Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2010
 

California Constitutional Provisions

Article XIII D Assessment and Property-Related Fee Reform

Section 6

Sec. 6. Property-related fees and charges. (a) Procedures for New or Increased Fees and Charges. An agency shall follow the procedures pursuant to this section in imposing or increasing any fee or charge as defined pursuant to this article, including, but not limited to, the following:

(1) The parcels upon which a fee or charge is proposed for imposition shall be identified. The amount of the fee or charge proposed to be imposed upon each parcel shall be calculated. The agency shall provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition, the amount of the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed fee or charge was calculated, the reason for the fee or charge, together with the date, time, and location of a public hearing on the proposed fee or charge.

(2) The agency shall conduct a public hearing upon the proposed fee or charge not less than 45 days after mailing the notice of the proposed fee or charge to the record owners of each identified parcel upon which the fee or charge is proposed for imposition. At the public hearing, the agency shall consider all protests against the proposed fee or charge. If written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels, the agency shall not impose the fee or charge.

(b) Requirements for Existing, New or Increased Fees and Charges. A fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements:

(1) Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service.

(2) Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.

(3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.

(4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4.

(5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reliance by an agency on any parcel map, including, but not limited to, an assessor's parcel map, may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership for purposes of this article. In any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance with this article.

(c) Voter Approval for New or Increased Fees and Charges. Except for fees or charges for sewer, water, and refuse collection services, no property related fee or charge shall be imposed or increased unless and until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area. The election shall be conducted not less than 45 days after the public hearing. An agency may adopt procedures similar to those for increases in assessments in the conduct of elections under this subdivision.

(d) Beginning July 1, 1997, all fees or charges shall comply with this section.

Construction.—The plain language of subdivision (c) of this section specifically excludes charges for water. Howard Jarvis Taxpayers' Assn. v. City of Los Angeles, 85 Cal.App.4th 79. Under this section, the electorate chose not to impose a voter-approval requirement for increases in water service charges. Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205. An in-lieu franchise fee imposed by a city on the annual budgets of each of its utilities, paid by the utility ratepayers and transferred to the city's general fund, was subject to this article, which requires voter approval of local government property-related assessments, fees, and charges, and was invalid because it did not comply with either of the following requirements of subdivision (b): the fee or charge revenues may not exceed what it costs to provide fee or charge services, and no fee or charge may be imposed for general governmental services. Howard Jarvis Taxpayers Assn. v. City of Roseville, 97 Cal.App.4th 637. A storm drainage fee for the management of storm water runoff from the impervious areas of each parcel in the city was a property-related fee that required voter approval under subdivision (c) of this section. Howard Jarvis Taxpayers Assn. v. City of Salinas, 98 Cal.App.4th 1351. A city's assessment of a fee in lieu of property taxes upon its own utility departments violated this section because of the restriction in subdivision (b)(3), which states that the amount of a fee or charge imposed shall not exceed the proportional cost of the service attributable to the parcel. Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127 Cal.App.4th 914; 128 Cal.App.4th 426b.

The "immediately available" requirement of subdivision (b)(4) is logically focused on the agency's conduct, not the property owner's. As long as the agency has provided the necessary service connections at the charged parcel and it is only the unilateral act of the property owner (either in requesting termination of service or failing to pay for service) that causes the service not to be actually used, the service is "immediately available" and a charge for the service is a fee rather than an assessment (assuming the other substantive requirements of a fee are satisfied). Paland v. Brooktrails Township Community Services District Board of Directors, 179 Cal.App.4th 1358.

Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use, while not a tax or assessment, is a property-related fee or charge "imposed . . . as an incident of property ownership," and, thus, subject to constitutional preconditions for the imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.

Water and sewer base rates.A minimum charge imposed on parcels with connections to a water district's utility systems for the basic cost of providing water or sewer service, regardless of the owners' actual use, is exempt from a requirement for ballot approval by a majority of affected property owners. Paland v. Brooktrails Township Community Services District Board of Directors, 179 Cal.App.4th 1358.