01 - January 17, 2025 - Special Assessment Districts and the Automated License Plate ReadersCITY COUNCIL INFORMATIONAL MEMORANDUM
Date: January 17, 2025
To: Cupertino City Council
From: Pamela Wu, City Manager
Re: Special Assessment Districts and the Automated License Plate Readers relating to
the City of Saratoga Landscape and Lighting Assessment District
Reason for Recommendation
Background
Proposition 218, also known as the "Right to Vote on Taxes Act," was approved by
California voters in 1996. This constitutional amendment establishes specific procedures
and requirements for local governments seeking to impose taxes, assessments, and fees
on property owners. Under Proposition 218, all new or increased assessments must
directly benefit the properties being assessed, and property owners must approve the
assessment through a ballot process. This framework ensures transparency,
accountability, and equitable cost distribution among affected property owners, making
it a cornerstone for implementing Special Assessment Districts (SADs).
SADs provide a mechanism for funding localized community projects in California.
These districts finance initiatives that provide specific benefits to a defined area, with
property owners within the district contributing through proportional assessments. This
memo examines the Saratoga Lighting and Landscape Assessment District (LLAD) as an
example and considers its potential applicability to Cupertino’s Automated License
Plate Reader (ALPR) program.
Case Study: The Saratoga LLAD
Established by the Saratoga City Council in 1980 under the State of California’s
Landscape and Lighting Act of 1972, the LLAD forms a single special district with eight
zones that subdivide the city. Within the district, approximately 1,884 parcels are
included. The LLAD funds the maintenance and operation of public lighting and
landscaped areas. Its creation followed a structured process that began with identifying
community needs and preparing an engineering report to outline the project’s scope and
costs. Ultimately, the district’s funding is approved through a ballot process, with
property owners agreeing to finance initiatives via property tax assessments.
Procedurally, this means that assessment ballots are mailed to property owners within a
designated area whose initial proposed assessments are either 1) higher than in any
previous year and who have not previously voted on their assessments, 2) higher than
what was authorized via balloting conducted in a previous year, or 3) annexation of new
Zones. Ballots are separately tabulated at the close of the Protest Hearing for each Zone
that may be voting. Only those ballots returned by the close of the Protest Hearing
count towards determining whether a majority protest exists.
In September 2022, the Saratoga City Council adopted a change that allows
neighborhoods to use the LLAD framework to fund the addition of Flock ALPR cameras
in their neighborhood and place cameras in the public right-of-way at the entrance to a
neighborhood. 51 LLAD devices are installed in Saratoga, while the City pays for seven
general ALPR devices.
Relevance to Cupertino’s ALPR Program
The ALPR initiative aims to enhance public safety by deterring crime and aiding
investigations. By linking the costs of ALPR installation and maintenance to the benefits
received, SADs could provide a structured approach to funding. However, the
feasibility of applying this model to ALPR implementation requires careful
consideration.
If Cupertino were to enact a Special Assessment District program for ALPR devices, the
City may be able to increase the number of devices deployed significantly. SAD funding
could provide the financial resources needed to expand the program to more
neighborhoods or strategic locations, maximizing its effectiveness and impact on public
safety. Establishing an ALPR-focused SAD in Cupertino would involve several steps.
These include identifying neighborhoods or zones that stand to benefit most, conducting
an engineering assessment to determine costs and expected outcomes, and engaging the
community through public meetings and a formal ballot process. Each step represents a
significant increase in administrative and programmatic requirements for
implementation. The financial impacts need to be studied.
2019 Clean Water and Storm Protection Fee
On March 5, 2019, the City Council initiated a Proposition 218 proceeding to establish a
new property-related fee to fund the stormwater program's clean water and operations
and maintenance elements. The 2019 Clean Water and Storm Protection Fee raises
revenue to pay for services provided by the City that are necessary to repair, operate,
and maintain pipes and other infrastructure to prevent system failure and sinkholes,
protect clean drinking water, comply with mandated clean water standards, and protect
the City against future flooding. The City Council adopted property-related fee ballot
proceedings through resolutions.
Advantages and Challenges of SADs
While SADs can offer advantages such as stable funding and equitable cost distribution,
there are also potential challenges. Compliance with Proposition 218’s legal
requirements, including voter approval and public notification, introduces procedural
complexity. Some property owners may object to assessments if they perceive limited
direct benefits, and the administrative demands of managing the district can be
substantial.
Sustainability Impact
No sustainability impact.
Fiscal Impact
The primary fiscal implications of this initiative will stem from the costs related to the
acquisition, installation, and ongoing maintenance of the ALPR devices. Significant
administrative expenses will also be involved in establishing and managing the SAD. To
effectively administer this program, staff anticipate that a dedicated team will be
required to undertake various essential tasks. These tasks include identifying eligible
zones, conducting comprehensive engineering assessments, organizing and facilitating
community engagement initiatives, and managing the formal ballot process.
Consequently, this will necessitate hiring additional personnel or reallocating current
staff responsibilities, thereby incurring further costs.
Furthermore, the City must adhere to the legal requirements stipulated by Proposition
218, which necessitates voter approval and public notification. This procedural
complexity will contribute to the program's administrative burden and associated costs.
_____________________________________
Prepared by: Tom Chin, Emergency Manager
Reviewed by: Christopher D. Jensen, City Attorney
Tina Kapoor, Deputy City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Opportunities to Use Assessment Districts to Finance Facilities and Services in
California Today – A 2015 report by the California Debt and Investment Advisory
Commission
B - A Resolution of the City Council of the City of Cupertino Adopting Ballot Procedures
for the City’s 2019 Clean Water and Storm Protection Fee
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION | CDIAC No . 15.07
Opportunities to Use Assessment
Districts to Finance Facilities and
Services in California Today
Opportunities to Use Assessment
Districts to Finance Facilities and
Services in California Today
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION | CDIAC No . 15.07
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION
The California Debt and Investment Advisory Commission (CDIAC) provides information, educa
tion, and technical assistance on debt issuance and public fund investments to local public agencies and
other public finance professionals. CDIAC was created to serve as the state’s clearinghouse for public
debt issuance information and to assist state and local agencies with the monitoring, issuance, and
management of public debt.
COMMISSION MEMBERS
JOHN CHIANG
California State Treasurer and Chairman
EDMUND G. BROWN JR.
Governor
BETTY T. YEE
State Controller
CAROL LIU
State Senator
HENRY PEREA
Assemblymember
MATTHEW M. DABABNEH
Assemblymember
DAVID BAUM
Finance Director
City of San Leandro
JOSÉ CISNEROS
Treasurer and Tax Collector
City and County of San Francisco
EXECUTIVE DIRECTOR
MARK B. CAMPBELL
Additional information concerning this report or CDIAC programs may be obtained by contacting
CDIAC directly via phone (916) 653-3269, fax (916) 654-7440, e-mail (cdiac@treasurer.ca.gov) or by
visiting CDIAC’s website: www.treasurer.ca.gov/cdiac.
All rights reserved. No part of the Opportunities to Use Assessment Districts to Finance Facilities and
Services in California Today may be reproduced without written credit given to CDIAC. Permission
to reprint with written credit given to CDIAC is hereby granted.
Contents
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ASSESSMENT DISTRICT LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RECENT COURT DECISIONS ADDRESSING
ASSESSMENT DISTRICTS IN CALIFORNIA . . . . . . . . . . . . . . . . . . . . . . . . . 5
Silicon Valley Taxpayers Association v. Santa Clara County Open Space Authority . . . . . . . . 5
Dahms v. Downtown Pomona Property and Business Improvement District . . . . . . . . . . . 7
Town of Tiburon v. Bonander . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Beutz v. County of Riverside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Concerned Citizens for Responsible Government v. West Point Fire Protection District . . . . . .10
Golden Hill Neighborhood Ass’n, Inc. v. City of San Diego . . . . . . . . . . . . . . . . . . .10
IMPACT OF COURT DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
COMMON PRINCIPLES AND APPROACHES
USED IN ASSESSMENT DISTRICT FINANCE . . . . . . . . . . . . . . . . . . . . . . . .12
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Introduction
Assessment districts have been in use in California
for the past 150 years. Local agencies, including
cities, counties, and special districts, may establish
assessment districts for the purposes of financing
all or a portion of the cost of certain public im
provements and services. Each property within an
assessment district is assessed an amount sufficient
to cover the proportional cost of the special benefit
that it receives from the improvements or services
that are paid for by the assessment.
