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Home My WebLink About1987-04-21; City Council; 8968; Liability for Utility Capital Facility Fees:z 0 fi c( ,.J 0 z ::, "' 0 CITT-OF CARLSBAD -AGEND.1-~ILL jp:v' (jJ 11---~---:--;-r----------------------,-------,:;,,:~#.d'~!..:~£-.- ; ,._B#~ l?o/1,,Y TITLE; DEPT. HD~ MTG. 4/21/87 A.B. 318 LIABILITY OF PUBLIC ENTITIES CITY A~ DEPT.--'-C=M'--_ FOR UTILITY CAPITAL FACILITY FEES CITY MQR."y RECOMMENDED ACTION: Authorize Mayor Lewis to send a letter supp.>rting A.B. 318. ITEM EXPLANATION: This proposed A. 8. 318 provides the necessary legislation to as.sure that each ;:,ublic entity pay its fair share of new capital facilities. This bill is a direct result of the recent California Supreme Court ruling that there is no general statutory authority for one public entity to charge another public entity a capital facility fee. This bill provides that authority. Since the City's current sewer and w.iter fees are based on each and every user's fair share charge, if this bill is not forthcoming, others would be charged a higher fee to make up the difference. EXHIBITS: 1. Memo to Frank Mannen from James C. Hagaman, 4/8/87. 2. Draft letter of support from Mayor Lewis. 3. Letter, plus attachments, from Olivenhain Municipal Water District 3/'14/87. 4. A.B. 318. APRIL 8, 1987 TO: FRANK MANNEN, ACM FROM: James C. Hagaman, Research/Analysis Group A.B. 318 -LIABILITY OF PUBLIC ENTITIES FOR UTILITY CAPITAL FACILITY FEES EXHIBIT 1 This proposed Assembly Bill 318 provides the legislation necessary to assure that each public entity may charge other public entity fees to pay for new facilities, such as water and sewer fees. Such fees are developed assuming a fair share collection from users both public and private. A recent California Supreme Court ruling -San Marcos Water District vs. San Marcos Unified School District -held that a fee imposed for capital improvements and ongoing costs of service is a special assess- ment, regardless of how the fee is determined. Under current law there is no general statutory authority for charging these fees to public entities. Assembly Bill 318 would impose a State mandated local program by authorizing public agencies providing water, light, heat, communica- tion, power, flood control, garbage or specified sewer service to charge other public entities a capital facility fee. Schools funded under this Leroy F. Greene law of 1976 would be reimbursed the cost under that law. If the commission on State mandates determines this bill contains costs mandated by the State, reimbursement costs shall be made pursuant to those statutory pro- cedures. In conversation with various staff members, it is apparent that the City should support this bill to provide funds for our capital costs of water and sewer services. {;~1w'Pf c/.:;~AN JCH .pgk -- DRAFT Assembly Ways & Means Committee: ASSEMBLY BILL 318 LIABlLITY OF PUBLIC ENTITIES FOR UTILITY CAPITAL FACILITY FEES The City of Carlsbad supports A.B. 318 to provide the con- tinued collection of Capital Facility Fees to assure that energy users, whether public or private, will continue to pay their fair share of the costs of capital facilities. If such legislation is not forthcoming, non-public entities will be faced with increasing rates to underwrite the costs. CLAUDE A. LEWIS, Mayor JCH:pgk EXHIBIT 2 EXHIBIT 3 Olivenhain Municioal Water District .. BOARD OF DIRECTORS Ann L. Peay, President Howard G. Go/em, Vice President Harley L Denk, Secretary Harold L Gano, Treasurer Thelma M. Miller, Director The Honorable John Mamoux 1966 OLl\iENHAIN ROAD ENCINITAS. CALIFORNIA 92024 PHONE (619) 753-6466 March 24, 1987 City Council Office of Carlsbad 1200 Elm Avenue Carlsbad, CA 92008 Dear Mr. Mamoux: GENERAL COUNSEL Vernon A. Peltzer ENGINEER Boyle Engineering Corp. MANAGER Wi/1/am H. Hollingsworth Enclosed please find a certified copy of Resolution 87-03 of the Olivenhain Municipal Water District urging support of Assembly Bill 318. The California Supreme Court ruling in the San Marcos decision may halt the equitable funding of capital improvements by all who obtain use from public agency facilities. Assembly Bill 318 is the corrective legislation needed to assure that each and every user, whether public or private, pay their fair share of the costs. On behalf of the Olivenhain Municipal Water District, I would like to thank you for your continued support. Sincerely, OLIVENHAIN MUNICIPAL