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HomeMy WebLinkAboutIntergovernmental Relations Committee (IRC) approval of a CiDept. ID ad 14-020 Page 1 of 2 Meeting Date: 5/19/2014 rlot 1, , i CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 5/19/2014 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Teri Baker, Assistant to the City Manager SUBJECT: As recommended by the City Council Intergovernmental Relations Committee (IRC), approval of a City Council position and authorization for the Mayor to sign a letter of opposition for Senate Bill 1021 (Wolk) which authorizes a split tax roll specific to school districts. Statement of Issue: Senate Bill 1021 (Wolk), which authorizes a split property tax roll specific to school districts, was discussed on April 30, 2014, at the meeting of the Intergovernmental Relations Committee (IRC). The IRC recommends the City Council take a position of opposition. Financial Impact: None by this action. Recommended Action: A) Approve a City position of opposition for Senate Bill 1021 (Wolk) - Split tax roll specific to school districts; and, B) Authorize the Mayor to sign a letter of opposition for Senate Bill 1021 (Wolk) - Split tax roll specific to school districts. Alternative Action(s): Do not take the recommended position on SB 1021 and direct staff accordingly. Analysis: Townsend Public Affairs Senior Associate, Cori Williams, Sr. attended the April 30th II She has since provided the following information on Senate Bill SB 1021: Meeting. • Senate Bill 1021 is a split roll tax specific to school districts. The bill would authorize more than 1,000 California school districts to impose unlimited tax increases on select property owners by allowing the imposition of non -uniform parcel taxes. Under this bill, school districts could split parcel tax assessments within a district based on the square footage of the parcel or the use of the parcel. ® The bill would also allow school districts to impose a different tax rate on unimproved parcels and to treat multiple parcels as "one" for the purposes of a parcel tax. Current state law requires school districts that impose parcel taxes to apply them uniformly to all taxpayers or property within the school district. Some local governments are in violatio in of this law as they impose non -uniform parcel taxes (meaning they impose parcel taxes at a higher rate on Item 14. - 1 HB -330- Dept. ID ad 14-020 Page 2 of 2 Meeting Date: 5/19/2014 commercial and industrial parcels than they do on residential parcels). In the court case, Borikas v Alameda School District, there was a ruling that Alameda School District was violating this law. Alameda School District taxed commercial parcels larger than 2,000 square feet at a higher rate than residential and small commercial properties. The court ruled that that difference exceeded the districts taxing authority and the property owner won the case. There was legislation in 2013, AB 59 (Bonta) that attempted to overturn the decision retroactively, but the bill died in its first policy committee. This bill, SB 1021, would overturn this decision prospectively and would allow school districts to tax select types of property at a higher rate than other types of property. The options to tax parcels would be unlimited. There are additional complications that the bill would add. For instance, the bill would allow school districts to treat multiple parcels as one parcel if they meet certain conditions. As discussed at the Intergovernmental Relations Committee Meeting, this bill would deteriorate Proposition 13 protection for homeowners and could potentially result in higher taxes on businesses. A non -uniform parcel tax would target both small and large business with an adverse impact. Opposition includes a variety of associations including, but not limited to the California Building Industry Association California Taxpayers Association, California Business Properties Association, California Apartment Association, Howard Jarvis Taxpayer Association, California Chamber of Commerce, Orange County Taxpayers Association and the Orange County Business Council. The list of supporters includes, but is not limited to: California School Boards Association, California Labor Federation, California School Employees Association, California Teachers Association as well as a number of school districts. The Intergovernmental Relations Committee voted 3-0 to recommend a position of opposition to the City Council. On May 5, the bill passed the Senate floor. As of the submittal of this report, the bill had not yet been assigned to its Assembly policy committees. Environmental Status: N/A Strategic Plan Goal: Improve long-term financial sustainability Attachment(s): 1. SB 1021 (Wolk) 2. Draft letter of opposition for SB 1021 xB -_'3 ; 1 - Item 14. - 2 AMENDED IN SENATE APRIL 2, 2014 SENATE BILL No. 1021 Introduced by Senator Wolk February 14, 2014 An act to amend Section 50079 of the Goveriunent Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST SB 1021, as amended, Wolk. School districts: parcel taxes. Existing law authorizes any school district to impose qualified special taxes within the district pursuant to specified procedures. Existing law defines "qual�fied special taxes" as special taxes that apply uniformly