The adoption of Proposition 218, the “Right to
Vote on Taxes Act,” added Article XIIID to the
State Constitution, specifying both procedural and
substantive requirements for the establishment of
assessments and various limitations applicable to
all assessments, irrespective of whether they are
imposed pursuant to a general statutory scheme or
procedures adopted by a charter city. Specifically,
Article XIIID expressly recognizes the distinction
between general and special benefits, specifies that
a local agency shall separate the general benefits
from the special benefits conferred on the benefit
ed properties, and specifies that the special benefits
be allocated to the benefitted parcels in propor
tion to the special benefits conferred. Section 4 of
Article XIIID states that “only special benefits are
assessable and an agency shall separate the general
benefits from the special benefits conferred on a
parcel.” Article XIIID also defined “special ben
efit” as a “particular and distinct benefit over and
above general benefits conferred on real property
located in the [assessment] district or to the public
at large. General enhancement of property value
does not constitute special benefit.”
All assessments adopted by the local agency and
imposed on properties within the assessment dis
trict must be supported by a detailed engineer’s
report signed by a registered professional engi
neer. The report must identify the total cost of
the improvements or services, identify the special
and general benefits received by properties, de
scribe the method of apportioning the assessment
among parcels within the district, and provide
the amount of the proposed assessment levied
against each parcel.
A series of recent court decisions challenging
the methods of apportioning general and special
benefits used for certain assessments in California
has led local agencies to question the viability of
assessment financing, which in turn has limited
the use of this important financing tool. These
decisions both expand our understanding of Ar
ticle XIIID and its application to assessments and
confound it. In 2012, the California Debt and In
vestment Advisory Commission gathered a group
of legal and finance professionals to identify ways
to tackle this uncertainty. This report is a product
of that effort. It seeks to inform local agencies as
well as others in the public finance community
about the opportunities for using assessments
within the constraints imposed by these deci
sions. It does so by addressing in a general man
ner the steps public entities must take to form
assessment districts and impose assessments. It
then broadly considers the steps and methods of
analysis employed by assessment engineers to: (a)
separate general benefits from special benefits and
(b) identify and apportion special benefits. The
report necessarily takes into account the court de
cisions that have changed the way public entities
must determine and impose assessments.
Background
Prior to 1978, public infrastructure and govern
mental services in California were often largely
financed with property taxes. As demand for fa
cilities and services grew, municipalities generally
chose to increase property taxes to pay for them.
In 1966, the State Legislature pegged property
tax rates to the assessed value of property as a
means to limit the unrestrained rise in tax rates
across California. AB 80 (Chapter 147, Statutes
of 1966) subjected real property to periodic re
assessment at current market value. Through the
1970s, the value of real property in California
real estate escalated appreciably and with it the
2 California Debt and Investment Advisory Commission
tax liability of owners. By the mid-1970s the
property tax burdens of many homeowners had
become unbearable.
On June 6, 1978, California voters overwhelm
ingly approved Proposition 13, officially named
the “People’s Initiative to Limit Property Taxa
tion.” Proposition 13 is embodied as Article
XIIIA of the California State Constitution – the
most significant portion of which is the first
paragraph, which limited the amount of property
taxes for real property:
“Section 1. (a) The maximum amount of
any ad valorem tax on real property shall
not exceed one percent (1%) of the full
cash value of such property. The one per
cent (1%) tax to be collected by the coun
ties and apportioned according to law to
the districts within the counties.”
The proposition decreased property taxes by as
sessing property values at their 1975 value and
restricted annual increases of assessed value of real
property to an inflation factor, not to exceed 2
percent per year. It also prohibited reassessment
of a new base year value except in cases of (a)
change in ownership or (b) completion of new
construction. Because Proposition 13 severed the
relationship between the local government and
property tax, it forced local agencies to seek other
forms of revenues, including sales and use taxes,
general taxes, special taxes, and assessments.
Section 4 of Article XIIIA, however, instituted
a two-thirds voter approval requirement for any
special tax. The effect of Article XIIIA, section 4
and other limits on tax generation, including the
Bradley-Burns limits on sales taxes, caused mu
nicipalities to focus on assessments as a strategy
to finance both facilities and services. The court
provided support for this option when it ruled in
County of Fresno v Malstrom (1979)1 that Article
XIIIA, section 1 applied to ad valorem property
taxes and not to special assessments intended to
finance improvements benefiting only certain
parcels. Therefore, the one percent limit imposed
by Article XIIIA on ad valorem property taxes
did not apply to special assessments and bonds
supported by these assessments. Furthermore, the
court ruled that special assessments were not spe
cial taxes.2 “A special assessment is distinguishable
from a property-related special tax,” according to
the ruling, “being a charge for benefits conferred
upon the property, cannot exceed the benefits the
assessed property receives from the improvement;
a special tax on real property need not so specifi
cally benefit the taxed property.”
The limits placed on special taxes by Article XII
IA, section 4 were challenged in City and County
of San Francisco v Farrell in 1982.3 The California
Supreme Court ruled in that case that special tax
es were taxes that were levied for a special purpose
rather than a levy placed in the general fund to be
utilized for general governmental purposes. The
cause of action resulted from the imposition of a
payroll tax by the City and County, the proceeds
of which were deposited into the general fund
and used for general governmental purposes. As a
consequence of this ruling, municipalities found
ways to skirt the limits of Article XIIIA, section
4 and impose various taxes and fees without the
vote of the qualified electorate. Voters responded
in November 1986 by approving Proposition 62,
restating the two-thirds voter approval require
ment for special taxes, but allowing that general
taxes require only a majority vote to be enacted.
Municipalities then intensified the use of special
assessments as a source of revenue for improve
ments and services. The rate of increase in the use
of assessment financing between 1978 and 1992
1 Fresno v. Malstrom (1979) 94 Cal. App. 3d 375.
2 The court narrowed its use of special assessments to those enacted under California Streets and Highway Code sections
5000 et seq. and 10000 et seq.
3 City and County of San Francisco v. Farrell (1982) 32 Cal. 3d 47.
3 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
was substantial. In 1992 when the California Su
preme Court ruled in Knox v City of Orland4 that
an assessment for the maintenance of five existing
city parks was valid as assessed and rejected the
claim that it was a special tax, Joel Fox, then Presi
dent of Howard Jarvis Tax Association, responded:
“After Prop 13’s success, bureaucrats looked
for ways to raise revenues while avoiding
Prop 13’s restrictions. They hit upon as
sessment districts which were historically
used to fund capital improvements that
directly benefited properties.
Overtime, bureaucrats molded assessments
into property taxes that avoid Proposition
13’s restrictions. The courts supported this
artistry by ignoring historical precedent
demanding a link between assessments
with a direct benefit to property. They held
that assessments could be used for opera
tion budgets and maintenance costs and
were not covered by Proposition 13’s limits
and vote requirements.
Assessments have become unrestricted
property taxes. They appear on your prop
erty tax bill. There are no limits on how
high assessments can go. There are no lim
its to how many assessments can be placed
on your property.”5
In response to these and other concerns, voters
approved Proposition 218 in November 1996.
Proposition 218 expanded restrictions on gov
ernmental spending, allowed voters to use the
initiative process to repeal or reduce taxes, spe
cial assessments, fees, or charges, and reiterated
voter requirements for special taxes (two-thirds
approval) and general taxes (majority approval).
Proposition 218 added Article XIIID to the Cali
fornia Constitution to, among other things, es
tablish both new substantive requirements with
respect to special assessments and new proce
dural requirements, including ballot protest pro
cedures. With regard to the substantive changes,
Proposition 218 affirmed that only special ben
efits are assessable. Article XIIID, section 2(i) de
fined “special benefits” to mean “a particular and
distinct benefit over and above general benefits
conferred on real property located in the district
or to the public at large. General enhancement of
property value does not constitute ‘special ben
efit.’” Furthermore, local, state and federal prop
erties are not exempt from assessment.
Pursuant to Article XIIID, all parcels that receive
a special benefit conferred upon them as a result
of the specified improvements or services shall be
identified and the proportionate special benefit
derived by each identified parcel shall be deter
mined in relation to the entire cost of the im
provements. The Landscape and Lighting Act of
1972 describes this task accordingly:6
“The net amount to be assessed upon
lands within an assessment district may
be apportioned by any formula or method
which fairly distributes the net amount
among all assessable lots or parcels in
proportion to the estimated benefit to be
received by each such lot or parcel from
the improvements.”
The work of apportioning special benefit is done
by a registered professional engineer. In the Im
provement Act of 1911 the specific requirements
for those acting as engineers for the purposes of
determining special benefit and apportioning the
benefit to affected properties appears in Article
2, Chapter 25 of the Streets and Highway Code
(commencing with section 5700). Irrespective
of the statutory scheme, the assessment engineer
may perform the following basic tasks:
4 Knox v. City of Orland (1992) 4 Cal.4th 132.
5 Reference found at www.hjta.org/propositions/proposition-218/closing-assessment-loophole-proposition-13/
6 Streets and Highway Code section 22573.
4 California Debt and Investment Advisory Commission
• Provide the legislative body with plans and
specifications for the improvements.
