Katovich Law Group » Assessment Districts

California Appellate Court Strikes Down Tiburon Assessment District

Jenny — Tue, 19 Jan 2010 01:48:32 +0000

In 1996, the California voters adopted Proposition 218, the Right to Vote on Taxes Act. Among other things, it requires that a special assessment may only be imposed for a “special benefit” conferred on a property – it cannot be imposed for “general benefits” received by the public at large. Furthermore, assessments must be formulated so that each parcel in the assessment district pays an amount that is in proportion to the benefit it receives.

Tiburon created a special assessment district to pay for the cost of undergrounding utility lines. Property owners in the district challenged the assessment as failing to meet the requirements of Proposition 218.

The court agreed for the following reasons:

1. Assessments must be based on relative benefit received by a parcel, not on the cost of providing the benefit to the parcel.

Tiburon divided the costs of the project unevenly between several zones within the district which resulted in some property owners paying a higher assessment for a similar benefit.

The court held that this method violates Proposition 218: “The critical inquiry . . . concerns the special benefits conferred on the property. Properties that receive the same proportionate special benefit pay the same assessment, without regard to variations in the cost of construction among the properties.”

2. No property that receives special benefit may be excluded from the assessment district.

Tiburon excluded certain parcels from the district even though they benefited from the project. The court held that this violates the requirement of proportional assessments for all the benefitted parcels (in effect, the parcels in the district are subsidizing those that are not).

While the court acknowledged that “Any attempt to classify special benefits conferred on particular properties and to assign relative weights to those benefits will necessarily involve some degree of imprecision.” However, the court felt that the problem with Tiburon’s district was not imprecision but inconsistent application.

For the entire text of the case, click here.

An underutilized financing tool for communities

Jenny — Fri, 09 Oct 2009 22:37:51 +0000

California state law (and the law of most other states) authorizes the establishment of a “Business Improvement District” (BID). A BID is a district whose boundaries are selected by its organizers that is established by a majority vote of the property owners within the district. Once a BID is established in conformance with the procedures required by the law, the property owners in the district pay an assessment into a communal fund. The assessments are based on a formula that typically takes into account parcel size, building size, sidewalk frontage, and use to ensure that the assessment amount is proportionate to the amount of benefit a property owner will receive. The funds collected by the BID may be used for a wide variety of community improvement projects, such as

Constructing community facilities such as parks, public restrooms, or community centers
Installing street furniture
Planting trees and flowers
Improving lighting
Installing public art such as banners
Streetscape improvements to make the area more pedestrian friendly
Rehabilitating buildings
Installing facilities such as ramps to improve accessibility
Organizing community festivals
Providing safety and cleaning services

Some BIDs are very creative about how they use their funds. For example, a BID in Los Angeles had created a Cool District Program whose purpose is to reduce greenhouse gas emissions from the district by planting drought-tolerant trees and plantings, installing photovoltaics on rooftops, negotiating incentives from the local utilities, negotiating discounts on bulk purchases of products such as compact fluorescent bulbs, etc. For more information on the Cool District Program, follow this link.

In addition to the state law that authorizes the creation of BIDs, many cities in California have adopted BID ordinances governing BIDs established within their boundaries. Many of these laws make BIDs easier to establish and allow the inclusion of residential property in a BID (unlike the state law).

For more information on how to create a BID in your community, talk to the BID managers in your city!