HomeMy WebLinkAboutProposition 218 and Proposition 26 AnalysisMayor
Ron Morrison
Council Members
Louis Naltvided
Alejanctre Sotelo-Stills
Mona Rios
Jerry Cano
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Office of the City Attorney
MEMORANDUM
City Attorney
Claudia Gacitua Silva
Deputy City Attorney
Jennifer Knight
TO: Mayor and City Council DATE: May 21, 2013
FROM: Senior Assistant City Attorney
SUBJECT: Proposition 218 and Proposition 26 Analysis of EDCO's Proposed Increase in
Rates for Refuse Collection Services
INTRODUCTION
The City of National City and EDCO Disposal Corporation ("EDCO") entered into the
Agreement for Collection of Rubbish and Trash in the City of National City by and between the
City of National City and EDCO Disposal Corporation, dated September 25, 1990
("Agreement"), The Agreement has been amended several times. The last amendment was on
July 1, 2007 to adjust the rate schedule.
Section 23 of the Agreement discusses applications for rate changes, annual "cost of living"
changes, and "changes in the rates (tipping fees) charged by the owners/operators of sanitary
landfill sites ...." This Section allows EDCO to apply annually for changes in the rates
charged pursuant to the Agreement. This Section goes on to say that "upon notification to
[EDCO] of a proposed tipping fee change, [EDCO] should submit a letter request for rate change
to the City, defining the impact of such change on his costs, and proposing a rate change that will
exactly recoup the tipping fee change." Section 23 says that the application must be in writing
and contain the financial and statistical data upon which the rate change application is made.
Section 23 also says that the tipping fees "shall be considered as `pass -through' costs." In
addition, Section 23 says that the annual "cost of living" changes will be based upon the
Consumer Price Index ("CPI") for San Diego and will be equal to the percentage change in the
index, with a cap of 6%.
EDCO has applied for an increase in rates pursuant to Section 23. The increase is based on an
increase in tipping fees, a decrease in revenue from recyclables sold, and an increase based on
the CPI of 2.71 %.
1243 National City Boulevard; National City, California 91950-4301
Tel.: (619) 336.4220 Fax: (619) 336.4327
ANALYSIS
L THE PROPOSED INCREASE TO THE FEES FOR REFUSE COLLECTION
SERVICES IS SUBJECT TO THE NOTICE AND MAJORITY PROTEST
REQLflREMENTS OF PROPOSITION 218, BUT NOT TO THE VOTER
APPROVAL REQUIREMENTS.
In 1996, voters passed Proposition 218 to amend the California Constitution to require voter
approval for certain kinds of assessments and fees. Shortly thereafter, the California Legislature
adopted the Proposition 218 Omnibus Implementation Act, California Government Code
sections 53750 through 53756. Proposition 218 provides that voter approval is required for an
increase in any "property related fee or charge" except for sewer, water, and refuse collection:
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.
Ca1. Const. art. XIIID, section 6(c}.
Although charges for refuse collection services are not subject to the voter approval requirements
of section 6(c), the City must comply with the notice and majority protest requirements of Article
XIIID, section 6(a). Cal. Const. art. XIIID, section 6(c). Cal. Gov't Code section 53755.
A. The City has Complied with the Proposition 218 Notice R uirements.
Pursuant to Proposition 218, the City must provide written notice by mail of the proposed
increase in the fee to the "record owner of each identified parcel" upon which the increase in the
fee is proposed for imposition. "Record owner" means the owner of a parcel whose name and
address appears on the last equalized secured property tax assessment roll. Ca1. Gov't Code
section 53750j).
The notice shall include:
(a)
(b)
calculated;
(c)
(d)
the amount of the increase in the fee proposed to be imposed upon each parcel;
the basis upon which the amount of the increase in the fee proposed fee was
the reason for the increase in the fee; and
the date, time, and location of a public hearing on the proposed increase to the fee,
Cal. Const. art. XIIID, section 6(a).
May 21, 2013 2 Prop 218 and 26 Analysis of
EDCO's Proposed Rate Increase
Notice of the proposed increase in the fee may be given by including it in the agency's regular
billing statement for the fee or by any other mailing by the agency to the address to which the
agency customarily mails the billing statement for the fee. Cal. Gov't Code section 53755(a}(1).
However, this Section does not change the definition of "record owner" in California
Government Code section 53750(j). Therefore, if the property tax rolls provide an address for the
owner of the parcel that is different than the billing or service address, a notice must be sent to
the "record owner" as defined by California Government Code section 53750(j).