• Provide the legislative body with an esti
mate of the costs and expenses of the im
provements.
• Create a diagram or map describing the
boundaries of the proposed district and
identify the affected properties.
• Identify the benefits resulting from an im
provement.
• Separate the general from special benefits.
• Apportion the special benefits to each par
cel within the district.
Prior to imposing special assessments on prop
erties receiving special benefit, the local agency
must conduct a number of procedural steps.
These include holding a public hearing to notify
property owners of the intent to establish an as
sessment district, mailing notice of the public
hearing to each affected property owner, which
notice must include a ballot for each property
owner to indicate his or her support for or op
position to the proposed assessment. If a majority
of the ballots submitted are in opposition to the
proposed assessment, then the assessment may
not be imposed. A majority protest exists if the
ballots submitted in opposition to the assessment
exceed the ballots submitted in favor of the as
sessment. The ballots are weighted by the propor
tional financial obligation (i.e., the dollar amount
of the proposed assessment) of each affected par
cel. In the absence of a majority protest, the local
agency may assess properties for the proportion
ate special benefit they receive from the planned
improvements or services.
Assessment District Laws
Special assessments have a long history of use in
the U.S. They can be traced back to a 1691 levy
for street and drainage construction in New York.
In California, early use of assessment financing
for facilities corresponds to three commonly used
statutory schemes: the Improvement Act of 1911
(Streets and Highway Code section 5000 et seq.)
(“1911 Act”), the Municipal Improvement Act of
1913 (Streets and Highway Code section 10000
et seq.) (“1913 Act”), and the Improvement Bond
Act of 1915 (Streets and Highway Code sec
tion 8500 et seq.) (“1915 Act”).7 The 1911 Act
combines the provisions governing the issuance
of bonds with the provisions for establishing an
assessment district.8 The 1913 Act specifies only
the procedures necessary to establish the assess
ment district and incorporates by reference an
other Act for the issuance of assessment bonds.
The 1915 Act provides only for the issuance of
bonds. In addition to these three general statu
tory schemes, charter cities may enact their own
procedures for assessment district formation and
the issuance of assessment bonds.
The public improvements that are authorized to
be financed by assessments levied under the 1911
Act include:
7 Other important California assessment acts include Park and Playground Act of 1909 (Government Code section 38000
et seq.), Tree Planting Act of 1931 (Streets and Highways Code section 22000 et seq.), Landscape and Lighting Act of 1972
(Streets and Highways Code section 22500 et seq.), Benefit Assessment Act of 1982 (Government Code section 54703 et
seq.), Street Lighting Act of 1919 (Streets and Highways Code section 18000 et seq.), Municipal Lighting Maintenance
District Act of 1927 (Streets and Highways Code section 18600 et seq.), Street Lighting Act of 1931 (Streets and Highways
Code section 18300 et seq.), Parking District Law of 1943 (Streets and Highways Code section 31500 et seq.), Parking and
Business Improvement Area Law of 1989 (Streets and Highways Code section 36500 et seq.), Property Business Improve
ment District Law of 1994 (Streets and Highways Code section 36600 et seq.), Pedestrian Mall Law of 1960 (Streets and
Highways Code section 11000 et seq.).
8 Although bonds supported by special assessments may be issued to finance public improvements, they may not be issued to
finance public services. Special assessments to finance public services are most commonly levied pursuant to the Landscape
and Lighting Act of 1972 (Streets & Highways Code section 22500 et seq.).
5 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
• Grading and paving of streets and roads;
• Construction of sidewalks, parks, bridges, tun
nels, subways, or viaducts;
• Sanitary sewers and related facilities;
• Storm drains and related facilities;
• Street lighting facilities and electrical and tele
phone service facilities, including the under
ground placement of existing overhead facilities;
• Pipes and hydrants for fire protection;
• Breakwaters, levies, and other flood or erosion
protection;
• Wells, pumps, dams, reservoirs, pipes, and oth
er domestic water supply facilities;
• Tanks, mains, pipes, and other domestic or in
dustrial gas supply facilities;
• Bomb or fallout shelters;
• Wharves, piers, docks, and other navigation fa
cilities;
• Retaining walls, ornamental vegetation, land
stabilization, and all other work auxiliary to
any of the above;
• Repair, prevention, mitigation or control of
geological hazards; and
• Energy and water conservation through con
tractual assessments.
Public improvements that are authorized under
the 1913 Act include any of the work and im
provements under the 1911 Act as well as:
• Water supply;
• Electric power supply facilities;
• Gas Supply facilities;
• Lighting facilities;
• Transportation facilities designed to serve an
area not to exceed three square miles and de
signed to operate on rails or similar devices; and
• Any “other works and improvements of a lo
cal nature.”
With limited exceptions, the public work and
improvements financed by assessments bonds is
sued on the security of assessments imposed un
der either the 1911 Act or the 1913 Act must be
performed and constructed on public property,
defined to include easements and rights-of-way
that have been dedicated to and accepted by the
local agency. Exceptions to this rule that result in
projects on private property might include work
undertaken for the purpose of grade adjustment or
to remedy a geological hazard, including retaining
walls or seismic safety work and improvements.
This work, while conducted on private property,
produces some determinable public benefit and
thus supports the use of public financing.
Both the 1911 Act and the 1913 Act allow the
acquisition of previously constructed improve
ments under certain conditions.
Recent Court Decisions
Addressing Assessment
Districts in California
Pursuant to Article XIIID, section 4(f), in the
event of any challenge to an assessment, the bur
den is on the local agency to demonstrate compli
ance with Article XIIID, section 4. Recent court
decisions have provided significant guidance to
public agencies on the actions they must take to
comply with the procedural and substantive re
quirements of Article XIIID, section 4. For pur
poses of this report, the most significant of these
cases and their impacts are described below.
Silicon Valley Taxpayers Association v.
Santa Clara County Open Space Authority
(2008) 44 Cal. 4th 431 – Supreme Court
exercises independent judgment and
clarifies special benefit and proportionality
requirements of Proposition 218.
In Silicon Valley Taxpayers Association, Inc. v.
Santa Clara County Open Space Authority, 44
Cal. 4th 431 (2008) (“Silicon Valley”), the case
concerned the levy of a supplemental assessment
6 California Debt and Investment Advisory Commission
for the acquisition and maintenance of open
space. This case is important for three reasons.
First, the California Supreme Court abandoned
the long-held deferential abuse of discretion stan
dard of review for the formation of assessment
districts established in cases decided prior to the
adoption of Article XIIID, and determined that
courts must exercise their independent judgment
in reviewing the validity of any assessment. Sec
ond, the court refined the definition of “special
benefit” and questioned the validity of assess
ments imposed for broad, regional services and
improvements which are determined to provide
special benefit to all parcels within an assessment
district. Third, the decision is the first to analyze
Proposition 218’s requirement that assessment
amounts be “proportional” to the special benefit
each parcel receives.
The court refined the definition of “special ben
efit” by determining that “under the plain lan
guage of Article XIIID, a special benefit must
affect the assessed property in a way that is par
ticular and distinct from its effect on other par
cels and that real property in general and the
public at large do not share.” By way of example,
the court recognized that if an assessment district
“is narrowly drawn, the fact that a benefit is con
ferred throughout the district does not make it
general rather than special. In that circumstance,
the characterization of a benefit may depend on
whether the parcel receives direct advantage from
the improvement (e.g., proximity to a park) or re
ceives an indirect, derivative advantage resulting
from the overall public benefits of the improve
ment (e.g., general enhancement of the district’s
property values).”
In this instance, however, all of the listed benefits
in the assessment engineer’s report were general
benefits shared by everyone within the assessment
district. The assessment engineer’s report failed
to measure the benefits that accrue to particular
parcels. The report failed to recognize that the
“public at large” means all members of the public
and not just transient visitors. Further, the report
assumed that all people and property in the dis
trict receive no general benefit and only special
benefits. “But under these circumstances, ‘[i]f ev
erything is special, then nothing is special.’”
The court also found that the report did not show
any distinct benefits to particular parcels of prop
erty above those received by the general public
using and enjoying the open space. “The special
benefits, if any, that may arise would likely re
sult from factors such as proximity, expanded or
improved access to the open space, or views of
the open space.” Here, however, the report did
not identify any specific open space land to be
acquired with the proposed assessment and thus
the report did not demonstrate any specific spe
cial benefits that assessed parcels would receive
from their direct relationship to the “locality of
the improvement.” Hence, the report failed to
demonstrate that the assessed properties received
a particular and distinct special benefit over and
above that shared by the public at large.
