Benicia City Council has agreed to Mayor Elizabeth Patterson’s request to hear a citizen’s concern that a Proposition 13 loophole needs to be closed.
But there’s no assurance the Council would push to modify the law approved by California voters in 1978.
Prop. 13, formally known as the People’s Initiative to Limit Property Taxation” amended the California Constitution. The law was upheld in 1992 by the United States Supreme Court in the case of Nordlinger v. Hahn.
The law states that the maximum amount of any ad valorem tax on real property shall not exceed 1 percent of the full cash value of the specific property. It reduced property taxes by assessing at the 1975 value and restricted annual increases of those assessments to an inflation factor that isn’t to exceed 2 percent a year.
In addition, the law banned reassessment of a new base year value except when property changes hands or new construction is finished.
Any future increases of state tax rates or revenue collections, including income tax, needs a two-thirds approval by voters. Local governments that want to impose special taxes need two-thirds voter approval as well, the law requires.
A subsequent Proposition 8 amended Prop. 13 to allow for reduction in property valuation.
Donald Basso wrote the Council June 2, asking that the panel consider placing on a meeting agenda the adoption of a resolution that also would modify Prop. 13, closing a loophole he said exists in the law.
“This section of the law has allowed purchasers of commercial property, in certain circumstances, to avoid reassessment when the ownership changes hands,” he wrote.
“This has resulted in a large shift of property tax to the owners of residential property.”
Without an amendment, he wrote, “the practice of acquiring commercial property with no reassessment, will unfairly continue to increase the ratio of taxes paid by residential property owners, and continue the lack of financial support for our schools and other government services.”
He wrote that the ratio is 75 percent for residential and 25 percent for commercial properties.
He submitted a resolution that contends that residential property changes hands about every 10 years, but that commercial property change of ownership “is far more complicated, and therefore generates reassessments less often….”
The resolution noted that since the adoption of Prop. 13, the state has assumed a greater role in funding public schools, but that per-pupil support has declined, moving California from the top 10 in ranking to the lower 10.
In addition, the resolution contends that Prop. 13 is “anti-competitive, in that new entrepreneurs and businesses must pay fair market value for property, while commercial property owners who have owned their property for a longer time pay disproportionately lower property rates….”
Regularly reassessing non-residential property would generate at least $6 billion, the resolution said, adding that the Benicia Unified School District Governing Board supports efforts to modify how commercial properties are reassessed.
The City Council requires a two-step procedure to put an item on an agenda, and Tuesday night, it took the first step by unanimously agreeing to hear the matter at a future meeting.
However, despite encouragement by Basso and another resident, Kathy Kerridge, some members of the Council were cautious about expressing any enthusiasm for the resolution.
Councilmember Alan Schwartzman said he was concerned how such a change would affect local businesses. “I have ideas about the ramifications it could cause,” he said.
Councilmember Christina Strawbridge, who like Schwartzman owns a First Street business, specifically asked for information from the city’s Economic Development Division.
However, she added her second to Councilmember Tom Campbell’s motion to consider the matter at a future meeting.
In other matters the Council decided Tuesday night, the panel agreed to keep the same assessments for its Lighting and Landscape District, although the panel and the Council agreed that the largest zone, made up of residences, is likely to face an assessment increase because its revenues don’t cover its costs.
In fact, Campbell cast the sole vote against approving the assessments. “We’re running in the red,” he said. “We’ll have to increase rates.”
But how those rates will be raised needs to be determined, City Manager Brad Kilger said, because the action likely would fall under California Proposition 218, the modification of Prop. 13 that requires assent from voters before the assessments could be increased.
The matter is further complicated by the age of the districts, Kilger said.
Because the city has more pressing matters, such as the drought and water and sewer rates, under consideration, he said the Council may not see a report on the situation until next year.
“The longer we put it off, the worse it’s going to be. I’ve been talking about this for over 10 years,” Campbell said.
Patterson said she noticed in 2004 that revenue shortfalls were inevitable, but said the city needs to take appropriate time to make a more thorough examination of what the district can provide to those who live and work there.
Total budget for the five zones in the district is $608,426, of which some are in reserve fund credits and interest earnings. The balance to levy is $427,622.
None of the five generates enough money to cover annual costs, but the four smaller zones are expected to end the year in the black if nothing changes, according to Public Works Director Graham Wadsworth.
The residential property zone, which is the largest in the district, needs an additional $110,108 from the city General Fund to cover the balance of expenditures. Its assessment rate will remain at $136.56.
