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HomeMy WebLinkAbout40-Council Office ( CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Wendy McCammack Dept: Council Office Subject: League of California Cities Housing, CommUDity and Economic Development Committee Report Date: 7-06-06 Synopsis of Previous Council Action: NI A Recommended motion: Receive and file report from League of Califomia Cities, Housing, Community and Economic Development Committee Meeting of 6-22-06. Signature Contact person: Phone: 909-384-5068 Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: N1A Source: (Acct. No.) (Accl Description) Finance: Council Notes: .. .-.' ..,...~"'._,,-,-~_.-.~->,"-~, Entered into Record 8t ,_ I I C"lJl1cillCmvDevCms Mtg: 1110 Iv (" IJV_C~iu.~ IJ%. ~ re I-I!lda Item ,/.f 0 Agenda Item No. 40 ~ ,f,j ~ City ClerklCDC Secy City of San Bernardino :. CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION STAFF REPORT 1. Discussion regarding "The Affordable Housing Bond" Measure (Prop I C): 40% polled approval rating to date, not enough to pass the measure because of the following wording per the pollsters... "affordable housing" "multi-family" "supportive transitional housing" 2. Discussion regarding Eminent Domain: In Kelo, the courts held that RDA's may have acted beyond redevelopment law. The League's position on the Anderson Initiative (pROTECT OUR HOMES INITIATIVE).. .on its face it sounds like Motherhood and Apple Pie. Hidden in the fine print are provisions that will require huge taxpayer subsidized bailouts. For instance, imagine if the taxpayers had to pay the property owner for the property under Caesar Chavez Middle School, not the value before it was built but AFTER it was built. The devil is in the details in this initiative. There are several bills pending to reform eminent domain that are good for the taxpayers, maybe not as overreaching as this one, but if it gets to the ballot in November, please read it in its entirety as to the long-term costs and effect before you vote on the measure. The problem is that some sectors of government have abused takings and the public has had enough. 3. AB2922 Jones: bill requires RDA's to set aside 50010 ofT! for low-mod housing instead of the current 20%. 4. Mullins bill (AB773): extends the time to gather signatures for redevelopment initiatives from 30 days to 90 days. His other bill (AB 782) tightens up the definition of blight. 5. Enterprise Zones: HCD says EZ's are to encourage business and generate jobs to low income and disadvantaged workers. 42 zones in the state, currently. Deadline for new applications is Sept. 6th of this year. Holding up the new legislation are the issues ofEIR's and CEQA requirements and retroactive tax credits. SB763 okay but SB 1 008 has stopped as of 6/22/06 because of the above stated issues. 6: AB 2987: the big telecommunications bill that you see commercials about now. Update on Key Land Usel Housing Bills As the Legislature nears adoption of a budget, talk fills the halls of the State Capitol that the month-long summer recess (July 7 to August 7) may actually occur. By July 7, policy committees will have concluded their work, and when the members return in August, they will have only 23 days to finish work in the appropriations committees, debate issues on the floors, then adjourn for the year August 31. This is, therefore, a good time to take stock on where things on land use and housing legislation. The 2006 Legislative Session has been a contentious one for land use issues: infrastructure funding, redevelopment reform, eminent domain and (Kelo), housing elements, twenty-year land supplies, density bonus battles, etc. Infrastructure Bond Package. Two of the most important developments for housing in this legislative session have been the passage of a $38 billion infrastructure bond package, with funding for transportation, housing, schools, levees; and passage of measure that protects local Proposition 42 transportation funds. Voter approval in November remains a significant hurdle, however, as we are reminded by the voters' rejection of the library bond (Prop. 81) and many local transportation taxes in the June primary. Eminent Domain (Kelo) and Redevelopment Reform. Early in the year redevelopment agencies were running a gauntlet of legislative proposals aimed at stripping away eminent domain authority, forcing higher housing set- asides, and imposing other restrictions. Thanks to the excellent efforts of the California Redevelopment Association and opposition from local governments, many of the most onerous proposals have been defeated or stalled. Several bills, however, including SB 1206 (Kehoe), continue to have provisions that merit opposition. Yet, the real battle will come over the "Anita Anderson" initiative measure, which is anticipated to qualify for the November ballot. This measure not only contains many limitations on the use of eminent domain, it also expands broadly into the field of "regulatory takings" and would require compensation by state or local governments to property owners for impacts of state or local laws on property. Housing Elements and Other Laws. A number of bills were introduced in this area, but many have either stalled or have been significantly amended. SB 1800 (Ducheny), a homebuilder-sponsored bill which required 20-year land supplies to be dedicated to housing and expanded state control over local housing elements, remains stalled in the Senate due to significant environmental and local government opposition. Other measures which the League opposed, such as AS 2526 (Arambula) and SS 1177 (Hollingsworth) are also stalled. While amendments have improved other bills, the League remains opposed to SS 1330 (Dunn), which expands attorney fee provisions against local governments, and several other measures. League's Housing/Land Use Package. The League's housing package also has thinned out over the Legislative Session. Two League-sponsored measures both failed to emerge from the Appropriations Committee suspense files due to costs to the state, and the adoption of $2.85 billion the housing bond SS 1689 (perata). These are SS 1754 (Lowenthal), which expanded tax increment financing for high-density housing development, and AS 2503 (Mullin), which required a dollar-for dollar return or ERAF funds to local governments to match investment in local housing trust funds. Other stalled measures are AS 2468 (Salinas), allowing local self-certification of housing elements, and AS 3042 (Evans), which proposed a more flexible housing transfer process. AS 2468 became in mired in housing advocate opposition, while AS 3042 became so loaded with unrealistic requirements that it was no longer worth pursuing. These other League-sponsored measures, however, continue to move: AS 2158 (Evans), which requires COGs to consult with LAFCO's prior to adopting housing allocation methodology; AS 2572 (Emmerson) which ensures communities with universities can raise unique local issues; and AS 2259 (Salinas), which continues LAFCO authority to review unincorporated county development for consistency with LAFCO policies. Flood Control. Within the last few months, the Legislature has been "awash" in flood control bills. Two key measures that relate to housing, planning and flood control are AS 802 (Wolk) and AS 1899 (Wolk). AS 802 is supported by the League. It now includes amendments jointly developed by the League, CSAC, APA and RCRC and others to enhance how general plans address flood issues. AS 1899 (Wolk) is the so-called "show me the flood protection" bill which proposes to tie future Greenfield development to implementation of plans to , achieve 200-year flood