The court found that the report failed the propor
tionality requirements of Proposition 218 “large
ly because the special assessment is based on the
local agency’s projected annual budget of $8 mil
lion for its open space program rather than on a
calculation or estimation of the cost of the partic
ular public improvement to be financed with the
assessment.” Assessments are imposed in order
to require that properties which receive special
benefit from public improvements pay for such
public improvements, not to fund an agency’s
ongoing budget. Ultimately, the court found that
the assessment engineer’s report failed to identify
with sufficient specificity the “permanent public
improvement” that the assessment will finance,
failed to estimate or calculate the cost of any
such improvement, and failed to directly connect
any proportionate costs of the benefits received
from the “permanent public improvement” to
the specific assessed properties. “[A]n assessment
calculation that works backward by starting with
an amount taxpayers are likely to pay, and then
determines an annual budget based thereon, does
not comply with the law governing assessments,
either before or after Proposition 218.”
7 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
As a consequence of this decision, public agencies
considering the formation of an assessment dis
trict must carefully identify with sufficient speci
ficity: (1) the specific services or improvements
to be funded by the assessment; (2) the special
benefit that properties within the proposed as
sessment district will receive from the services or
improvements; (3) an estimate or calculation of
the cost of any such services or improvements;
and (4) the direct connection of any proportion
ate costs of and special benefits received from the
services or improvements to the specific assessed
properties. The special benefit must affect the
identified assessed parcels in a way that is partic
ular and distinct from its effect on other parcels
and that real property in general and the public
at large do not share. The assessment engineer’s
report must measure and reflect the special ben
efits that accrue to each particular parcel within
the assessment district. Consequently, an assess
ment that is levied at the same rate for all parcels
of property within an assessment district may not
meet the proportionality requirements of Article
XIIID, section 4.
Dahms v. Downtown Pomona Property
and Business Improvement District
(2009) 174 Cal. App. 4th 708 – Court
determines period for 45-day mailing,
upholds assessment district formation
and special benefit analysis, and
allows discounted assessments.
In Dahms v. Downtown Pomona Property and
Business Improvement District (”Dahms”), the
court of appeal found that a city did not violate
either the procedural or substantive provisions
of Article XIIID, section 4 in the formation of
a proposed Property and Business Improvement
District (“PBID”). This case is important for its
analysis of when the 45-day period runs on a bal
lot protest hearing and its analysis of proportion
al special benefit.
Dahms argued that the hearing approving the as
sessments violated the procedural requirements
of Article XIIID because it took place on the 45th
day after the City mailed the notices of the pro
posed assessments to the affected property own
ers. The court found that Article XIIID permits a
public agency to hold the hearing on the 45th day
after the mailing of the notices. The day of mail
ing is excluded from computation of the 45-day
mailing period. Hence, the notice did not violate
Article XIIID.
The engineer’s report based the amount of the
assessment for each assessed property within the
district on three factors: street frontage, build
ing size, and lot size. Those factors accounted
for 40 percent, 40 percent, and 20 percent, re
spectively, of the amount assessed for each prop
erty. The City determined the amount of the as
sessment by first identifying the special benefits
as the enhanced services, separating the special
benefits from general benefits, and identifying
the estimated costs of the special benefits. The
City then calculated the assessment for each as
sessed property as a portion of the total cost of
the services by applying the three factors. The
City heavily discounted the assessment for vari
ous nonprofit entities (“religious organizations,
clubs, lodges and fraternal organizations”)
and certain commercial properties within the
boundaries of the district, and exempted from
assessment properties zoned solely for residen
tial use and certain commercial property.
Dahms challenged the assessments as violating
the substantive provisions of Article XIIID, be
cause of discounted assessments or the failure to
impose the assessment on the nonprofit entities
and certain commercial properties. The court
concluded that Article XIIID leaves local gov
ernments free to impose assessments that are less
than the proportional special benefit conferred.
The court reasoned that if the assessments im
posed on some parcels are less than the reasonable
cost of the proportional special benefit conferred
on those parcels, then the discounted assessments
do not violate Article XIIID so long as those dis
counts do not cause the assessments imposed on
the remaining parcels to exceed the reasonable
cost of the proportional special benefit conferred
8 California Debt and Investment Advisory Commission
on those parcels. The same logic applied to those
properties that were not assessed.
Dahms further argued that the assessments were
not proportional because they were based only in
part on street front footage in the PBID. Dahms
argued that the assessments exceeded the rea
sonable cost of the proportional special benefit
because the assessments should have been based
entirely on the total street length on which a
property borders rather than, in part, on front
footage. The court exercised its independent
judgment and found that the assessment formula
did not cause the assessments to exceed the rea
sonable cost of the proportional special benefit.
The final argument concerned whether the city
adequately distinguished special benefits from
general benefits. The court found that the ser
vices proposed to be funded by the assessments
(security, streetscape maintenance, marketing,
promotion, and special events) are over and
above those already provided by the city within
the boundaries of the PBID. They are particu
lar and distinct benefits to be provided only to
the properties within the PBID, not the public
at large, i.e., they “affect the assessed property in
a way that is particular and distinct from [their]
effect on other parcels and that real property in
general and the public at large do not share.” The
services, therefore, are special benefits and the
engineer’s report separated those special benefits
from the general benefits.
Town of Tiburon v. Bonander (2009)
180 Cal. App. 4th 1057 – Court
strikes down utility undergrounding
district proportionality analysis.
In Town of Tiburon v. Bonander (“Tiburon”) an
appellate court determined that although prop
erties in an assessment district formed for the
purpose of financing the undergrounding of
overhead utilities (the “Project”) would receive
special benefits from the Project, the proposed
assessments were invalid because: (1) they were
allocated among three zones based on cost con
siderations rather than on proportional special
benefits; and (2) the properties in the district
were required to pay for special benefits con
ferred upon parcels excluded from the district.
This case is important for its analysis of what
public improvements and services constitute
special benefit, how enhancement of property
value arising from public improvements that
provide a direct benefit to property does not
convert a special benefit into a general benefit,
and how to proportionately allocate those spe
cial benefits among properties.
After forming an assessment district to pay for
the undergrounding of overhead utility lines,
the Town of Tiburon determined that the Proj
ect would cost more than originally projected
and a supplemental special assessment was nec
essary to cover the shortfall. The engineer’s re
port identified three special benefits that prop
erties would receive from the Project, improved
aesthetics, increased safety, and improved ser
vice reliability. The appellants claimed that: (1)
the Project improvements did not provide spe
cial benefits to the properties assessed; (2) the
assessments did not tie special benefit to specific
properties; (3) enhanced property values are not
special benefit; and (4) the assessments were not
proportionately allocated.
The court found that each of the special benefits
identified in the engineer’s report were tied to in
dividual properties based upon their proximity to
the existing overhead utility lines and that such
benefits are neither indirect nor derivative, i.e.,
general benefits. The engineer’s report equally as
signed improved aesthetics as special benefit to all
such properties. The court noted that “the mere
fact that a particular benefit is conferred equally
on most properties in an assessment district does
not compel the conclusion the benefit is not tied
to particular properties.” The court also recog
nized that almost every assessment that confers
a particular and distinct advantage on a specific
parcel will also enhance the overall value of that
property in some respect. Such an effect, does not
transform a special benefit into a general benefit.
9 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
The engineer’s report created three benefit zones
for which the construction costs were determined
and separately apportioned. The court found that
the benefit zones were not based on differen
tial benefits enjoyed within each zone but were
largely based on variances in the costs of placing
the utilities underground in the zones. This ap
portionment methodology resulted in properties
that receive identical special benefits paying vastly
different assessments and, therefore, did not pro
portionately allocate the assessments within the
district according to relative special benefit. The
court reasoned that “proportionate special benefit
is a function of the total cost of the project, not
costs determined on a property-by-property or
neighborhood-by-neighborhood basis.”
Finally, the Town excluded certain properties
from the supplemental district even though they
were determined to receive special benefits. By
excluding these properties from the district, the
assessments on properties included in the dis
trict necessarily exceeded the proportional special
benefit conferred on them. In effect, the assessed
properties were subsidizing the special benefit en
joyed by the non-assessed properties.
Beutz v. County of Riverside (2010)
184 Cal. App. 4th 1516 – Court
strikes down park assessment for
failing to separate and quantify special
benefits from general benefits.
