HomeMy WebLinkAbout1996-11-07 City Council (4)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:NOVEMBER 7, 1996 CMR:467:96
SUBJECT:PRELIMINARY ASSESSMENT OF THE IMPACT OF
PROPOSITION 218 ON THE CITY OF PALO ALTO
The purpose of this report is to provide the Council with information on the potential impact
of voter approval of Proposition 218 on November 5, 1996. This is an informational report
and no Council action is required.
EXECUTIVE SUMMARY
On November 5, 1996, the California voters passed Proposition 218. Proposition 218 is a
comprehensive Constitutional amendment that covers property-related fees and assessments,
in addition to taxes.
The City Manager’s staffhas been working with the City Attorney’s Office for several weeks
to analyze the potential impacts of Proposition 218 on the City of Palo Alto. Definitive draft
guidelines are anticipated from the League of California Cities in late November. These
guidelines will assist City staff in more accurately identifying and quantifying the impacts.
Proposition 218 clarifies the difference between a "general tax" and a "special tax" by
defLning a special tax as "... any tax imposed for specific purposes including taxes imposed
for specific purposes which are placed in the general fund." A majority vote is required to
impose, increase or extend a general tax on or after January 1, 1995; and a two-thirds vote
is required to impose, increase or extend a special tax. Staffdoes not believe that any of the
City’s existing taxes would be redefined as special taxes under the initiative’s new definition.
Proposition 218 will not impact any of the City’s existing general taxes.
Proposition 218 requires that any assessments which are not subject to specific exemptions
be approved by the voters by July 1, 1997 to remain valid. Exempt assessments include
those for capital costs or maintenance and operation expenses for sidewalks, streets, sewers,
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water, flood control, drainage systems and vector control. However, any increases in these
assessments would be subject to a process which involves notification of affected property
owners, a ballot (proportionate to the property owners’ weighted share of the assessment) and
a public hearing to consider the ballots returned.
Proposition 218 defines "fees" or "charges" as".., any levy other than an ad valorem tax,
a special assessment or an assessment, imposed by an agency upon a parcel or upon a person
as an incident of property ownership, including user fees or charges for a property related
service." The City would be required to do a proportional cost calculation for any such
property-related fee or charge, to ensure that each parcel paid only its attributable share of
the service being provided. A mailed notice would then need to be sent to each parcel owner,
informing them of the amount of the fee, the method by which it was calculated, and the
specific use for the fee or charge. There are additional voting requirements imposed on
certain types of property-related fees and charges, beyond the notice, hearing and protest
requirements for assessments. User fees are exempt from the provisions of Proposition 218.
Gas and electric services are specifically cited as not covered by the initiative, but sewer,
water and refuse collection services are covered. Staff is working to determine what
changes, if any, may be required to the rate structures in each of these enterprises to ensure
compliance with the requirements of Proposition 218.
Staff does not believe the City will be required to place any measures on the July 1997 ballot.
Staff will continue to update the Council as more information becomes available.
PREPARED BY:Emily Harrison
Deputy City Manager/Administrative Services
DEPARTMENT HEAD APPROVAL.~~, ~_~_,xA ,g~_
Emil3! ~arrison
Deputy City Manager,
Afl~inistrative
kC_Xty Manager ~/CC: rda
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