protection. The state Department of Water Resources has been circulating a conceptual proposal to address the topic in a different manner. A hotly debated bill, AS 1899 will likely be the subject of continued negotiations throughout the summer. The League has sent comments to the author, and the EQ and HCED policy. Finally, it is likely that one omnibus bill will be crafted to address the issue of liability and flood control. Affordable Housing Bond - $2.85 Billion (SB 1689 - As Amended May 4, 2006) An investment of $1.8 billion could produce homes and shelter spaces for more than 37,057 families or individuals: . Affordable homeownership programs: $725 million (50 percent of the bond) would help an estimated over 23,600 families become or remain homeowners (23,646). This includes funding for the Building Equity in Neighborhoods Program, CalHome and California Downpayment Assistance Program. . Affordable rental housing construction programs: $345 million will provide affordable rental housing for over 4,000 (4,054) families, including rental housing for the State's lower income workforce, the elderly, disabled, and veterans. . Housing for farmworkers: $135 million will produce rental and affordable ownership opportunities for over 2,800 farm worker families. . Homeless permanent housing construction: $245 million to build permanent housing for the homeless, those transitioning out of homeless, and foster care youth. Over 2,400 units for permanent housing would be produced. . Homeless shelter housing construction: $50 million to construct and expand shelters of last resort and transitional housing for the homeless. . Transit-Oriented Development: $300 million for the development and construction of housing development projects within close proximity to transit stations. . A $1.8 billion investment would leverage an estimated $9.4 billion in other private and local funding, and create an estimated 87,000 full time jobs, almost $3.5 billion in wages and $520 million in combined federal, State and local tax revenues over the award and construction period. The $2.85 billion Strategic Growth Plan housing bond also includes $200 million for urban, suburban and rural parks and $850 million in grants for development of public infrastructure projects that facilitate or support infill housing construction. Projects could include water, sewer and transportation improvements, traffic mitigation, brownfield cleanup and up to an additional $200 million for parks. Attachment I Infrastructure Bond Packal!:e Uudate Proposition lA-Prop 42 Fix seA 7 (Torlakson). A state constitutional amendment to "fix" 2002 Proposition 42, by permanently dedicating the sales tax on gasoline to transportation purposes - a key goal for the Leaguc--with new restrictions on the diversion of the funds that are virtually identical to Proposition IA - the historic League-sponsored measure passed overwhelmingly by the voters in 2004 that ended the state's ability to raid local funds. Like the Prop. IA of 2004, the measure (also Prop. IA) would allow the Legislature to borrow the Prop. 42 funds, buy only by meeting the following criteria: . The governor must declare that the state faces a severe fiscal hardship . The Legislature must enact statute authorizing the borrowing by 2/3 vote. At the same time, the Legislature must pass a bill specifying that they will repay the loan with interest within three years. . The state can borrow the funds no more than twice in 10 years, and must repay a prior loan before borrowing. . Any Prop. 42 transportation funds that were borrowed by the state but not repaid as of July I, 2007, must be repaid within a 10 year period (no later than June 30, 2016) at payment of no less than one-tenth per year of the total amount owed. . Authorizes the Legislature to provide for the issuance of bonds by state or local agencies in accordance with the established Prop. 42 allocation methodology. Proposition 1B-Transportation Bond SB 1266 (Nunez/Perata). Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006. This measure authorizes $19.925 billion ofstate general obligation bonds for high-priority transportation corridor improvements, includinl! $1 billion for cities and $1 billion for counties to snend on local transportation proiects. Unlike Prop. 42 funding, which is dedicated to local street and road maintenance and repair projects, local agencies may determine their own priorities for use of these transportation funds. Specific allocations include the following: . $2 billion for the Local Street and Road Improvement, Congestion Relief, and Traffic Safety Account, allocated directly to cities and counties for traffic congestion relief, traffic safety, transit, storm damage, maintenance, construction and other projects to improve the local street and road system. $1 billion will go directly to cities (minimum $400,000 allocation), and $1 billion will go directly to counties. . $4.5 billion to Corridor Mobility Improvement Account to fund performance improvements on highly congested travel corridors. This includes major access routes to the state highway system on the local road systems that relieve congestion. . $1 billion for improvements to State Route 99 traversing approximately 400 miles of the Central Valley. - 1 - . $3.1 billion for the California Ports Infrastructure, Security, and Air Quality hnprovements Act. Of the $3.1 billion, $2 billion is to fund improvements to trade corridors, $1 billion to State Air Resources Board for emissions reductions related to goods movement, and $100 million for the Office of Emergency Services for publicly-owned port, harbor and ferry terminal improvements. . $200 million for school bus retrofitting and replacement to reduce air pollution. . $2 billion for projects in the State Transportation hnprovement Program (STIP). . $4 billion for the Public Transportation Modernization hnprovement and Service Enhancement Account for improvements to intercity rail and other transit-related projects and improvements. Of the $4 billion, $400 million is dedicated to rail improvements and purchase of railcars and locomotives. . $1 billion for the State-Local Partnership Program Account for transportation projects nominated by a regional transportation agency. This program requires a dollar for dollar match of local funds. . $1 billion for the Transit System Safety, Security and Disaster Response Account for projects that increase protection against security and safety, and develop disaster response systems. . $125 million for Local Bridge Seismic Retrofit Account for seismic work on local bridges, ramps, and overpasses. . $750 million for the Highway Safety, Rehabilitation and Preservation Account (SHOPP) for safety, rehabilitation and preservation projects on state highway systems. $250 million ofthe funds in this account are for technology-based improvements to improve safety, operations and effective capacity oflocal streets and roads. . $250 million for the Highway-Railroad Crossing Safety Account for completion of high-priority grade separation and railroad crossing safety improvements. Proposition lC-Housing Bond AD 136 (Nunez and Perata). This measure contains $2.85 billion in funding for affordable housing construction, infill incentives. The funds are divided into the following funding categories: , Housing Construction: . $1.5 billion for first-time homebuyer programs an~able I;ousing construc~f which: ----_..