Among the items on the consent calendar the Council approved Tuesday, it bought $56,000 worth of crushed aggregate rock from Syar Industries, Vallejo; spent $75,000 on water distribution pipeline fittings and hardware from Roberts and Brune Company, Oakley; set the bonded indebtedness secured tax rates at 1.3 cents per $100 of assessed valuation, a slight reduction, for $639,445 in revenue to pay for principal and interest on the 2012 Refunding General Obligation Bonds; and agreed to a $29,635 amendment of the city’s agreement with Siemens Industry for additional street light repairs.
The Council authorized a $60,000 agreement with Wolf Communications for tourism marketing.
The panel also approved of Assistant City Manager Anne Cardwell’s response to the Solano County grand jury’s recommendations about city acceptance and use of credit cards.
According to Cardwell’s replies, Benicia has been in compliance with the grand jury’s recommendations since 2009.
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If the loophole is changed it will not change dollar amounts of residential property taxes. Just increase commercial therefore reducing the percentage not the amount. It is just another way to exchange the wealth to get more money. Try econ dev.
Back when Prop 13 was voted on I remember many businesses stating that they were not in favor since they believed it would place a hardship on the state in terms of funding. I also remember the reason Prop 13 made it to the ballot was the ineptitude of the elected state government to do anything for a period of 2 to 3 years. That said, do I believe that there should be some changes – yes I do. But I will never, ever support a change in Prop 13 as it stands today. The reason??? A train for $68,000,000,000.00 (does anyone actually believe the cost won’t be closer to $2 Trillion?), unfunded and unsustainable pension funds that will ultimately fall to the tax payers, A tunnel for water for untold billions that will forever change the Sacramento River Delta. I could go on and on. I do not trust any politician regardless of what party. Never, ever, will I support or vote for a change to Prop 13 – because I do not trust the politicians and how they would spend it.
And from where do businesses get the money to pay taxes? Think it through – from you!
The Mayor just wants more money to satisfy her agenda driven ideals. If you watched the Council meeting Tuesday night her toilet comment tops the list. A higher water rate to subsidize new toilets that use less water. Pure Socialist ideals. It is about time we started thinking that the residents are much more savy than the Mayor gives them credit for. She will never let a Socialist ideal go by..
Perhaps you would prefer a law that requires you to change your high flush toilets to ultra low flush by January 1, 2017, at your entire expense, no subsidy, with inspections required if you get a building permit starting in 2014 and disclosures required if you sell your house, ?
Too late, that is California Law now. SB 407, 2009
Well aware of that. That was not my thought. It was the way the MAYOR goes about wanting to enforce a law. It should be at my own expense when doing the permitted work. She appears to want to force the issue with a subsidy like solar. She wants folks to move at her pace.
You do not understand my thoughts. The Mayor wants to move the law along with a subsidy by upping the water bill even if you are not doing permitted work. It is her way to advance her water agenda. I fully understand renovation and construction permitted issues. You will have no choice and there will be no other toilets put the required ones. Very simple the Mayor wants to fast track this issue with a city budget increase to subsidize the work. She is wrong on that issue.
Here is the law:
1101.4. (a) On and after January 1, 2014, for all building alterations or
improvements to single-family residential real property, as a condition for
issuance of a certificate of final completion and occupancy or final permit
approval by the local building department, the permit applicant shall replace
all noncompliant plumbing fixtures with water-conserving plumbing fixtures.
(b) On or before January 1, 2017, noncompliant plumbing fixtures in
any single-family residential real property shall be replaced by the property
owner with water-conserving plumbing fixtures.
You have until Jan 1, 2017. whether you need a permit for construction or not.
Greg, I do understand the law. A proberty may not be in compliance in twenty years from now and at that time it will have to be identified as not in compliance. It will then have to be brought up to compliance or it will not close for occupancy. That happens all ther time. So someone does not bring their proberty up to complisance. Then what happens. Try nothing. Do you think the city is sending out inspectors out and knocking on doorsd to see of proberty is in compliance. The answer is no. That property if not up to complisance will not be sold for occupancy till it is in compliance. Just where did I go wrong. That is why I said the Mayors agenda is to get everyone into a toilet that meets the new standards. So what dfo you do you put it into the budget as a subsidy to meet her agenda driven goal .It will not happen.
Correct that there is no penalty for non-compliance at this time (other than not getting a permit and later for not being able to close a sale). Up until recently, most agencies subsidized toilet upgrades because it was cost effective (cheaper than buying the water saved) and because they got state grants that made them locally cost effective (or for Benicia, grants and subsidies from Solano Water Agency). For the state, grants were cheaper than more dams, recycling, desalination, etc. needed to keep the state in water.