In Beutz v. County of Riverside, a court of ap
peal struck down an assessment imposed by the
County of Riverside to fund the maintenance of
landscaping within four public parks. The court
held the assessments were invalid because the as
sessment engineer’s report failed to separate and
quantify the general benefits and the special ben
efits that would accrue to members of the general
public and to properties proposed to be subject to
the assessments. This case is important to public
agencies for its analysis of how public agencies
must separate and quantify general and special
benefits and how to proportionately allocate
those special benefits among properties.
The County of Riverside acquired three parks
from a park district that could no longer afford
to fund their maintenance. Shortly thereafter,
the park district dissolved and the County took
over its assets and liabilities. The County adopted
a park and recreation master plan (the “Master
Plan”) and imposed a fee on new development
in the unincorporated community of Wildo
mar, where the parks were located, to fund the
acquisition and rehabilitation of park facilities.
The County later initiated proceedings to form
a landscape maintenance district to levy assess
ments on parcels within the Wildomar commu
nity to fund the cost of maintaining the three
parks and a new ten-acre park. The assessment
was part of the master plan to acquire and de
velop the parks.
An assessment engineer’s report was prepared
which apportioned the costs of the proposed
assessment equally among all single-family resi
dential properties within the boundaries of the
proposed assessment district. All commercial
and industrial properties, vacant land, a senior
citizens’ retirement community, and all publicly
owned properties were excluded from the assess
ment on the grounds that none of them would
specially benefit from the maintenance of the
park improvements. The special benefits identi
fied in the report included: promotion of walking
and other physical activity; group picnic shelters
for large gatherings; restroom and concession fa
cilities; playground and tot lot areas; and sports
fields and courts for active recreation. The report
recognized that the general public may benefit
from these parks; however, the report concluded
that the benefits to the general public would be
offset by the County’s payoff of the debt it as
sumed from the park district and other park-re
lated expenditures.
The plaintiff challenged the assessment, alleging
that the County violated Article XIIID, section
4 by assessing the entire cost of refurbishing and
maintaining the parks on residential properties,
without deducting any portion of the costs at
tributable to the general benefits the parks would
10 California Debt and Investment Advisory Commission
confer on nonresidential properties. The appellate
court agreed, noting that the County failed its bur
den of demonstrating that the assessment satisfied
the special benefit and proportionality require
ments of Article XIIID. The Court found that the
report failed to separate the general and special
benefits to be realized from the entire Master Plan.
Rather, the report assumed, without supporting
evidence or analysis, that the general benefits of
the Master Plan will be “offset” by the County’s
expenditure of moneys to acquire and refurbish
the three parks, retire the park district’s debt, and
annually fund park recreational programs.
Of particular significance, the court also found
that the report failed to quantify the special and
general benefits. The court noted: “Separating
the general from the special benefits of a pub
lic improvement and estimating the quantity of
each in relation to the other is essential if an as
sessment is to be limited to the special benefits.”
Thus, if special benefits represent 50 percent of
the total benefits, a local agency may only levy an
assessment for that half of the cost of the project
or services.
Concerned Citizens for Responsible
Government v. West Point Fire Protection
District, 196 Cal. App. 4th 1427 (2011) –
Court strikes down special assessment
for fire services, finds assessment would
provide general, not special benefit. (De
published; case dismissed for review by
California Supreme Court as being moot.)
In Concerned Citizens for Responsible Government
v. West Point Fire Protection District, the court
agreed with the citizens’ group claim that a spe
cial assessment adopted by a fire protection dis
trict did not provide special benefit to property.
The court further agreed that by earmarking the
revenues for additional fire protection services
the district had, in effect, created a special tax.
This case calls into question the ability of local
governments to impose assessments to fund ser
vices or facilities for fire protection, police protec
tion, and, in some instances, park maintenance.
In order to levy assessments for these purposes, a
local government must be able to clearly demon
strate that the services provide a special benefit to
property separate from the general benefits.
In this case, the court found that the proposed
fire protection assessment failed to comply with
the substantive provisions of article XIIID, sec
tion 4(a) addressed in the Silicon Valley case. The
court noted that:
“the goal of the assessment is plain: double
the District’s existing budget for fire pro
tection service. Such an objective, however
lofty, does not contemplate the conferring
of special benefits on specific parcels suf
ficient to qualify as a special assessment...
Fire suppression, like bus transportation or
police protection, is a classic example of a
service that confers general benefits on the
community as a whole. A fire endangers
everyone in the region... Such protection
cannot be quantifiably pegged to a par
ticular property, nor can one reasonably
calculate proportionate “special benefits”
accruing to any given parcel.
It is important to emphasize that the opinion in
this case has been de-published and may not be
used as authority in any subsequent litigation. It
is, however, instructive of how a court may ana
lyze assessments imposed for similar services.
Golden Hill Neighborhood Ass’n,
Inc. v. City of San Diego, 199 Cal.
App. 4th 416 (2011) – Court holds
special assessments against public
property do not meet proportionality
requirements and assessment engineer’s
report failed to separate and quantify
special and general benefits.
In Golden Hill Neighborhood Association, Inc. v.
City of San Diego, the court found that the city
did not meet its burden of showing how the as
sessment amounts charged against certain public
property were proportional to the special ben
11 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
efits conferred on them. In addition, the court
held that the assessment engineer’s report failed
to separate and quantify the general and special
benefits received from the proposed services and
improvements, thereby making the formation of
the assessment district constitutionally infirm.
The City of San Diego formed an assessment
district for the purpose of providing services and
improvements for the benefit of properties in
the Golden Hill neighborhood. The report pro
vided a methodology for apportioning the special
benefit to each parcel but did not specify how
it was apportioned to city park and open space
land located within the assessment district. Ad
ditionally, it did not explain how the assessment
amount and corresponding ballot weighting for
such public properties were calculated.
The court held that it was not able to determine
from the administrative record, including the
report, how the assessments against the city’s
open space and park property were calculated or
whether they were proportionate to the special
benefits, if any, to be conferred on them. The
court therefore concluded that the city’s failure
to publicly disclose how the assessment amounts
for the city’s park and open space properties were
calculated compromised the transparency and in
tegrity of the ballot protest process by depriving
other property owners of the opportunity to re
view and challenge the ballot weighting for those
properties. The court noted that “notice of the
amount of an assessment is not notice of the basis
for an assessment.”
The Golden Hill Neighborhood Association, Inc.
repeatedly argued that the city’s failure to explain
the assessment amounts for the open space and
park properties should result in nullification of the
city’s entire vote for those properties which would
reduce the weighted vote in favor of forming the
District to a minority. Because the city did not
meet its burden of showing that the assessment
amounts charged against its park and open space
land were proportional to the special benefits con
ferred on them, the court could not conclude that
the ballots cast by the city for those parcels was
properly weighted under Article XIIID, section 4.
The court therefore held that it was appropriate to
eliminate the City properties from the weighted
balloting. With the elimination of the city’s ballot,
the ballots opposing formation of the district pre
vailed. The court therefore vacated the resolution
establishing the district.
The court also held that the report failed to sepa
rate the general benefits from the special benefits
conferred on property, finding no basis for the
report’s conclusion that the services are exclu
sively of distinct and special benefit to properties
in the district. Moreover, the report acknowl
edged that the services and improvements con
ferred some general benefit, but concluded they
would be minimal and offset by the significant
other contributions the city provides to property
in the district. Because Article XIIID, section 4
allows only special benefits to be assessed, the
court determined that even minimal general ben
efits must be separated from the special benefits
and quantified so that the costs of such general
benefits can be deducted from the cost assessed
against the properties.
Impact of Court Decisions
The proposed assessment must be supported by
a detailed engineer’s report prepared by a regis
tered professional engineer, which would, under
Proposition 218 and these recent court decisions,
include identifying the parcels that will receive a
special benefit from the improvements or services
to be funded by the assessment, determining the
proportionality of the special benefit among the
parcels, and making certain the assessment levied
upon a parcel is not greater than its proportionate
share of the costs of the special benefit received. In
addition, there must be an analysis to determine if
there are any general benefits associated with the
improvements to be constructed or maintained.
Recent judicial findings help to clarify the role of
the assessment engineer in preparing the report
12 California Debt and Investment Advisory Commission
which addresses the requirements of Proposi
tion 218. The following practical considerations
are provided to guide assessment engineers and
public agencies.
• As general benefits are not restricted to ben
efits conferred on persons and properties out
side the assessment district but may include
benefits conferred on real property in the
district or the public at large, the assessment
engineer’s report must separate and quantify
general and special benefits.
• An assessment represents an amount not in
excess of a particular property’s proportionate
share of the special benefit that will be con
ferred on it by a public improvement or service.
• The engineer’s report must recommend an ap
portionment of the cost of the particular pub
lic improvements or services to be financed,
which may include the cost of administering
the assessment district.