----~----_._-'---'''- - $345 million for the construction of affordatiIe.multif~miIYlJousing. - $300 million for loans/grants for local homeownership programs. - $200 million for down payment assistance. - $195 million fO~iv:tran~ - $135 million for farmworker housing -2- - $125 million for grants to local governments for down payment assistance programs, where local regulatory barriers have been reduced. - $100 million for a newly created affordable housing innovation fund. - $50 million for housing for homeless foster youth. - $50 million for emergency shelters. Planning and Inflll Incentives: . $850 million for regional planning, housing, and infill incentives which will be further defmed by future legislation, of which no more than $200 million may be used for park development in conjunction with infill. . $300 million in grants to local governments to develop infrastructure associated with high density transit-oriented development. . $200 million for development of parks in urban, suburban and rural areas, subject to conditions which will be further defined by future legislation. Proposition ID-School Construction AB 127 (NunezlPerata). Education Facilities: Kindergarten-University Public Education Facilities Bond Act of 2006. This measure would provide $10.4 billion in bonds to be deposited into the 2006 State School facilities funds, which will be used to meet capital outlay needs of higher educational facilities, and finance grants for construction and renovation of schools, including charter schools and facilities for career technical education programs, and to relieve overcrowded schools. This also includes $29 million to fund joint-use projects for construction of K-12 school facilities. Here is the breakdown: . $1.9 billion for new construction of school facilities. . $500 million for providing school facilities to charter schools. . $3.3 billion for modernization of school facilities. . $500 million for facilities for career technical education programs. . $1 billion for new construction to fund severely overcrowded school sites. . $1.5 billion for CA Community Colleges. . $890 million for DC and Hastings College of Law. . $690 million for CSU. - 3 - Proposition IE-Levees and Flood Prevention AD 140 (Nunez/Perata) Disaster Preparedness and Flood Prevention Bond Act of 2006. This bond would provide a total of $4.09 bil1ion to prevent flooding by repairing levees and other flood control infrastructure in the Sacramento-San Joaquin River Delta and elsewhere. The funds will be allocated as follows: . $3 billion to evaluate, repair, rehabilitate, reconstruct or replace levees, weirs, bypasses and facilities contained in the state flood control plan; improve or add facilities to increase levels of flood prevention; and reduce the risk of levee failure. . $500 million to cover the past and future obligations under the flood control subvention payments to local governments for qualifying projects. . $290 million for the protection, creation, and enhancement of flood protection corridors and bypasses, including fund for floodplain mapping. . $300 million for grants (with local match) to manal!e storm water runoff to reduce flood damage and provide benefits such as ground water recharge, water quality improvement and ecosystem. Related Trailer Bills AB 142 (Nunez/Perata) Flood Control: Levee Repair and Flood Control Systems. This measure is an urgency appropriation of $500 million dedicated to levee repairs for those critical levee erosion sites identified under Governor's Executive Order S-O 1-06 in order to reduce the threat of potential flood damage. AD 1039 (Nunez/Perata) Permit Streamlining. This bill would provide exemptions from the California Environmental Quality Act (CEQA) to streamline various transportation, levee repair and flood control projects funded by the transportation and flood control bond measures that will appear on the November 7, 2006 statewide general election. They are: . Structural modification of specific existing and replacement highway structure projects in Alameda, Santa Barbara, and Los Angeles Counties. . Specific seismic retrofit projects on existing local bridges. , . Repair of critical levees of the Sacramento River Flood Control Project that are within an existing levee footprint. Requires the lead agency performing the repairs to conduct community outreach, sufficiency comply with standard construction practices, and to use emulsified diesel fuel to the best extent possible with a sunset of July I, 2016. - 4- Attachment II HOUSING, COMMUNITY & ECONOMIC DEVELOPMENT POLICY COMMITTEE Legislative Agenda ("denotes consent item) REVISED REDEVELOPMENT Backl!:round: Since the U.S. Supreme Court's decision in Kelo v. City of New London last year, many bills have been introduced which have restricted eminent domain and redevelopment law. The League and CRA have opposed these bills. However, a few "lower priority" bills have been introduced in both the Assembly and the Senate that the League should support, but our existing policy restricts our ability to support them. Currently our existing policy on Redevelopment reads: The League supports continuingjlexibility in the use of redevelopment authority. Redevelopment authority has been one of the few tools that cities have been provided that encourages economic development. The League opposes limiting authority or increasing the liability of redevelopment agencies. It is apparent that our existing policy on redevelopment does not provide flexibility to support minor changes and clarifications that address fairness issues or other concernS with the law. For these reasons, we are bringing the following bills for support positions to the committee: 1. AB 1893 (Salinas) Redevelopment. Summary: Existing law prohibits a redevelopment agency from using tax increment funds for the construction or rehabilitation of a city hall or county administration building. This bill clarifies that the ban on spending tax increment funds on the construction of city halls or county administration buildings includes spending money for land acquisition, related site clearance, and design costs. Staff Recommendation: Support. CRA is currently watching this legislation because they understand this bill to reflect the current interpretation of existing law. 2. AB 773 (Mullin) Redevelopment Referendum Summary: - 5 - Existing law provides that only voters in cities or counties with a population over 500,000 are guaranteed a 90 day time line to gather sufficient signatures to qualify a redevelopment referendum (Health and Safety Code 33378). This bill would extend the 90 day time line to ALL cities and counties. According the committee analysis, most cities and counties, referendum petitions challenging a redevelopment ordinance must be submitted within 30 days of the adoption of the ordinance. But with cities or counties with populations over 500,000, the petition period is 90 days after the ordinance's adoption (Health and Safety Code 33378). This bill allows smaller communities the same time line as those larger than 500,000. Staff Recommendation: Support. This position is consistent with CRA's position on the bill. 3. AB 782 (Mullin) Redevelopment: Proiect Area. Summary: This bill tightens up the definition of blight by removing the provision that states that a blight finding may be found where there are lots of "irregular form and shape" and "inadequate size for proper usefulness." This finding of blight has always been somewhat controversial and does not fit neatly into the public perception of blight. Staff Recommendation: Support. This position is consistent with CRA's position on the bill. 4. SB 1210 (Torlakson) Eminent Domain Summary: This bill would make the following changes to the laws governing the use of eminent domain: \ . Prevents the issuance of a pre-judgment order of possession, which would allow a public entity to take possession of a property without prior notice