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Always Advocating Alan – Why Special Benefit Assessment Districts Are So Important To Your Future

| Opinion | March 7, 2019

If you think your property tax bill is too high now, there was a time in California when property tax increases were out of control.

A story highlighting this issue was written by Joel Fox in 2015 for the California Political Review, which stated, “Let me take you back to 1966 to Newhall, California right here in Los Angeles County, to an item that appeared in the local Newhall Signal newspaper. It came with a picture of an elderly couple standing before their house. It would not be unkind to call it a shack. The house was assessed for taxes at the property’s highest and best use, a standard used by assessors at the time. Since an apartment building had been built close by, this elderly couple’s home was assessed as if an apartment building was built there. The couple’s tax bill, in 1966 dollars, was $1800 a year. Their total income was $1900 a year.” But, “the situation got worse. What happened was property values were increasing dramatically in the 1970s—kind of like now. Property taxes are a function of the tax rate and the value of the property. If the tax rates were not adjusted but the property value increased, taxes zoomed up.”

The problem gave birth to Proposition 13, which was approved on June 6, 1978 by California voters. “It capped the property tax rate, allowed a limited increase for inflation, reassessments on sale of property, and required a supermajority vote in the legislature for state taxes and a vote of the people on local tax increases.” In addition, Proposition 13 went on to limit “ad valorem tax” to 1 percent of the property’s assessed value, returned property tax assessments to their 1976 value, and limited assessed value inflation to a maximum of 2 percent per year.

While Proposition 13 gave homeowners welcomed tax relief, it also created big challenges for local municipalities to gain new revenues to fund services they provide. The answer came on November 5, 1996 when voters approved Proposition 218, “The Right to Vote on Taxes Act.” This bill included “additional requirements for special benefit assessments on real property as well as numerous requirements for property-related fees and charges, such as utility fees imposed by local governments which are no longer allowed to exceed the cost of providing the utility service.”

I am a great proponent of Proposition 218 Special Benefit Districts, as it is a way to finance local services and improvements which the community needs. Why am I so supportive? Because Proposition 218 districts are required to use revenue generated, within the specified district boundaries, for the purposes established when the district is created by a vote of the affected property owners who will be paying the bill. In addition, fees established may not exceed the cost of the service or improvement. Such a structure and restrictions were enacted to prevent funds from being raided for other purposes. Plus, it puts local municipalities in a position of having to sell services similar to a private venture.

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But, with any legislation aimed to fix a problem, there comes a dark side. Unfortunately, Proposition 218 allows “Protest Elections” where 50 percent of the eligible property weighted votes, + 1 opposing vote must be cast, in order to prevent an assessment from being levied. Next, ballots are weighted and counted by a property’s assessed value and use. Developers are allowed to vote with the weight of entitled, but not yet build developments, even though they will not be charged until each section of their development is completed. There is also the issue of developers using “Special Benefit Districts” as a substitute for “Mello-Roos Districts,” which have become unpopular and detrimental to selling property. In this case, a Developer will approach a municipality to form a “Special Benefit District” within the boundaries of their development. Since they own the entire property, they will be the only voter, which assures passage.

Currently, we are also reading about municipalities pushing the envelope of what may be included in, and paid for, by “Special Benefit Districts.” So, this is what makes Special Benefit Assessment Districts so important to the well-being of our residents. Very often, additions are small and incremental, not rising to the level to garner public outrage. But, in each case, they result in small additions to your property tax bills and cumulatively they make a substantial difference. California in general, and Santa Clarita more specifically, have become expensive places to live. Younger family breadwinners in increasing numbers have to work multiple jobs to make ends meet, while seniors, living on meager pensions or social security are being priced out of their homes. While Special Benefit Districts may not be the major cause of heartache or homelessness in our valley, they do contribute to escalating housing costs and are a process which should be transparent and clearly represented, in order to provide the residents an opportunity to challenge fees and services they do not feel are needed.

Those are the specific reasons I have been following the “Landscape and Streetlight Special Benefit District” issue closely and have been asking so many questions. Last week, city staff provided the answers to my query initiated 10 weeks ago, and published them in the Gazette across from my column. (Staff response is also available on the Gazette website). Although I may not agree with all the information provided, I appreciate having finally received a response. Since they have been provided in writing, there is a reduced possibility of misinterpretation, or confusion, over the city’s position. For now, I’ll leave it to you, the reader, to determine if the answers are timely and acceptable.

But let’s not forget this issue, because around May each year, all Special Benefit Assessment District “Maximum Assessment” amounts and “Actual Assessment” fees, which is what will appear on your Property Tax Bill, will be brought before the city council for approval.

At that time, there will be an opportunity for another careful look.

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