WATER DISTRICT ~~ J7l~ Leslie Moreno Secretary LM Enclosure A Publ,c Agency lncoipor.ted on March 24, 1959. formed under the Munc,paI water 01stnc1 law of 1911 Section 71000 et seq of the State of Cahlorn,a Water Coda RESOLUTION 87-03 RESOLUTION OF THE BOARD OF DIRECTORS OF THE OLIVENHAIN MUNICIPAL WATER DISTRICT URGING SUPPORT OF ASSEMBLY BILL 318 (Liability For Capital Facilities Fees San Marcos Case) WHEREAS, the Olivenhain Municipal Water District (Olivenhain) imposes capital facilities fees for service provided to all new customers, both public and private; and WHEREAS, in San Marcos Water District vs. San Marcos Unified School District (San Marcos Case) the Supreme Court held that a fee imposed by a public entity to provide funds for capital improvements to build utility tacilities, and to cover ongoing costs of service, is a special assessment for this purpose regardless of how the fee is determined; and WHERBAS, in the San Marcos Case, the Supreme Court held that there is an implied exemption from special assessments for publicly owned and used property; and WHEREAS, utilizing capital facilities fees to pay for new facilities assures that all new users pay their fair share, and without which dramatic increases in w&ter rates to all customers will be necessary . . NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE OLIVENHAIN MUNICIPAL WATER DISTRICT DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS: Section 1: That the Board of Directors of the Olivenhain Municipal Water D:l.strict strongly urge your support of Assembly Bill 318 to generally authorize public agencies to charge other public entities capital facilities fees. Section 2: That the Board of Directors of the Olivenhain Municipal Water District urge all local agencies providing utilities services to provide a united front in supporting Assembly Bill 318. Section 3: That the Board of Directors of the Olivenhain Municipal Water District urge the customers and constituency of all local public agencies providing utility services in the State of California to support Assembly Bill 318, which if enacted will mandate that every entity public or private will pay its fair proportionate share for capital facilities. Section 4: That the Secretary of the Olivenhain Municipal Water District is hereby authorized and directed to transmit a certified copy of this Resolution to the Assembly Ways and Means Committee, Senate Local Government Committee, San Diego County Board of Supervisors, City Council members from the cities of Encinitas, Solana Beach, Carlsbad, San Diego, San Marcos and Escondido and other appropriate parties. PASSED, ADOPTED AND APPROVED by the Board of Directors of the Olivenhain Municipal Water District at a regular board meeting held on March 19, 1987 by the following roll call vote: AYES: Directors Miller, Golem, Peay, Gano, Denk NOES: None ABSTAIN: None ABSENT: None t2U Ann L. Peay, Pre~ Board of Directors Olivenhain Municipal Water District ATTEST: oar o rectors Olivenhain Municipal Water District STATE OF CALIFORNIA) SS COUNTY OF SAN DIEGO) I, W:iLLIAM HOLLINGSWORTH, Assistant Secretary of the Board of Directors of the Olivenhain Municipal Water District, DO HEREBY CERTIFY THAT the foregoing Resolution was duly adopted by the Board of Directors of said _District at a Regular Meeting of said Board of Directors held on the 19th day of March , 19__£, and that it was so adopted by the following roll cell vote: AYES: Directors Miller, Golem, Peay, Gano, Denk NOES: None ABSTAIN: No,1e -------------------------ABS ENT: _N_o_n_e _________________ _ I DO HEREBY FURTHER CERTIFY THAT the foregoing is a full, true and correct copy of Re1olution Number 87-03, of said Board of Director, and that aae bas not been amended or repealed. DATE: March 25, 198 7 ~ ~" ' ~~R~ AssWantSecret.:;B~ Olivenhain Municipal Water Di1trict ( ·, l I '1 : '! 