and an opportunity for the owner or occupant to respond and seek a hearing. . Requires a public entity seeking to take a property by eminent domain to offer to pay the property owner's reasonable costs for an independent appraisal. . Prohibits a redevelopment agency from exercising eminent domain powers more than 12 years after the adoption of the redevelopment plan, unless substantial blight still exists in the area that cannot be eliminated without the use of eminent domain. . Creates a new conflict of interest provision that would prevent a board member of a public entity who also sits on organization's board from voting on matters - 6 - affecting the organization ifthere is an interest in property that the public entity has taken by eminent domain. . Clarifies that possession can be granted if the property owner does not object within 30 day time period, and directs the court to grant possession after an application hearing unless it finds specific hardships. . Allows for an emergency possession at the courts' discretion. . Allows possession without serving the property owner in limited circumstances. Staff Recommendation: Support. WATER 5. AB 1899 (Wolk). Show Me the Flood Protection. Policv Questions: . What position, if any, should the League take on AB 1899 or similar legislation, that proposes a new regulatory scheme for approval of new developments in the Sacramento River-San Joaquin River watersheds? . Should the League support, oppose or remain neutral on legislation regarding stronger flood protection standards for new developments in the Sacramento-San Joaquin Rivers watershed? . How does one balance the need to plan so as not to put people in harms way with the need to approve new housing developments? . Should new, greeenfield development that may flood to a depth oftwo/tbree feet or more be required to meet higher flood protection standards than currently required by federal law (i.e., achieve 100 year protection sooner and eventually reach 200 year protection)? . How do cities feel about a requirement to achieve a 200 year flood protection standard? What about requirements to provide flood risk notice to new homeowners (and subsequent purchasers), and developer provided insurance until the 200 year standard is met? Staff Recommendation: Discussion. Staff will provide a written and verbal report of the comments and recommendations of the League's Flood Working Group, which has been expanded to include more representatives from the impacted areas. Staff will also provide an update on the ongoing discussions about AB 1899, including a summary ofa new proposal being offered by the Department of Water Resources. This issue is being reviewed by both the EQ and HCED Policy Committees. MISCELLANEOUS -7- *6. SB 1329 (AlQuist). Community Development. Healthv Food Choices Policv Questions . Should the League take a position on legislation that encourages opportunities for food stores to sell items that offer healthy food choices to underserved communities and that facilitates locating such stores in underserved communities? . Is this bill consistent with one of the League's strategic priorities, which is to promote healthy communities? Staff Recommendation: Support. Although traditionally the League does not get involved in such types oflegislation, this voluntary measure is consistent with the League's interest in promoting healthy communities. In addition, the sponsors ofthe measure specifically requested the League's support. This measure is being considered by the COlnmunity Services Policy Committee and the HCED Policy Committee. Bill Summarv: This bill would establish a grant and loan program for the development of retail markets that will offer healthy, high quality and affordable food in underserved communities. Specificallv, the bill would establish, until January 1,2010, the Healthy Food Retailing Initiative in the State Department of Housing and Community Development, in partnership with the Department of Health Services. It would require HCD to provide competitive grants to fund such activities as feasibility studies and business plan development and would require HCD to provide competitive loans for development of retail food markets in underserved communities. Funding would come from HCD's administration ofCDBG funds. Support/Qpposition: The measure is sponsored by the California Center for Public Health Advocacy and is supported by a wide variety of community, EJ and health groups. There is no known opposition. The sponsor has requested that the League support this measure as not only an economic development issue, but primarily as a community health Issue. , Fiscal Impact: Unknown. Funds for grants and loans would come from CDBG funds. Possible positive economic impact through increased economic vitality in underserved communities, as well as reduced health costs as families are able to purchase higher quality food at more affordable costs. - 8 - AB 2987 (Nunez/Levine): Why This Bill Needs Work AB 2987 (NuiiezlLevine) would create a new statewide franchise for cable and video service providers, issued by the California Department of Consumer Affairs. The bill's supporters claim that AB 2987 will guarantee 'speed to market' for telephone companies that want to offer video services that compete with cable companies. They argue that increased competition will offer consumers lower rates and better service. The Telecommunications Equality Coalition is a group of community and local government organizations that support competition and a streamlined approach to franchising. But we are greatly concerned about AB 2987 and have highlighted our concems and provided solutions below: Prevent Discrimination. AS 2987 prohibits discrimination on the basis of income, but contains only vague legislative intent language concerning build-out. It pre-empts local build-out requirements and is silent on statewide build-out issues. AT&T has a business build-out strategy that deoends upon cherry-picking. Solution: Amend the bill to require that state franchises must provide the same landline-based broadband service throughout each local jurisdiction within a specified number of years of providing the service to the first customer within that jurisdiction. Provide that state franchisees must offer the same land line-based broadband service throughout their telephone service territory within the state within a specified number of years, deploying to both high and low income areas. Strengthen Customer Service Standards. AB 2987 pre-empts local customer service standards which local agencies adopt and enforce under their cable franchise agreements. The bill requires local agencies to enforce limited state standards and authorizes the imposition of liquidated damages. but preempts franchise termination as a remedy. In other words, the bill gives local agencies the responsibility for ensuring consumer protection with little real authority. Solution. Leave in place local agency authority to adopt customer service standards; at a minimum, adopt model customer service standards developed by the Federal Communications Commission (FCC). Leave in place local authority to enforce those standards, including franchise termination in extreme cases. Retain Local Authority to Manage Public Rights-of-Way. AS 2987 contains confusing and conflicting language about who controls the public rights-of-way. It also bill defines 'right of way' so broadly that franchisees could put the boxes virtually anYWhere on public or Drivate lands. It is also not clear in the bill who would be responsible for addressing graffiti or other problems. With AT&T planning to 1 ,- install large utility boxes (referred to