A copy of the Notice of Public Hearing to Consider Proposed Rate Increase for Refuse Services
(Notice) is attached. It complies with all of the requirements of Proposition 218. EDCO
included the Notice in the regular billing statement for refuse services. If the property tax rolls
provided an address for the owner of the parcel that is different than the billing or service
address, EDCO also sent the Notice to the "record owner" of the parcel as defined by California a
Government Code section 53750(j),I
B. The City Must Comply with the Proposition 218 Majority Protest Requirements.
Pursuant to Proposition 218 and the implementing legislation, the City must comply with the
following requirements:
1) The City must conduct a public hearing on the proposed increase to the fee not
less than 45 days after mailing the notice.
2) During the public hearing, the City Council must hear and consider all objections
and protests against the proposed increase in the fee. However, verbal protests will not be
counted in calculating a majority protest to the proposed increased fee.
3) The City shall count one written protest per parcel, filed by an owner or tenant of
the parcel in calculating a majority protest to the proposed increased fee.
4) The written protest must be received by the City Clerk prior to the close of the
public hearing. The written protest must include an original signature, identification of the parcel
by parcel number or address, and a statement of protest against the increase in the rate. Written
protests by e-mail or fax will not be accepted.
5) If written protests against the proposed increase in the fee are presented by a
majority of owners of the identified parcels, the City shall not impose the increase to the fee.
Cal. Const, art. XIIID, section 6. Cal. Gov't Code section 53755.
1 The City has preserved any authority it may have to record or enforce a lien on the parcel to which service is
provided by mailing the Notice to the record owner's address shown on the last equalized assessment roll if that
address is different than the billing or service address,
May 21, 2013 3 Prop 218 and 26 Analysis of
EDCO's Proposed Rate Increase
II. THE PROPOSED INCREASE IN THE FEES FOR REFUSE COLLECTION
SERVICES IS NOT A SPECIAL TAX UNDER PROPOSITION 26.
A. There are Seven Exceptions to the Definition of a Special Tax under Proposition 26.
Proposition 26 was adopted by the voters in November 2010. Proposition 26 is a constitutional
amendment which expands the revenue -raising restrictions placed on state and local
governments by the constitutional amendments adopted by Propositions 13, 62, and 218.
Since the enactment of Proposition 218, all "taxes" imposed by local government are either
general taxes or special taxes. Cal. Const. art. XIII C, section 2(a). Special taxes are taxes
imposed for a specific purpose, as distinguished from general taxes which are imposed for
general governmental purposes. Cal. Const. art. XIII C, sections 1(a), (d). Given that the
proposed increase in fees for refuse services is assessed for a specific,purpose, and the funds
generated from the proposed increase axe not to be used for general governmental purposes, it is
analyzed as a special tax.
Local governments may not "impose, extend, or increase" any special tax without a two-thirds
vote of the electorate. Cal. Const, art. XIII C, section 2(d). Prop 26 added a broad definition of
"tax" to the State Constitution. Gr%f,ith v. City of Santa Cruz, 207 Cal. App. 4th 982, 995-996
(2012). A tax is "any levy, charge, or exaction of any kind imposed by a local government,"
unless it falls within one of the following seven exceptions:
(1) A fee for a benefit or privilege provided directly to the fee payer
that is not provided to those not charged and that does not exceed
the reasonable cost of providing the benefit or privilege;
(2) A fee for a service or product provided directly to the fee payer
that is not provided to those not charged and that does not exceed
the reasonable cost of providing the service or product;
(3) A fee for reasonable regulatory costs for issuing licenses and
permits, performing investigations, inspections, audits, and
administrative enforcement and adjudication;
(4) A fee for entrance to or use of local government property or the
purchase, rental, or lease of local government property;
(5) A fine or penalty imposed by the judiciary for a violation of law;
(6) A charge imposed as a condition of property development; and
(7) Assessments and property -related fees imposed pursuant to
Proposition 218.
Cal. Const. art. XIII C section 1(e).
May 21, 2013 4 Prop 218 and 26 Analysis of
EDCO's Proposed Rate Increase
Under Proposition 26, the City bears the burden of proving that the fee is not a "tax," that the
amount charged is no more than necessary to cover reasonable costs, and that the allocation of
those costs among fee payers bears a fair or reasonable relationship to the fee payer's burdens
on, or benefits received from, the local government activity. IId.
