What this publication is
This book intends to serve as a primer on local property-based revenue mechanisms in the state of California. The intended audience is local public agency staff, community leaders, property owners, and other interested parties. The book provides a general review and discussion of these revenue sources, which fall under the basic heading of “Special Taxes and Special Assessments” as provided by California statutes, and which are collectively termed “Special Financing Districts.” (Note that this book was first published in 2006, updated in 2011, 2014 and 2015. The information contained herein is subject to change.)
Examples of property-based revenue mechanisms in California are: a Landscape & Lighting District assessment that finances the maintenance of parks and parkways within a specific area (Special
Assessment), and a tax levied on all properties within a city to fund police services (Special Tax). Most other states in the U.S. maintain similar revenue systems, albeit through different processes (and employing different terminology).
What it is not (the disclaimer)
This publication is not a technical how-to guide, and is not to be construed as legal or technical advice. This book is to be used for general informational purposes, and is not meant to replace the services of experienced attorneys, engineers, finance professionals, or consultants with expertise in this field. In particular, a number of legal challenges have been filed in recent years challenging
assessments. One is advised to seek out good technical and legal advice.
Note that Proposition 26, known as the “Stop Hidden Taxes Initiative,” was approved in the November 2010 election by the voters of California. Proposition 26 was aimed at a certain class of government “regulatory fees,” but it contained broad local government revenue language.
In summary, there are seven categories of exceptions, and it is the current understanding that Special Assessments and Special Taxes (and generally Property related Fees) as covered under Proposition 218 constitute one category of these exceptions. Proposition 218 is discussed further within this book. discussion of revenues as the life blood of any special district. The focus is on the basic concepts of their importance, their rationale, and their need for regular maintenance, just like the other assets of any special district.
As background, it is important to understand that we are living and working in the post-Proposition 13 era of California, as that 1978 voter-approved measure severely limited local property tax revenues. Moreover, local governments must actively work to justify their revenue streams on a regular basis. It is imperative that special district staff and board members think about and then take action on revenues, whether they are rates, fees, or other property-related charges. It is also crucial that districts regularly educate their communities about the vital services they provide and the revenues needed to make those services available.
Special district staff and board members have the responsibility to be proactive in maintaining the fiscal health of their agency; neglecting this duty is not a sustainable option.
This publication has two primary sections. The first volume provides an overview of these primary revenue tools for special districts, though not all are applicable to all district types:
• Utility rates
• User and regulatory fees
• Development impact fees, Quimby Act fees, and connection/capacity charges
• Parcel-based revenue tools (such as benefit assessments and parcel taxes)
The second volume provides basic background information, including an overview of property taxes and the impact of Propositions 13, 218, and 26, a discussion of cost recovery and cost allocation, roles of special district board and staff in managing revenues, and a summary of available debt financing tools when pay-as-you-go is not sufficient to provide the necessary public improvements.
We hope you find this information to be helpful as you move your community forward in a fiscally-sustainable manner.