as '52Bs') in order to deliver its 'Project Lightspeed' service, neighborhoods could be signifICantly impacted by a loss of control over the rights-of-way. The boxes stand more than 5 feet high, 40 inches deep and 20 inches wide. Illustrations of the impact that poorly located and poorly maintained AT&T boxes could have on a community. Solution: Amend the bill to provide that nothing in the bill affects the authority of local agencies to regulate the time/place/manner of the use of the public rights-of-way provided it is done in a manner consistent w~h the bill. Develop a better defin~ion of rights-{)f-way, and clarify who is in charge of cleaning up graffiti. If the locals, then local agencies need better authority. Retain Funding for PEG Channels. Public, education and government channels ('PEG') are an important tool used by many local agencies and local organizations to broadcast public meetings. programs and information of community interest. Cities are currenijy able to negotiate with cable providers as part of their local franchise agreement for PEG funding and support. AB 2987 would instead prescribe a set amount for PEG channels, and limit that to only pay for capital expenses (no operating expense). Solution: Amend AB 2987 to provide that operators shall pay a specified amount of gross revenues for PEG only (not I-Net, which should be funded separately). Provide that these funds may be used for e~her capital or operational expenses. , More than $300 Million Annual Franchise Fees at Risk. California cities currently receive approXimately $300 million a year in cable franchise fees, in exchange for the cable companies 'renting'local rights-of.way. These funds are considered general revenues - available to fund public safety or other local priorities. I I , These revenues could be lost or significantly reduced if cable companies are able to cut a deal in AB 2987 that allows them to abrogate current contracts to achieve a 'level playing field" with telephone companies. Future Franchise Fees Are At Risk. AB 2987 provides local agencies with franchise fees equal to 5% of gross revenues (as many agencies receive today). But the bill as drafted presents two serious issues. First, while local agencies can currenDy impose a franchise fee as 'renf for local rights-of-way, AB 2987 imposes a state franchise fee that is remitted to the local agency. Since the state does not own local streets, this state-imposed fee is really a tax. Local agencies would need voter approval before they could Impose these new "franchise fees" (taxes) on new franchisees. Second, the definition of 'gross revenues' excludes many services from that definition - meaning that agencies will lose revenues. 2 -.-.'"'".' Solution: Authorize local agencies - not the state - to impose a franchise fee not to exceed 5 percent of gross revenues, provided that the fee is the same for all equivalent providers. The bill could impose 'speed to marker considerations - require issuance within a specified number of days: automatic approval after a specific time, etc. Also, provide that revenues from bundled services shall be allocated between each type of service in proportion to the price of each service if provided separately. SeNlce to Schools, Ubraries and Other Public Buildings. Many local franchises require operators to provide free video and data services to public schools, libraries and other public buildings. These requirements ensure that our kids have the full range of educational tools that people without access to broadband can get it at libraries. and that government agencies can better serve the public. The bill would preempt these requirements. Solution: Require operators to provide free service to all public schools, libraries and other public buildings. Institutional Networks. InstibJtional Networks ("I-Net') provide a tremendous benefit to local government by providing high capacity voicelvideo/data networks that they could never afford on their own, while costing the operator relatively little due to the fact that the incremental cost of building additional capacity is relatively low. Many local franchises require the cable operator to provide an I-Net- but AB 2987 doesn't require operators to provide an Institutional Network even if paid for by the local agency. The bill would effectively tenninate existing Institutional Networks and prevent the deployment of new Institutional Networks. Solution: Amend the bill to require operators to provide an I-Net, with the number of network connections or sites based on the population of the local agency. Alternatively, require existing Institutional Networks provided by incumbents to continue, but require new entrants to pay a proportionate share of the cost to the incumbent. 3 MARIN COUNTY 591 R.EDWOOD HIGHWAY, 14000 MILL VALLEY, CALIFORNIA 9"94.1 TELEPHONE (415) 389-68UO LAW OFFICES Of NIELSEN, MERKSAMER, PARRINELLO, MUELLER 8< NAYLOR, LLP 1"'15 L STREET, SUITE 12QO SACRAMENTO, CALIFORNIA 95814 TELEPHONE (916) 446-6152 SAN FRANCISCO 225 BUSH STREET, 16TH FLOOR SAN fRANCISCO, CALIfORNIA 94104 TELEPHONE (41.5) 389-6800 FAX (.'51388--6814 FAX (916) 446-6106 FAX {.lS) 386-6874 June 13, 2006 CONFIDENTIAL-ATTORNEY/CLIENT PRIVILEGE TO: Coalition to Protect California FROM: Steve Merksamer Cathy Christian RE: Taxpayer Implications of the "Protect Our Homes Act" Initiative (Secretary of State No. 1204 - Attorney General No. SA2005RFOI46) You have asked our firm to review the "Protect Our Homes Act" initiative referenced above, which is pending signature verification with the Secrefary of State. Specifically you have asked that we look at its potential to increase costs for California taxpayers. While proponents are highlighting the provisions restricting eminent domain, this measure goes far beyond eminent domain reform to include provisions that would require increased payments by government agencies - and thus taxpayers - for cornmon public works and infrastructure development such as schools, roads, utility infrastructure and levees, to name a few. It also contains new and far-reaching "regulatory takings" provisions that would require new and increased payments any time a state or local agency, or group of voters, enacts a new law or regulation that impacts the value of property. The initial summary of the fiscal impact on state and local governments prepared by the Legislative Analyst and Director of Finance indicate the measure will result in "potentially significant major future costs for state and local governments to pay damages and/or modify regulatory or other policies to conform to the measure's provisions" and "potentially major changes in governmental costs to acquire property for public purposes. " Combined, it is not unrealistic to predict that these new provisions would increase government costs and costs to taxpayers by billions of dollars annually. Here's why: , · INITIATIVE PROVIDES NEW DEFINITIONS FOR COMPENSATION REQUIRED WHEN STATE OR LOCAL AGENCIES ACQUIRE LAND FOR PuBLIC PROJECTS - DRIVING UP TAXPAYER COSTS AND REDUCING THE ABILITY OF VOTERS AND STATE AND LOCAL AGENCIES To BUILD ROADS, SCHOOLS AND OTHER NECESSARY INFRASTRUCTURE. In cases of eminent domain necessary for traditional public infrastructure projects like schools, roads, utilities or other public works, the initiative alters the definition of "just compensation" for the property from the current standard of "fair market value" to a complex valuation which is ripe for dispute and costly litigation. For instance, if the condemned land is going to be used "for ,any proprietary government purpose" the property must be valued "at the use to which the government intends to put the