Proposition 26 does not apply retroactively to existing local fees and charges. See Proposition 26
section 1 Findings and Declaration of Purpose; Strauss v. Horton, 46 Ca1. 4th 364, 470 (2009);
Ballot Pamphlet, General Elec. (Nov. 2, 2010) Legislative Analyst's Analysis pp. 58-59. Thus,
absent an adjustment, a pre-existing fee would not be impacted by Proposition 26.
B. The Proposed Increase in Fees for Refuse Collection Services is not a Special Tax
Under Proposition 26 because the Proposed Increase is an Increase to Property -Related Fees.
The proposed increase in the fees for refuse collection services is based, in part, on an increase in
tipping fees. Pursuant to Section 23 of the Agreement, tipping fees are considered as "pass -
through" costs to the customers and are part of the refuse collection rate. Fees for refuse
collection services are property -related fees subject to Proposition 218. See Section I of this
Memorandum. According to Exception 7 to Proposition 26, property -related fees imposed
pursuant to Proposition 218 are excluded from the definition of a special tax under Proposition
26. Ca1. Const. art. XIII C section 1(e)(7). Therefore, the proposed increase in the fees for refuse
collection services is not a special tax under Proposition 26.
CONCLIJSION
The City has complied with the notice requirements of Proposition 218 with regard to the
proposed increase in fees for refuse collection services, The City will comply with the
Proposition 218 majority protest requirements with regard to that proposed increase. The
proposed increase in fees for refuse collection services is not a special tax under Proposition 26.
Elisa A. Cusato
Senior Assistant City Attorney
cc: City Manager
Public Works Director
May 21, 2013 5 Prop 218 and 26 Analysis of
EDCO's Proposed Rate Increase
City of National City
Notice of Public Hearing to Consider
Proposed Rate Increase for Refuse Services
Notice is hereby given that the City Council of the City of National City will hold a Public
Hearing at a regular meeting of the City Council of the City of National City on June 4, 2013, at
6:00 PM, in the Council Chamber of the Civic Center at 1234 National City Blvd., National City,
California, 91950 for the purpose of considering an increase in rates for refuse services,
including recycling and yard waste disposal.
At the public hearing, the City Council will consider written protests to the proposed increase in
rates received by the City Clerk, City of National City, at 1243 National City Blvd. prior to the
conclusion of the public hearing. Only one protest per parcel will be counted. The written
protest must include (1) an original signature; (2) identification of the parcel by parcel number or
address; and (3) a statement of protest against the increase in the rate. Written protest by e-mail
or fax will not be accepted. All members of the public are entitled to make comments and
objections at the public hearing whether or not they choose to submit a written protest, However,
verbal protests will not be accepted.
A rate adjustment is being proposed due to the increased costs of providing refuse services to
residential and commercial users. The amount of the increase to the residential rate was
calculated by adding $0.27 to the rate for refuse, based on an increase in the tipping fee of $2.17
per ton; adding $0.01 to the rate for yardwaste, based on an increase in the tipping fee of $1.29
per ton; adding $0.18 to the recycling rate, based on the reduced revenue on collected recycling
and the impacts of scavenging; and adding $0,28 based on the San Diego Consumer Price Index
(CPI) of 2.71%. The amount of the increase to the commercial rates was calculated by adding
$1.86 to the rate for refuse, $0,06 to the rate for yardwaste, $1.23 to the rate for recycling, and
$1.69 based on the CPI. The amounts of the increases to the commercial rates were calculated
based an the same increases to the tipping fees, impacts on recycling, and CPI index. An increase
to the City Franchise Fee and Enterprise Fund of $.09 for residential and $.64 for commercial
rates is also included in the overall adjustment. The increase of $0.83 cents per month for
residential users and $5.48 per month for commercial users would be effective for basic service
subscribers. The proposed increase in rates for refuse services would to take effect on July 1,
2013. Additional information pertaining to this matter may be obtained from the Public Works
Department, 2100 Hoover Avenue, National City, California, 91950,
Current Monthly Rate (eff 7/2/07) Proposed Monthly Rate (7/1/13)
Residential Service Rate
Base Rate $16.64 $17.47
Senior Discount Rate $13.32 $13.99
Silver Bag Rate $ 2.28 per bag $ 2.39 per bag
May 21, 2013 6 Prop 218 and 26 Analysis of
EDCO's Proposed Rate Increase