• The method of apportioning the cost of the im
provements may take into account, when appro
priate, proximity of properties to the improve
ments or services financed with assessments.
• The method of apportionment may provide
discounted assessments to certain properties
as long as those discounts do not cause the as
sessments imposed on the remaining parcels to
increase above the proportional special benefits
conferred on those parcels.
• The apportionment method may and should,
when appropriate, use multiple property char
acteristics to determine the proportional spe
cial benefits for each parcel within the district.
Different characteristics may be used to repre
sent different special benefits.
• If the apportionment methodology includes es
tablishing different zones of benefit, the zones
may not be based on the cost of the improve
ments serving that zone but must be based on
the special benefits accruing to those properties
from the improvements or services. For there
to be different zones of benefit, there have to
be different special benefits or different levels
of special benefit attributable to the zones.
• “Flat rate” assessments are extremely vulnerable
to challenge. This is especially true if: (a) the
assessments are levied “district wide,” involving
thousands of parcels; and (b) the assessments
on different parcels are the same irrespective of
the parcels’ location in relation to the improve
ment or services provided by the assessment.
Common Principles and
Approaches used in
Assessment District Finance
The combined weight of Article XIIID, the vari
ous assessment district acts, and the rulings of
the courts have provided a “set of standards”
that might be used by local agencies to guide
their actions.
A special assessment is a charge on a real property
imposed by the local agency to finance all or a
portion of the cost of providing public improve
ments or services. The assessment is based upon
the special benefits received by the property. As
sessments may not be used to fund general ben
efits. General benefit is not defined by Article
XIIID, but it is understood to be a benefit avail
able to and received by the general public and
independent of ownership of property. Proposi
tion 218 provided a definition of special benefit,
defining it as a “particular and distinct benefit
over and above general benefits conferred on real
property located in the district or to the public
at large. General enhancement of property value
does not constitute ‘special benefit.’”
Article XIIID provides that publicly-owned
properties that receive special benefit from the
improvements or services must be assessed.
Whether they will pay the assessment or not
should not be considered by the local agency.
The assessment engineer must identify the im
provements provided by the project, distinguish
special and general benefit derived from the
improvements, and identify all parcels benefit
13 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
ing from the improvements. This information
must be conveyed in an engineer’s report that
supports the benefit determination and the ra
tionale for the assessments. For the most part,
engineer’s reports contain the same basic in
formation, including sections addressing the
improvements or services provided, the cost
and location of the improvements or services,
a description of the general and special benefits
provided by the improvements or services, the
methodology by which special benefits were al
located to each parcel, and a listing of the pro
posed amount to be imposed on each benefitted
parcel and an assessment diagram showing the
location of benefitting properties.
The administrative and procedural processes for
establishing an assessment district encompass
a set of recognized steps. The public agency,
often with the support of the assessment en
gineer, identifies the improvements or services
to be provided by their location and type and
the cost of these improvements or services. The
costs must be directly related to the improve
ments or services provided. The engineer then
must identify the parcels specially benefitted by
the constructed improvements or services pro
vided as well as those bordering the improve
ments that may potentially benefit from them.
The engineer must next evaluate each parcel in
dependently to determine the benefit provided
to it by the improvements or services and, in so
doing, provide an analysis of what the special
benefit is and why the improvements or services
confer a special benefit on properties proposed
to be assessed.
To apportion the cost of the special benefit pro
vided, the engineer must identify and quantify
the general benefit. Examples of general benefit
include a road segment that provides access to
other properties, a storm drain retention basin
that holds drainage from other neighborhoods,
or construction of an arterial road as a condition
of developing adjacent properties. Quantifying
general benefit requires the engineer to establish
a methodology that in the end differentiates be
tween general and special benefit. So for example,
the benefit of a road to different parcels may be
apportioned according to trips taken by residents
on the road.
General benefit must be excluded from the as
sessment. Once the assessment engineer has
quantified the general benefit it may propor
tionately be subtracted from the cost of the im
provement so that only the remaining special
benefit is assessed.
How does the assessment engineer allocate the
remaining special benefit to benefited properties?
Because there are a plethora of combinations that
unfold from the type, cost, and distribution of
special benefits among different types of districts
providing different types of facilities or services,
it is impossible to dictate a single method or ap
proach. However, it is possible to recognize the
elements of a common approach that each assess
ment engineer should seek to apply.
The assessment engineer must develop a valid
and reliable methodology for allocating special
benefit. This requires the engineer to determine
how properties are benefited and what measure
ment or indicator best represents this benefit.
For example, the special benefit to properties
from improvements to a sewer line may be mea
sured by the size of the sewer connector line,
the size or type of property use (i.e., zoning or
land use), or the size and number of improve
ments on the property. The methodology used
must link the benefits of the improvement pro
vided by the financed facilities or services to the
property in a measurable and quantifiable way.
Furthermore, the methodology must be intui
tively sound and explainable. The methodology
should take into account future development
in order to apportion the special benefit to new
or newly improved properties as they begin to
receive benefits from the improvement or ser
vice or are able to take greater advantage of
the benefits as a consequence of development.
The assessments assigned to any parcel must be
proportional to the benefits received by the im
14 California Debt and Investment Advisory Commission
provements or services. If six properties receive
equal special benefit from the project, then they
would each be apportioned one-sixth of the cost
of the special benefits provided by the improve
ments or services. The total assessment must not
exceed the proportional special benefit received
by each parcel.
The following table provides various assessment
methodologies that may be applied to different
types of improvements and services. A common
special benefit resulting from many of the im
provements and services identified in the table is
the ability to develop the parcel. Stated another
way, the project is intended to meet the necessary
conditions of development. Another common
special benefit relates to unique or enhanced im
provements and services that otherwise are not
provided by the local agency (e.g., installation of
decorative lighting, installation and maintenance
of landscaped medians; more frequent trash col
lection, or power washing of sidewalks).
Summary
Since 2008 assessment engineers have had to re
main agile in response to the various decisions
rendered by the courts, resulting in an increas
ing level of rigor and detail in their analyses of
special benefit. The changes in approach used
by assessment engineers since 2008 have helped
to define a set of improved practices that will
continue to be modified as new decisions are
rendered by the courts. These changes are and
must continue to include:
A. MORE FOCUS ON IDENTIFYING SPECIAL AND
GENERAL BENEFITS. Since only special ben
efits may be assessed, the assessment engineer
must commit to defining, characterizing, or
otherwise differentiating the special and gen
eral benefits derived from an improvement
or service. The Silicon Valley court decision
refined the definition of special benefit and
questioned whether benefits attributed to
IMPROVEMENT COMMON UNIT OF SPECIAL
TYPE ENABLING ACT(S)10 MEASURE BENEFIT
Equivalent Dwelling Units Specific Enhancement to LANDSCAPING 1913 Act, 1972 Act, PBID (EDUs),11 Frontage, Acreage Property Value, Aesthetics
Safety, Character & Vitality, 1913 Act, 1972 Act, STREET LIGHTING EDUs, Frontage, Acreage Economic Enhancement,1982 Act, PBID Enhanced Illumination, Proximity
STREETS 1913 Act, 1982 Act, PBID EDUs, Frontage Access to Property, Safety
STORM DRAIN 1913 Act, 1982 Act, PBID Impervious Area Storm and Flood Protection
Proximity, Access to Green PARKS 1972 Act, PBID EDUs, Employee Density Spaces, Extension of Open Areas
SEWER 1913 Act Connection, Peak Capacity Occupancy, Health, Sanitation
View, Aesthetics, Safety, PUBLIC UTILITIES 1913 Act EDUs, Frontage Reliable Connection
SECURITY, Acreage, Frontage, PBID Economic EnhancementsMARKETING, ETC. Building Size, Use
9 The Municipal Improvement Act of 1913 (Streets and Highway Code section 10000 et seq.) (“1913 Act”), Landscape and
Lighting Act of 1972 (Streets and Highway Code section 22500 et seq.) (“1972 Act”) Benefit Assessment Act of 1982 (Gov
ernment Code section 54703 et seq.) (“1982 Act”) Property and Business Improvement District Law of 1994 (Streets and
Highway Code section 36600 et seq.) (“PBID)
10 An Equivalent Dwelling Unit is any “service unit.” A standard service unit is defined typically as one single-family dwelling
unit or its equivalent. A standard service unit is assumed to discharge wastewater at a flow and strength equal to that of an
average single-family dwelling unit. www.casaweb.org/definition-of-terms/e
15 Opportunities to Use Assessment Districts to Finance Facilities and Services in California Today
broad, regional improvements and services
may also be particular and distinct. However,
the mere fact that a benefit is conferred to all
parcels within the district does not necessar
ily make it general. Similarly, the Beutz and
Golden Hills court decisions affirm the need
to separate and quantify both general and spe
cial benefits to members of the general public
and to the parcels to be assessed. It is worth
repeating the court’s finding: “separating the
general from the special benefits of a public
improvement and estimating the quantity of
each in relation to the other is essential if an
assessment is to be limited to the special ben
efits.” By inference, if the special benefit rep
resents 50 percent of the total benefit, a local
agency may only levy an assessment for half of
the cost of the improvement or services. The
Tiburon court ruling clarified the fact that an
enhancement of property value arising from
a public improvement that provides a direct
benefit to property does not convert a special
benefit into a general benefit.