property". Although "proprietary government purpose" is not defined, it is entirely possible, for example, that the state or a local government could acquire property to build a new toll road that would generate ongoing revenue. The initiative could be construed to require that a landowner receive compensation for this property measured by the condemned property's proportional relationship to the total acreage acquired for the project at the value the government intends to use the property. Under this view, then, it is possible to imagine that the property owner could receive compensation measured by a portion of potential revenues to be generated by the new toll road - even if the property owner could never have achieved such use. It is fairly evident that the method of compensation specified in the initiative could result in a windfall to a property owner that is potentially staggering in its dimensions, and costly and unfair to the taxpayers who will carry this burden. The result of the "just compensation" provisions of the initiative will mean one of two things: either the public will never receive the benefits of necessary infrastructure projects because the compensation is too costly or the burden on taXpayers to provide compensation under the initiative's provisions will increase exponentially. . THE MEASURE'S PROVISIONS REDEFINING PROPERTY "DAMAGE" REQUIRE TAXPAYER PAYMENTS FOR ANY GOVERNMENTAL ACTIONS THAT CHANGE VALUE OF PRIVATE PROPERTY. THE POSSmn..ITIES OF REQUIRED PAYMENTS ARE VIRTUALLY LIMITLESS - AND So ARE THE T AXP A YER COSTS. , If this initiative is enacted, the existing law concerning compensation for "inverse condemnation" or "regulatory takings," (i.e., a regulation or other governmental action that deprives the property owner of all reasonable uses of his property) will no longer govern. 2 Instead, this measure redefines "damage" to property as including "government actions that result in substantial economic loss to private property". Depending on the ultimate construction of this language, this provision could commit California to a radical departure from basic principles regarding regulatory takings, resulting in greatly increased costs of governmental regulations affecting the value of property - costs that will be borne by all taxpayers. At a minimum, the overly broad and unclear provisions of this initiative will result in a litany of lawsuits at the expense of Califomia taxpayers. Ordinances and regulations adopted by local governments dealing with such common zoning practices as downzoning (commercial to residential, e.g.), height restrictions, or zoning to deal with disreputable or dangerous businesses, as well as environmental regulations, may require ')ust compensation", as defined by this measure, by the implementing agency. The only exception to the compensation requirement is for the protection of public health and safety, but that is not defmed and will undoubtedly invite litigation. Moreover, although not specified, regulatory action which results in "collateral" impacts on surrounding property may also have to be compensated. For instance, if a local government builds a needed school or road, taxpayers could be on the hook to compensate nearby property owners for alleged "damages" to their . potential property value. The scope of possible governmental actions that would require compensation is virtually limitless. For example, a local initiative (even initiatives are covered because government action is defined to mean any statute, charter provision, ordinance, resolution, law, rule or regulation) which establishes zoning restrictions in order to preserve the character of existing neighborhoods could be found to "damage" property that does not comport with the existing neighborhood plan. As such, the initiative would trigger new compensation requirements for the affected property owners. Compensation is required even if current law would not permit use of the property in the manner under which the property owner would receive the highest value. The excessively high cost of compensation under this measure could tie the hands oflocal agencies - forcing them to pay huge payouts or limiting their ability to pass even modest changes to land use laws. Conclusion The true mischief caused by this proposed initiative is that its effect is, by and large, entirely unpredictable. It will undoubtedly spawn litigation with every effort to acquire land for public purposes, and will lead to a bonanza oflawsuits and claims based on the new regulatory takings definitions. One thing is for sure: California taxpayers will pay substantially more as state and local agencies incur increased costs to provide basic public works and infrastructure, and to pass and enforce basic land use laws and regulations 3 . NO on the Anderson Initiative Costly for Taxpayers. Harmful to the Environment. Bad for Schools, Traffic Relief and Every California Community. The "Anderson Initiative" contains far-reaching provisions that will drastically reduce our ability to protect our neighborhoods from inappropriate development, curtail critical environmental protections, and raise costs for new necessary community projects like new schools, roads and public projects. The proponents want voters to believe that this measure will provide eminent domain reforms in response to the recent U.S. Supreme Court decision in Ke/o vs. New London - but this measure goes too far. While some reforms are needed to protect homeowners from abuses of eminent domain, the Anderson Initiative is misleading and it's the wrong approach. Why you should OPPOSE the Anderson Initiative: x Costly for all taxpayers - the measure's new 'Just compensation" and regulatory takings definitions will cost all levels of government billions more to provide basic government services and infrastructure. It will cost California taxoavers billions of dollars each vear by arbitrarily inflating compensation paid to a few property owners and thereby adding costs to build roads, schools, parks and other public works. The state's nonpartisan legislative analyst says it will result in "potentially major future costs" for the state and its taxpayers. X Drives up the cost of all public infrastructure projects such as schools, flood control, traffic relief and utility services - the measure imposes a new and unreasonable definition of 'Just compensation" that is no longer based on the fair market value of property. These provisions will exponentially drive up the cost of acquiring land, rendering many public works projects cost-prohibitive and impossible to complete. Rights-of-way for congestion relief projects; land for building new schools; setbacks or easements for flood control projects; rights-of-way for electricity and telecommunications utilities and a variety of other similar projects would all be impacted. X Bad for the environment - the measure's new provisions redefining property "damage" would severely restrict the ability of local and state agencies to enact and enforce laws that protect our coastline, open spaces, neighborhoods, and farmland. It guts the ability of agencies to enforce environmental laws like the California Environmental Quality Act - or requires exorbitant payments to a few property owners. X Bad for communities - the measure imposes a one-size fits all mandate that will threaten the ability of local communities to decide what types of projects get built in their neighborhoods, what types of businesses locate in a neighborhood, and how a community decides to grow. X Bad for public safety - would restrict local government's ability to regulate the operation or location of unsavory businesses like adult bookstores, strip