'I I •j I I I '' . I I ' ' ; , I ; AMENDED IN ASSEMBLY MARCH 9, 1987 CALIFORNIA LECISLATURE-1987-88 REGULAR SESSION ASSEMBLY BILL No. 318 Introduced by Assembly Member Cortese (Principal coauthor: Senator Bergeson) January 20, 1987 An act to add Chapter 13.7 ( commencing with Section 54999) to Part 1 of Division 2 of Title 5 of the Government Code, relating to public agencies, and deciaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 318, as amended, Cortese. State and local public agencies: liability for capital facilities fees. (1) In San Marcos Water Dist. v. San Marcos Unified School Dist., 42 Cal. 3d 154, the California Supreme Court held that (a) there is an implied exemption from special assessments for publicly owned and used property and (b) a fee im:.,osed by a public entity to provide funds for capital improvements to utility facilities, rather than to cover ongoing costs of service, is a special assessment for this purpose, regardless cf how the fee is determined. Under existing law, there is no general statutory authority for charging these fees to public entities. This bill would impose a state-mandated local program by generally authorizing public agencies that provide water, light, heat, communications, power, Rood control, garbage, or specified sewer service, to charge other public entities, including local agencies and school districts, prescribed user charges for costs of capital facilities (hereafter "capital facilities fees") to provide the service. This authorization would not be applicable where expressly prohibited by 98 -10 EXHIBIT 4 AB 318 -2- statute. The bill would prohibit imposition of ne•.v capital facilities fees for service provided prior to the bill's effective date, but would authorize collection and retention of capital facilities fees imposed prior to that date. The bill would preclude any judicial action to contest a capital facilities fee, whether imposed prior to or on or after the bill's effective date, unless the fee was paid under protest and the action filed within 30 days of payment or unless the fee exceeded the cost of providing the service. The bill would also make capital facilities fees paid hy school districts, with respect to construction of school facilities for which --., application for funding is made ttnder the Leroy F., Greene State School Building Lease-Purchase Law of 1976 on or after the bill's effective date, a reimburseable cost under that act. (2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates which do not exceed $500,000 statewide and other procedures for claims whose statewide costs exceed $500,000. This bill would provide that, if the Commission on State Mandates determines that this bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to those statutory procedures and, if the statewide cost does not exceed $500,000, shall be made from the State Mandates Claims Fund. (3) The bill aeelMes would declare that it 'lf'ottld is to take effect immediately as an urgency statute. Vote: ¾. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. The people of the State of California do enact as follows: 1 SECTION 1. Chapter 13.7 ( commencing with Section 2 54999) is added to Part 1 of Division 2 of Title 5 of the 3 Government Code, to read: 98 70 1 2 3 -3-AB 318 CHAPTER 13.7. LIABILITY OF PUBLIC ENTITIES FOR PUBLIC UTILITY CAPITAL FACILITIES FEES 4 54999. (a) As used in this chapter, "capital facilities 5 fee" means any charge imposed on a user by a public 6 agency to pay the capital cost of public utility facilities in 7 existence at the time the charge is imposed or to pay the 8 capital cost of public utility facilities t(: be constructed in 9 the future, which are of benefit and allocated for service 10 to the person or property being charged. 11 (b) As used in this chapter, "public utility facilities" 12 means facilities for the provision of water, light, heat, 13 communications, power, flood control, or garbage service 14 or sewage collection, treatment, or disposal for sanitary or 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 drainage purposes. 54999.1. Any public agency may make a nondiscriminatory capital facilities fee applicable to public agencies, including any school district, an agency of the state or a local agency, as defined in Section 54994, except where expressly prohibited by statute. Any public agency, including any school district, agency of the state or local agency, as defined in Section 54994, is authorized to pay nondiscriminatory capital facilities fees, except where expressly prohibited by statute. 