 1963). (4) The California Supreme Court stated in Los Angeles County Flood Control District v. Southern California Edison Co. (1958) 51 Cal.2d 331, that "no distinction has been made between sanitary sewers and storm drains or sewers." (5) The term, "sewer" has been used interchangeably to refer to both sanitary and storm sewers in many other cases, including, but not limited to, County of Riverside v. Whitlock (1972) 22 Cal.App.3d 863, Ramseier v. Oakley Sanitary Dist. (1961) 197 Cal.App.2d 722, and Torson v. Fleming (1928) 91 Cal.App. 168. (6) Dictionary definitions of sewer, which courts have found to be an objective source for determining common or ordinary 99 SB 231 meaning, including Websters (1976), American Heritage (1969), and Oxford English Dictionary (1971). (h) Prior legislation has affirmed particular interpretations of words in Proposition 218, specifically Assembly Bill 2403 of the 2013-14 Regular Session (Chapter 78 of the Statutes of 2014). (i) The Legislature reaffirms and reiterates that the definition found in Section 230.5 of the Public Utilities Code is the definition of "sewer" or "sewer service" that should be used in the Proposition 218 Omnibus Implementation Act. 0 99 Attachment D SB 1298 Opposition Letter MAYOR: SAmRAARM1fENTA MAYOR PRO TEM: POLLY LOW COUNCILMEMBERS: W=AMALARCON MARGARET CLARK S=NLY August 24, 2016 Members of the State Legislature California State Capitol IO"` and L Streets Sacramento, CA 95814 is11 I ' I /'SM 8838 E. VALLEY BOULEVARD PA BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569.2100 FAX (626) 307-9218 RE: SB 1298 (Hertzberg) — Oppose Dear Members of the State Legislature: I am asking you to join the City of Rosemead in opposing Senate Bill 1298 (Hertzberg). This bill is already opposed by the cities of Glendora, Claremont, Monrovia, Duarte, Howard Jarvis Taxpayers' Association, San Gabriel Valley Economic Partnerships, etc. While we do appreciate the Senator's endeavors to help cities and counties that are facing enormous costs for storm water cleanup, a bill that makes such drastic changes needs to be properly vetted. It is a gut and amend which as you know means it was dropped into another bill without going through the standard procedures which are intended to give the public the time needed to vet the consequences. To rush it through at the end of session during August when so many constituents are on vacation violates the public trust, Groups pushing for these taxes had proposed to put on this November ballot a constitutional amendment to change Prop 218 but backed off when the Attorney General's summary said it would allow taxes "without voter approval". Knowing the voters wouldn't like that they withdrew it and proposed this "end run" around the voters. We were led to believe that the current mandates upon cities were cost effective, satisfactory to the environmental groups, cleaned up the storm water, and were standard for all cities in California. We find this not to be accurate. (LA County is faced with $20 billion EWMPS that no other county has to do and which could actually pollute the ground water. The environmental groups' are actually suing over them.) Because the bill would re -define sewer which is exempt under Prop 218 to include storm water, SB 1298 would allow virtually any storm water taxes to pass without going to the voters. So in essence the County's 2013 "Clean Beaches" proposal, which imposed astronomical costs on businesses and non -profits but was withdrawn due to tremendous pressure by opponents, would pass easily. Thus the $20 billion program that LA County is facing which has serious problems mentioned above would easily pass. This could put a huge burden on our low income families and struggling businesses. The City of Rosemead urges a no vote on this bill and ask that you uphold the right of voters to approve new taxes being placed upon them. Sincerely, Sandra Armenia Mayor CC: Rosemead City Council Assemblymember Ed Chau — Fax: (916) 319-2149 Assemblymember Roger Hernandez —Fax: (916) 319-2148 Assemblymember Chris Holden — Fax: (916) 319-2141 Senator Ed Hernandez — Fax: (916) 319-2143 Senator Bob Huff—Fax: (916) 651-4929 Senator Carol Liu—Fax: (916) 651-4925 Jennifer Quan, Regional Public Affairs Manager (via email) Meg Desmond, League of California Cities, mdesmondcacities.org California Contract Cities —Fax: (562) 622-9555 Independent Cities Association—Fax: (310) 321-7810 Joe A. Gonsavles & Son (via email)