to all taxpayers or all real property within the school district and may exempt certain persons. This bill would provide that special taxes that apply uniformly include any special tax imposed on a per parcel basis. according to the square footage of a parcel or the square footage of improvements on a parcel, according to the-tise classification of a parcel, and at a lower rate on unimproved property. This bill would authorize a school district to treat multiple parcels of real property as one parcel of real property for purposes of a qualified special tax, where the parcels are contiguous, under common ownership, and constitute one economic unit. Vote: majority. Appropriation: no. Fiscal committee: no. State -mandated local program: no. The people of the State of Califbrnia do enact as follonrs: 1 SECTION 1. Section 50079 of the Government Code is 2 amended to read: 98 Item 14. - 3 H3 -332- SB 1021 1 50079. (a) Subject to Section 4 of Article XIII A of the 2 California Constitution, any school district may impose qualified 3 special taxes within the district pursuant to the procedures 4 established in Article 3.5 (commencing with Section 50075) and 5 any other applicable procedures provided by law. 6 (b) For purposes of this section. all of the following shall apply: 7 (1) "Qualified special taxes" means special taxes that apply 8 uniformly to all taxpayers or all real property within the school 9 district, except that "qualified special taxes" may include taxes 10 that provide for an exemption from those taxes for all of the I 1 following taxpayers: 12 (A) Persons who are 65 years of age or older. 13 (B) Persons receiving Supplemental Security Income for a 14 disability, regardless of age. 15 (C) Persons receiving Social Security Disability Insurance 16 benefits. regardless of age. whose yearly income does not exceed 17 250 percent of the 2012 federal poverty guidelines issued by the 18 United States Department of Health and Human Services. 19 (2) "Qualified special taxes" do not include special taxes 20 imposed on a particular class of property- or taxpayers. 21 (3) "Special taxes that apply unifonnly" include any special tax 22 imposed in accordance wither one or more of the following: 23 (A) On a per parcel basis. 24 (B) According to the square footage of a parcel or the square 25 footage of improvements on a parcel. 26 (C) According to the b as the same 27 commercial,, industrial., single family residential,, or multi anzily 28 residential classification of a parcel, so long as the same rate of` 29 tax is levied on all properties of the same ttse classification. 30 (D) At a lower rate on unimproved property. 31 (c) A school district may treat multiple parcels of real property 32 as one parcel of real property for purposes of a qualified special 33 tax where the parcels are contiguous, under common ownership, 34 and constitute one economic unit, meaning that the multiple parcels 35 of real property have the same primary purpose and are not separate 36 and distinct properties that may be independently developed and 37 sold. 38 SEC. 2. No inference shall be drawn from the enactment of 39 this act with respect to the meaning of "uniformly" for purposes 40 of special taxes imposed by school districts pursuant to the 98 HB - 3 33_ Item 14. - 4 -3— SB 1021 I authorization in Section 50079 of the Government Code as it 2 existed prior to the enactment of this act. N 98 Item 14. - 5 14B -3334- May 6, 2014 Senator Lois Wolk State Capitol, Room 5114 Sacramento, CA 95814 RE: SB 1021: Parcel Taxes for School Districts Notice of Opposition Dear Senator Wolk, The City of Huntington Beach would like to express its opposition to SB 1021, which authorizes a split roll tax specific to school districts. We have grave concerns about this legislation, considering that it will authorize more than 1,000 California school districts to impose unlimited tax increases on select property owners by allowing the imposition of non -uniform parcel taxes. We are concerned about the potential adverse impact that this legislation will have on small and large businesses. Current state law requires that school districts that impose parcel taxes to apply them uniformly to all taxpayers or property within the school district. If passed, this bill would overturn the decision made in Borikas v Alameda School District, which ruled that Alameda School District was violating current law. By overturning this decision, SB 1021 will allow school districts to tax select types of property at a higher rate than other types of property. Additionally, the bill will provide school districts with unlimited options to tax parcels. This could result in unequal and unfair imposition of taxes on select parcels. This bill will effectively deteriorate Proposition 13 protection for homeowners and could potentially result in higher taxes on businesses. Additionally, a non -uniform parcel tax would target both small and large business with adverse impact. For the reasons stated above, the City of Huntington Beach respectfully opposes this resolution, and urges legislators to uphold current law, which maintains uniform application of parcel taxes. Sincerely, Matthew Harper Mayor City of Huntington Beach Cc: Assembly Member Allan Mansoor Senator Mimi Walters HB -335- Item 14. - 6