clubs and liquor stores and to eradicate slums and blight, all of which are magnets for crime. X Misleadingly labeled as "eminent domain" reform - the measure would actually slip far- reaching provisions into our state constitution that would cost taxpayers billions in added costs, harm the environment, and hurt our ability to build schools, roads and other community improvements. X Poorly written and contains flawed language that will result in thousands of lawsuits that would last many years. Constitutional experts are already questioning its legality. Paid for by Coalition to Protect Califomia, a committee of taxpayers, environmentalists, business, local government and public safety ~ Major Provisions of Anderson Initiative . Cbanges laws governing "regulatory takings" and severelv and nel!ativelv impacts state & locall!overnments' ability to enact and enforce environmental. land use. and housinl! laws and rel!ulations. The Anderson Initiative redefines 'damage' to require payment for any government action that results in economic loss to property. For example: o If a city or county wants to help protect water quality by preventing development of an area with wetlands, the local government could be required to compensate the developer for the value of the property as ifit could be developed. If the agency is unwilling or unable to pay these costs, it could be left with no alternative but to allow the development and destruction of wetlands. o If voters, the city or county conclude that 50 homes can be built on a piece of property for environmental or traffic .reasons and a developer believes the property can hold 200 homes, the developer could seek payment for the other 150 homes. This would potentially put the taxpayers on the hook for the value of the property at the more dense use, even though the community could not handle the size of the development. . Redefines "just compensation" and greatly increases the cost of all property acquisitions by state and local agencies for things like schools, roads, levees, and other important public works projects - at the taxpayers' expense. According to the initiative, "just compensation" goes far beyond the "fair market value" of property to also inclu!ie the value of the property as the government intends to use it. o For example, if a county acquires property for an airport, the owner must be paid the value ofthe property for its use as an airport, regardless of whether or not the owner could have achieved such a use under the applicable zoning. . . Prohibits use of eminent domain unless the property acquired is owned and occupied by a governmental agency. Would significantly hinder community revitalization and redevelopment efforts and the ability oflocal agencies to clean up blight, eliminate slum lords, build affordable housing, and reduce crime though partnerships with the private sector. For example: o Local community redevelopment agencies sometimes condemn vacated or run-down housing, and then partner with private sector, non-profit affordable housing organizations to purchase and revitalize these properties into refurbished, clean and safe affordable housing. Such transactions would be prohibited by the initiative. . Nonpartisan Legislative Analyst cites "votentiallv maior future costs" to deal with regulatory takings provisions and "potentially major changes in governmental costs to acquire property for public purposes. " Paid for by Coalition to Protect California, a conunittee of taxpayers, environmentalists, business. local government and public safety . . 1204. (SA2005RF0146) Government Acquisition, Regulation of Private Property. Initiative Constitutional Amendment. Summary Date: 02/16/06 Circulation Deadline: 07/17/06 Signatures Required: 598.105 Proponent: Anita S. Anderson Bars state and local governments from condemning or damaging private property to promote other private projects, uses. Limits government's authority to adopt certain land use, housing, consumer, environmental and workplace laws and regulations, except when necessary to preserve public health or safety. Voids unpublished eminent domain court decisions. Defines "just compensation." Government must occupy condenmed property or lease property for public use. Condenmed private property must be offered for resale to prior owner or owner's heir at current fair market value if government abandons condcrrmation's objective. Exempts certain governmental actions. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Unknown, but potentially significant major future costs for state and local governments to pay damages and/or modify regulatory or other policies to confonn to the measure's provisions. Unknown, potentially major changes iri governmental costs to acquire property for public purposes. (SA2005RFOI46.) Initiative Language Section 1. STATEMENT OF FINDINGS (a) The California Constitution provides that no person shall be deprived of property without due process of law and allows government to take or damage private property only for a public use and only after payment to the property owner of just compensation. (b) Despite these constitutional prote(:tions, state and local governments have undermined private property rights through an excessive use of eminent domain power and the regulation of private property for purposes unrelated to public health and safety. (c) Neither the federal nor the California courts have protected the full scope of private property rightstpund in the state constitution. The courts have allowed loca.1 governments to exercise eminent domain powers to advance private economic interests in the face of protests from affected homeowners and neighborhood groups. The courts have not required government to pay compensation to property owners when enacting statutes, charter provisions, ordinances, resolutions, laws, rules or regulations not related to public health and safety that reduce the value of private property. (d) As currently structured, the judicial process in California available to property owners to pursue property rights claims is cumbersome and costly. Section 2. STATEMENT OF PURPOSE (a) The power of eminent domain available to government in California shall be limited to projects of public use. Examples of public use projects include, but are not limited to, road construction, the creation of public parks, the creation of public facilities, land-use planning, property zoning, and actions to preserve the public health and safety. (b) Public use projects that the government assigns, contracts or otherwise arranges for private entities to perform shall retain the power of eminent domain. Examples of public use projects that private entities perform include, but are not limited to, the construction and operation of private toll roads and privately-owned prison facilities. (c) YVhenever government takes or damages private property for a public use, the owner of any affected property shall receive just compensation for the property taken or damaged. Just compensation shall be set at fair market value for property taken and diminution of fair market value for property damaged. Whenever a property owner and the government can not agree on fair compensation, the California courts shall provide through a jury trial a fair and timely process for the settlement of disputes. (d) This constitutional amendment shall apply prospectively. Its terms shall apply to any eminent domain proceeding brought by a public agency not yet subject to a final adjudication. No statute, charter provision, ordinance, resolution, law, rule or regulation in effect on the date of enactment that results or has resulted in a . substantial loss to the value of private property shall be subject to the new provisions of Section 19 of Article 1. (e) Therefore, the people of the state of California hereby enact "The Protect Our Homes Act." Section 3. CONSTITUTION AMENDMENT TO THE CALIFORNIA ~ Section 19 of Article I of the state constitution is amended to read: SEe. 19. (a)(l) Private property may be taken or damaged Q.O..