54999.2. (a) The Legislature finds and declares that many public entities that provide public utility service have imposed capital facilities fees applicable to new users in order to equitably apportion the cost of capital facilities construction or expansion required by all public and private users of the facilities, In the recent decision in San Marcos Water Dist. v. San Marcos Unified School Dist., 42 Cal. 3d 154, the California Supreme Court held that public entities cannot be made subject to these fees without statutory authorization. As a result, the fiscal stability and service capabilities of the affected public utility service agencies which have in good faith collected and spent these fees for capital improvements a:~ seriously impaired as is the ability to finance essemial future facilities. (b) The Legislature further finds and declares that the !)8 80 l '. ,, I ! ,, i ,! ,\ I I • AB 318 -4- 1 ·avoidance of actual or potential (1) disruption of public 2 utility service or (2) reduction in the quality or capacity 3 of public utility service provided to a public entity, is a 4 public purpose of that public entity. 5 ( c) Capital facilities fees imposed prior to the effective 6 date of this chapter may be collected and retained by the 7 entity that imposed the fee. Capital facilities fees not 8 imposed with respect to service provided prior to the 9 effective date of this chapter may not be imposed and 10 collected retroactively. Capital facilities fees may be 11 imposed with respect to service provided on and after the 12 effective date of this chapter. . 13 54999.3. An action to contest the validity of a capital 14 facilities fee, whether imposed prior to or on or after the 15 effective date of this chapter, may not be instituted unless 16 (a) the fee has beer1 paid under written protest stating 17 the claim of invalidity, and provided the action is 18 initiated within 30 calendar days following the date of the 19 protested payment, or (b) ualess the capital facilities fee 20 exceeded the cost of providing the service. 21 54999.4. Any capital facilities fees paid by school 22 districts for public utility facilities to serve school facilities 23 for which an application for funding is filed on or after the 24 effective date of this chapter shall qualify for 25 reimbursement by the State Allocation Board as a cost of 26 the project, as defined in Section 17702 of the Education 27 Code. 28 SEC. 2. Notwithstandir,g Section 17610 of the 29 Government Code, if the Commission on State Mandates 30 determines that this act contains costs mandated by the 31 state, reimbursement to local agencies and school 32 districts for those costs shall be made pursuant to Part 7 33 (commencing with Section 17500) of Division 4 of Title 34 2 of the Government Code. If the statewide cost of the 35 claim fo1 reimbursement does not exceed five hundred 36 thousand dollars ($500,000) , reimbursement shall be 37 made from the State Mandates Claims Fund. 38 SEC. 3. This act is an urgency statute necessary for 39 the immediate preservation of the public peace, health, 40 or safety within the meaning of Article IV of the 98 100 -5-AB 318 1 Constitution and shall go into immediate effect. The facts 2 constituting the necessity are: 3 In order to assure adequate revenue resources for 4 publicly provided utility services and to provide the 5 mea..11s for appropriate apportionment of capital facilities 6 fees therefor, it is necessary that this act go into effect 7 immediately. 0 98 110 " 6. SUPPORT League of California Cities 1400 K Streat • Sacramento 95814 • (916) 444-5790 #8-1987 March 13, 1987 Authority for Capital Facilities Fee to be Charged to Another Public Agency. Passas Committee Unanimously. AB 318 (Cortese). On Wednesday March 11, the Assembly Local Government Committee heard AB 318, which responds to the case of San Marcos Water District v. San Marcos Unified School District. In general, that case held that one public agency could not charge another public agency a fee to cover the cost of capital f aci l it i es used to provide a utility service. AB 318 would authorize that payment. The bill is supported by the League and is vigorously opposed by UC, the State University system, community colleges ·and many K-12 school districts. Following substantial debate on the bill, it passed the Assembly Local Government Committee on an 8-0 vote. Voting "Aye" were: Hannigan, Hansen, Hauser, Kelley, Sher, Waters, Frazee, and Cortese. Not present were Jones and Lancaster. The bill will next be heard by the Assembly Ways and Means Committee. Interested city officials should contact the members of that Committee urging them to vote "Aye" on the bill. The nembers of that Committee are: John Vasconcellos, Chair; William Baker, Vice Chair; Bronzan, Dennis Brown, Calderon, Camp be 11 , Eaves, Ferguson, Hannigan, Hayden, Hi 11 , 6 MARCH 13, 1987