B. THE ASSESSMENT METHODOLOGY MUST BE
CLEAR, VALID, AND RELIABLE. Because of
the Supreme Court’s ruling in Silicon Val
ley, courts will now exercise their indepen
dent judgment in reviewing the validity of
an assessment. Given the fact that many
courts may not fully understand the nuances
of assessment district financing, providing a
defensible model for calculating the special
benefit and proportionally distributing this
benefit to properties is in the best interest of
the local agency. Assessment methodologies
that employ quantifiable measures, such as
trip counts, census, radius, diameter, are less
susceptible to challenge if they are reasonably
valid and reliable measures of benefit.
C. THE ASSESSMENT METHODOLOGY MUST
CLEARLY RELATE THE ASSESSMENT TO THE
SPECIAL BENEFIT RECEIVED BY EACH BENE
FITTED PARCEL. The methodology used by the
assessment engineer in Tiburon ignored the
relationship between the special benefit pro
vided by the project and the benefitted parcel.
As a result, parcels which may have been simi
larly benefitted were assessed differently. This
provides a caution to assessment engineers
who adopt categories of benefit based upon
EDUs or zones that the assessment method
ology must, in the end, reflect the individual
differences between parcels. The assessment
engineer may conclude that different parcels
are identically benefitted but only after ana
lyzing each parcel individually.
D. ASSESSMENTS FOR GENERAL SERVICES,
SUCH AS REGIONAL PARK MAINTENANCE
AND FIRE PROTECTION SHOULD BE AP
PROACHED WITH CARE. Because it is often
difficult to distinguish the general benefit
from special benefit derived from general ser
vices, it is difficult to develop and articulate
a methodology for proportionally distribut
ing the cost of the special benefit. As a result,
these types of assessments are susceptible to
challenge and adverse court rulings.
E. THE ASSESSMENT ENGINEER MUST DISTIN
GUISH BETWEEN BENEFIT AND COST. The
cost of the special benefits derived from
an improvement or service may not be
fully recoverable. Some of the special ben
efit may be passed on to parcels outside
of the district. As a result, the assessment
engineer must acknowledge the difference
in benefit vis-a-vis the difference in the
cost of the improvement or service. As the
Silicon Valley court ruling affirms, the cost
of the improvements or services to be as
sessed upon benefited parcels must be based
upon the cost of providing the benefit not
on the actual or projected cost of providing
the improvements or services. The Tiburon
court decision further recognizes the limits
of developing an assessment methodology
based upon cost rather than benefit. How
ever, the “proportionate special benefit” to
be assessed is a function of the total cost of
the project. Benefit zones may exist within
a district, but only where there are distinct
16 California Debt and Investment Advisory Commission
differences in benefit, not cost. These differ
ences may present themselves as differences
in the level of services, in improvements,
differences in proximity or in location.
F. ONLY THE PROPORTIONAL COST OF PROVID
ING THE SPECIAL BENEFIT MAY BE LEVIED
AGAINST BENEFITED PARCELS. As the Silicon
Valley court ruling indicates, the assessment
engineer’s report must carefully identify: (1)
the specific improvements or services to be
funded by the assessment; (2) the special
benefit that properties within the district
will receive from the improvements or ser
vices; (3) an estimate or calculation of the
cost of any improvements or services; and
(4) the direct connection of any proportion
ate cost of any special benefit received from
the improvement or services to the specific
assessed parcels. All benefiting parcels must
be assessed according to the Tiburon court
ruling. The Dahms court ruling recognized,
however, that the district was free to impose
assessments that are less than the propor
tional special benefit conferred, so long as
the discounts offered do not cause the as
sessments imposed on the remaining as
sessed parcels to exceed the reasonable cost
of the proportional special benefit conferred
on those parcels.
G. THE ASSESSMENT METHODOLOGY SHOULD
BE SUPPORTED BY THE ADMINISTRATIVE RE
CORD OF THE PUBLIC AGENCY. The Golden
Hill court was unable to determine from
either the engineer’s report or the admin
istrative record how the assessments were
calculated. In exercising its independent
judgment on the validity of an assessment, a
court will generally only review the adminis
trative record of the local agency responsible
for adopting a proposed assessment. The
most important document in that adminis
trative record is the engineer’s report, which
must include the methodology employed by
the assessment engineer to allocate the cost
of the proportional special benefit accruing
to each parcel.
The challenges facing local agencies seeking to
utilize assessment financing for improvements
or services suggest they take a few precautionary
steps. To this end, it is recommended that local
agencies take extra care when using assessment fi
nancing, including an evaluation of the proposed
improvements or services, and the suitability
of assessment financing versus other alternative
tools, including Community Facilities Districts,
other special taxes, or general taxes. Local agen
cies considering projects should weigh the experi
ences of other agencies that have used assessments
to finance the same or similar benefits. However,
local agencies should understand that courts are
now charged with a different standard of review
when determining whether an assessment meth
odology complies with Article XIIID. As a result,
the engineer’s report must clearly distinguish
special and general benefits and quantify these
in a valid and reliable manner. The local agency’s
administrative record may be used to support its
action both during the district formation process
and when and if challenges arise subsequent to
the levy of assessments.
Acknowledgements
This report was authored by Mark Campbell,
Executive Director of the California Debt and
Investment Advisory Commission. However, it
would not have been accomplished without the
direct contribution and support provided by the
following people: Dennis Anderson, Harris &
Associates; Jim Copeland, Sidley Austin, LLP;
Chris Fisher, Willdan Financial Services; Dean
Misczynski; John Murphy, Stradling Yocca
Carlson & Rauth, LLP; Larry Rolapp, Field
man Rolapp & Associates; Kelly Salt, Best Best
& Krieger, LLP; Tim Seufert, NBS; Sam Sperry,
retired bond attorney.
915 Capitol Mall, Room 400, Sacramento, CA 95814
p 916.653.3269 • f 916.654.7440
cdiac@treasurer.ca.gov
www.treasurer.ca.gov/cdiac
RESOLUTION NO. 19-023
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
ADOPTING BALLOT PROCEDURES FOR THE CITY'S 2019 CLEAN WATER AND
STORM PROTECTION FEE
WHEREAS, Proposition 218 was adopted on November 6, 1996, adding Articles
XIII C and XIII D to the California Constitution; and
WHEREAS, Article XIII D of the California Constitution imposes certain
procedural and substantive requirements relating to property-related fees; and
WHEREAS, barring a protest by a majority of affected property owners, the City
of Cupertino ("City") intends to conduct a ballot proceeding to obtain approval of a
proposed property-related fee, called the "2019 Clean Water and Storm Protection Fee"
consistent with the procedures established in Article XIII D of the California Constitution.
If approved, the 2019 Clean Water and Storm Protection Fee would raise revenue to pay
for services provided by the City that are necessary to repair, operate and maintain pipes
and other infrastructure to prevent system failure and sinkholes, protect clean drinking
water, comply with mandated clean water standards, and protect the City against future
flooding; and
WHEREAS, the City is initiating the process necessary to adopt the 2019 Clean
Water and Storm Protection Fee.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Cupertino as follows:
SECTION 1. Statement of Legislative Intent. In adopting this resolution, it is the
Council's intent to adopt property-related fee ballot proceedings for adoption of a
proposed 2019 Clean Water and Storm Protection Fee that are consistent and in
compliance with Article XIII D of the California Constitution.
SECTION 2. Definition of Property-Related Fee. Article XIII D, section 2(e), of the
California Constitution defines "fee" as "any levy other than an ad valorem tax, a special
tax, or an assessment, imposed by an agency upon a parcel or upon a person as an
incident of property ownership, including a user, or charge for a property related
service."
Resolution No 19-023
Page 2
SECTION 3. Property-Related Fee Ballot Proceeding. Article XIII D, section 6(c), of the
California Constitution states "[a]n agency may adopt procedures similar to those for
increases in assessments in the conduct of elections" for a property-related fee. The
following procedures shall be used to conduct a ballot proceeding to seek property owner
approval of the proposed 2019 Clean Water and Storm Protection Fee:
A. Property-Related Fee Ballots: The following guidelines shall apply to the property-
related fee ballots:
1. The record owner(s) of each parcel to be subject to the 2019 Clean Water and Storm
Protection Fee shall be determined from the last equalized property tax roll.