[y for Q stated public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner. Private orooertv mav not be taken or damaqed for orivate use. (2) Prooertv taken by eminent domain shall be owned and occuoied by the condemnor. or another qovernmental aqency utilizinq the orooerty for the stated oublic use by aqreement with the condemnor, or may be ~ . leased to entities that are requlated bv the Public Utilities Commission or any other entity that the qovernment assiqns. contracts or arranqes with to oerform a oublic use oroiect. All orooertv that is taken bv eminent domain shall be used onlv for the stated oublic use. (3) If anv orooertv taken throuqh eminent domain after the effective date of this subdivision ceases to be used for the stated oublic use. the former owner of the orooertv or a beneficiary or an heir. if a beneficiary or heir has been desiqnated for this ouroose. shall have the riqht to reacquire the orooertv for the fair market value of the orooertv before the orooertv may be otherwisesold or transferred. Notwithstandinq subdivision (a) of Section 2 of Article XIIIA. uoon reacquisition the orooertv shall be aooraised by the assessor for ourooses of orooerty taxation at its base year value. with any authorized adiustments. as had been last determined in accordance with Article XIII A at the time the orooertv was acquired by the condemnor. ill The Legislature may proyide for possession by the condemnor following commencement of eminent domain proceedings upon deposit in court and prompt release to the owner of money determined by the court to be the probable amount of just compensation. (b) For ourooses of aoolvinq this section: 1. "Public use" shall have a distinct and more narrow meaninq than the term "oublic ouroose:" its Iimitinq effect orohibits takinqs exoected to result in transfers to non-qovernmental owners on economic develooment or tax revenue enhancement qrounds. or for any other actual uses that are notoublic in fact. even thouqh these uses may serve otherwise leqitimate oublic ourooses. 2. Public use shall not include the direct or indirect transfer of any oossessorvinterest in orooertv taken in an eminent domain oroceedinq from one orivate Darty to another orivate Darty unless that transfer oroceeds oursuant to a qovernment assiqnment. contract or arranqement with a orivate entity whereby the orivate entity oerforms a oublic use oroiect. In all eminent domain actions. the government shall have the burden to Drove oublic use. 3. Unoublished eminent domain iudicial ooinions or orders shall be null and void. 4. In all eminent domain actions. orior to the qovernment's occuoancv. a orooertv owner shall be qiven cooies of all aooraisals bv the qovernment and shall be entitled. at the orooertv owner's election. to a seoarate and distinct . . determination bv a superior court iury. as to whether the takina is actuallv for a public use. 5. If a public use is determined. the taken or damaaed property shall be valued at its hiahest and best use without considerina any future dedication reauirements imposed bv the aovernment. If private property is taken for any proprietary aovernmental purpose. then the property shall be valued at the use to which the aovernment intends to put the property. if such use results in a hiaher value for the land taken. 6. In all eminent domain actions. iust compensation shall be defined as that sum of money necessary to place the property owner in the same position monetarilv. without any aovernmental offsets. as if the property had never been taken. Just compensation shall include. but is not limited to, compounded interest and all reasonable costs and expenses actuallv incurred. 7. In all eminent domain actions. fair market value shall be defined as the hiahest price the property would brina on the open market. 8. Except when taken to protect public health and safetv. "damaae" to private property includes aovernment actions that result in substantial economic loss to private property. Examples of substantial economic loss include. but are not limited to. the down zonina of private property. the elimination of any access to private property. and limitations on the use of private air space. "Government action" shall mean any statute. charter provision. ordinance. resolution. law. rule or reaulation. 9. A propertv owner shall not be liable to the aovernment for attorneY fees or costs in anv eminent domain action. 10. For all provisions contained in this section. aovernment shall be defined as the State of California. its political subdivisions. aaencies. any public or private aaent actina on their behalf. and any public or private entity that has the power of eminent domain. ~ (c) Nothina in this section shall prohibit the California Public Utilities Commission from regulating public utilitv rates. (d) Nothina in this section shall restrict administrative powers to take or damaae private property under a declared state of emeraencv. (e) Nothina in this section shall prohibit the use of condemnation powers to abate nuisances such as bliaht. obscenitv. pornoaraphv. hazardous substances or environmental conditions provided those condemnations are limited to abatement of specific conditions on specific parcels. I' 'J< . Section 4. IMPLEMENTATION AND AMENDMENT This section shall beself-executing. The Legislature may adopt laws to further the purposes of this section and aid in its implementation. No amendment to this section may be made except by a vote of the'people pursuant to Article II or Article XVIII. Section 5. SEVERABILITY The provisions of this section are severable. If any provision of this section or its application is held invalid, that finding shall not affect other provisions or applications that can be given effect without the invalid provision or application. Section 6. EFFECTIVE DATE This section shall become effective on the day following the election pursuant to section lO(a) of Article II. The provisions of this section shall apply immediately to any eminent domain proceeding by a public agency in which there has been no final adjudication. Other than eminent domain powers, the provisions added to this section shall not apply to any statute, charter provision, ordinance, resolution, law, rule or regulation in effect on the date of enactment - that results in substantial economic loss to private property. Any statute, charter provision, ordinance, resolution, law, rule or regulation in effect on the date of enactment that' is amended after the date of enactment shall continue to be exempt from the provisions added to this section provided that the amendment both serves to promote the original policy of the statute, charter provision, ordinance, resolution, law, rule or regulation and does not significantly broaden the scope of application of the statute, charter provision, ordinance, resolution, law, rule or regulation being amended. The governmental entity making the amendment shall make a declaration contemporaneously with enactment of the amendment that the amendment promotes the original policy of the statute, charter provision, ordinance, resolution, law, rule or regulation and does not significantly broaden its scope of application. The question of whether an amendment significantly broadens the scope of application is subject to judicial review.