2. The ballot shall be designed in such a way that, once sealed, its contents are
concealed.
3. The ballot and/or ballot guide provided by this section shall contain the following
information:
a. The total amount to be charged to parcels City-wide;
b. The amount to be charged to the owner's particular parcel(s);
c. The duration of Fee payments;
d. The reason for the proposed Fee;
e. The basis upon which the amount of the proposed Fee was calculated;
f. A summary of the procedures for the completion, return and tabulation of the
ballots;
g. A statement that the failure to receive a majority of ballots in support of the
proposed Fee will result in the Fee not being imposed;
h. On the face of the envelope in which the notice of election and ballot are mailed,
there shall appear in substantially the following form in no smaller than 16-
point bold type: "OFFICIAL BALLOT ENCLOSED"; and
Resolution No 19-023
Page3
1. The ballot shall include the City's address for return of the ballot, the date and
location where the ballots will be tabulated, and a place where the person
returning it may indicate his or her name, a reasonable identification of the
parcel, and his or her support or opposition to the proposed Fee.
4. Failure of any person to receive a ballot(s) shall not invalidate the proceedings.
5. All ballots must be returned either by mail or by hand delivery and received by
the City not later than the date and time for return of ballots stated on the ballot
described in this section. Mailed ballots must be returned to the City Clerk at the
address shown on the ballot and pre-printed on the ballot return envelope. Hand
delivered ballots must be returned to the City Clerk at 10300 Torre A venue,
Cupertino, California 95014.
6. Each ballot must be signed under penalty of perjury.
7. Only one vote will be counted per parcel. If more than one vote per parcel is
submitted, then only the ballot with the most recent date will be counted and any
previous votes submitted for the same parcel will not be accepted or counted. If
more than one vote per parcel is submitted and the ballots for that parcel are not
dated, the replacement ballot will be counted and any other votes for the same
parcel will not be accepted or counted.
8. The City will only accept official ballots issued by the City.
9. If a 2019 Clean Water and Storm Protection Fee ballot is lost, withdrawn, destroyed
or never received, the City will mail or otherwise provide a replacement ballot to
the owner upon receipt of a request delivered to the City. The replacement ballot
will be marked to identify it as a replacement ballot. Any request for a replacement
ballot to be mailed to another location must include evidence, satisfactory to the
City, of the identity of the person requesting the ballot. The same procedure
applies to replacement ballots which are lost, withdrawn, destroyed, or never
received.
10. If a 2019 Clean Water and Storm Protection Fee ballot is returned by the United
States Post Office as undeliverable, the City may mail a redelivered ballot to the
current property owner, if updated ownership and/or owner mailing address can
be determined. The redelivered ballot will be marked to identify it as a
replacement ballot.
Resolution No 19-023
Page4
11. A property-related fee ballot is a disclosable "public record" as that phrase is
defined by Government Code section 6252 during and after tabulation of the
ballots.
12. To complete a 2019 Clean Water and Storm Protection Fee ballot, the owner of the
parcel or his or her authorized representative must (1) mark the appropriate box
supporting or opposing the proposed 2019 Clean Water and Storm Protection Fee,
and (2) sign, under penalty of perjury, the statement on the ballot that the person
completing the ballot is the owner of the parcel or the owner's authorized
representative. Only one box may be stamped or marked on each ballot. All
substantially incomplete or improperly marked ballots shall be disqualified from
the tabulation. The Tabulator will retain all such invalid ballots.
13. After returning a 2019 Clean Water and Storm Protection Fee ballot to the City
Clerk, the person who signed the ballot may withdraw the ballot by submitting a
written statement to the City directing the City to withdraw the ballot. Such
statement must be received by the City prior to the close of the balloting period.
When ballots for the 2019 Clean Water and Storm Protection Fee are tabulated, the
City Clerk will segregate withdrawn ballots from all other returned ballots. The
City will retain all withdrawn ballots and will indicate on the face of such
withdrawn ballots that they have been withdrawn.
14. In order to change the contents of a ballot that has been submitted, the person who
has signed that ballot may (1) request that such ballot be withdrawn, (2) request
that a replacement ballot be issued, and (3) return the replacement ballot fully
completed. Each of these steps must be completed according to the procedures set
forth above.
B. Tabulating Ballots. The following guidelines shall apply to tabulating 2019 Clean
Water and Storm Protection Fee ballots:
1. 2019 Clean Water and Storm Protection Fee ballots shall remain sealed until
tabulation commences after the conclusion of the balloting period.
Resolution No 19-023
Page 5
2. The ballots shall be tabulated in a location accessible to the public.
3. The City Clerk shall oversee the tabulation of the 2019 Clean Water and Storm
Protection Fee ballots, and may be assisted by technical staff from a third party.
The City Clerk shall follow the rules and procedures of the laws of the State of
California, this resolution and any other rules and procedures of the Council or
the City. All ballots shall be accepted as valid and shall be counted except those in
the following categories:
a. A photocopy of a ballot, a letter or other form of a ballot that is not an official
ballot issued by the City or on behalf of the City;
b. An unsigned ballot, or ballot signed by an unauthorized individual;
c. A ballot which lacks an identifiable mark in the box for a "yes" or "no" vote
or with more than one box marked;
d. A ballot which appears tampered with or otherwise invalid based upon its
appearance or method of delivery or other circumstances;
e. A ballot for which the parcel number is damaged or obstructed, unless the
parcel number or property ownership information is legible and allows the
Tabulator to clearly determine the property(s) identified on the ballot;
f. A ballot received by the City Clerk after the close of the balloting time
period;and
g. A ballot which has been withdrawn, or a ballot for a parcel for which a later
or replacement) ballot has been counted.
4. The City Clerk's decision shall be final and may not be appealed to the City.
5. In the event of a dispute regarding whether the signer of a ballot is the owner of
the parcel to which the ballot applies, the City will make such determination from
the official County Assessor records and any evidence of ownership submitted to
the City prior to the conclusion of the balloting period. The City will be under no
duty to obtain or consider any other evidence as to ownership of property and its
determination of ownership will be final and conclusive.
Resolution No 19-023
Page 6
6. In the event of a dispute regarding whether the signer of a ballot is an authorized
representative of the owner of the parcel, the City may rely on the statement on
the ballot signed under penalty of perjury that the person completing the ballot is
the owner's authorized representative, and any evidence submitted to the City
prior to the conclusion of the balloting period. The City will be under no duty to
obtain or consider any other evidence as to whether the signer of the ballot is an
authorized representative of the owner and its determination will be final and
conclusive.
7. A property owner who has submitted a 2019 Clean Water and Storm Protection
Fee ballot may withdraw the ballot and submit a new or changed ballot up until
the conclusion of the balloting period.
8. A property owner's failure to receive a 2019 Clean Water and Storm Protection Fee
ballot shall not invalidate the proceedings conducted under this section and
Article XIII D, Section 6 of the California Constitution.
9. The City shall retain all 2019 Clean Water and Storm Protection Fee ballots for a
period of two (2) years from the date of the close of the balloting period.
10. The period of time in which ballots may be submitted (balloting period) shall end
at 5:00 p.m. on the closing date of the balloting. All 2019 Clean Water and Storm
Protection Fee ballots must be received by this date and time to be tabulated.
11. After the conclusion of the balloting period, the Tabulator shall tabulate the ballots
at the direction of the City Council.
12. The ballot tabulation may be continued to a different time or different location
accessible to the public, provided that the time and location are announced at the
location at which the tabulation commenced and posted by the City in a location
accessible to the public. The City Clerk may use technological methods to tabulate
the ballots, including, but not limited to, punch card or optically readable (bar-
coded) ballots.
13. Each ballot shall count for as many votes as there are parcels with a fee greater
than zero listed on that ballot. If, according to the final tabulation of the ballots,
votes submitted against the 2019 Clean Water and Storm Protection Fee exceed the
votes submitted in favor of the 2019 Clean Water and Storm Protection Fee, the
City Council shall not impose the 2019 Clean Water and Storm Protection Fee.
Resolution No 19-023
Page7
PASSED AND ADOPTED at a Regular Meeting of the City Council of the City of
Cupertino the 5 1" day of March 2019, by the following vote :
AYES:
NOES:
ABSENT:
ABSTAIN:
Members of the City Council
Scharf, Chao, Paul, Sinks, Willey
None
None
None
ATTEST: APPROVED:
3-tl{f] ~-~
Grace Schmidt, City Clerk Steven Scharf, Mayor,
City of Cupertino