Subsidies for toilets have gone away or are going away: why subsidize what is required by law? What will happen is penalties: after January 2017, the SWRCB will likely declare that having a non-compliant fixture is a waste and unreasonable use of water (prohibited by the Calif. Constitution) and assess or allow agencies to assess fines for non-compliance. But the likelihood of subsidies for toilets is fast fading.
Plenty of other things in the water business are subsidized; for example, lawn replacement is very popular (MWDSC just stopped the program because they ran out of budgeted money, but they are spending about $450 million (yes million) on conservation efforts. This year. Again, they do this to avoid costs and to avoid rate increases to buy more expensive water.
I did not hear the Mayor call for subsidies or raising rates to subsidize them, but perhaps I missed it. But generally these things are done in a way to avoid rate increases, not to generate them, because they are kept cost effective..
Thanks Greg. I know you are a water expert. Remember I am just the lone voice of the residents. You did talk about subsidies for lawns etc. in the form of grants and other ways to get the money to the folks to reduce water usage. Well guess what you reduce water usage and the bill goes up to replace lost revenue. If it is pure conservation at any cost I do believe the public must understand that.. Up the bridge toll on the Martinez/Benicia bridge for use for upgrades to try and force the residents to take public transportation. Guess what here in Benicia is was a pure beautification issue. Did not drive folks to the public transportation. Then the Industrial Park bus hub. All that money came from the tax paying public. Bridge tolls and what ever. The public is getting tired of it. 1% tax increase fully supported by the residents. This could come back to bite the council if we have increases in fees, water rates etc. They will be very mad and will show it at the polls.Mark my word Greg your water bill is going to go up with another round of graduated increases. Infrastructure, reduced revenue and yes to pay for Mayor Patterson toilets. So as you see it is a budget issue that the mayor is talking about. If it does not go on the budget guess what watch all the grants that the city will apply for. Grants are public money and are a revenue source for this city AND come with strings attached.. I do understand all that but at the same time who pays. The public. This is driven by agenda driven ideals. Proper long term planning which I do believe the city is now investing in is the only answer. Greg keep your eye on the water rates. There is an election in 2016 and I do believe the council is well aware of that.
Actually, the subsidies from agencies are generally set to make it economical for the agency and more economical for the user, but they don’t pay the whole enchilada, they cost share. Generally the cost savings on water and treatment costs will offset it.
And you are wrong on the accounting for conservation and rates. First if one conserves, they pay less. Period. If everyone conserves, yes RATES will go up, because most costs in a water system are fixed (it takes the same number of people to run the treatment plant no matter how much water goes through). But overall, there is still a cost savings to the people who conserve. As an example, if everyone cuts water use by 30%, to cover fixed costs, rates (the cost per unit of water) would have to go up by about 22%–you still save money (your bill is less, but your rate is more). People who save more than average of course save more money, people who don’t conserve pay a lot more.
You are wrong. I reduced from my 2014 usage by 32 percent. Surchare of $9.45, water consumptyion chareg down by 4
You may be correct on the consumption cvharge but that is only part of the bill. Yers it was doewn becAYSE
I have to guess at what you were trying to write (suggestion, read over what you type and make corrections before you punch SUBMIT), but if you recall, the increase for the drought was to 1) make up revenue already reduced because of reductions prior to the increase going into effect (which were considerable) and 2) a guess as to what future consumption would be; finally they council and finance department have stated repeatedly there would be a “true up”. By state law, an agency cannot collect more than costs for water enterprises.
My bill went down, even with the rate increase.
You may be correct on the consumption charge but that is only part of the bill. Yes my consumption charge was down by $14.40 but all other charges were up including a $9.45 drought surcharge the 2014 bill. So I use 32% less water and get a bill that is $9.31 higher. The surcharge will never go away I do not care what the council says. It will stay in some form. Could be consumption charges,, maintenance charges and no more senior discount which is being fazed out. My water usuage is down by 46% from the base year of 2013. my bill for 2015 is up by $19.11 from the base year of 2013 even when my usage was way down. 46%. It is all about revenue and the city needs the revenue so consumption rate will go up,. The public only cares about what the monthly rate is overall. That is what they pay. They do not care how they figure it out. Yes I pay less for consumption but who cares when your is bill way up with other charges and you use less water.. That is just a con game. The real bill is the only thing that counts. Rersidents should be prepared to continue to pay more on their water vbill. Who cares a bout consumption. .
You can thank Howard Jarvis Taxpayers Association for the removal of the Senior Discount! (their Proposition 218 outlawed it).
Also, it is one of the laws that requires agencies to collect no more than needed for the water enterprise system. The water bills fund the water system only, not the City. “the City needs revenue”: no doubt but they can only collect from water bills what the water system costs. And it is cheap, by any standard.
Less consumption less revenue. They will get the money. just watch.
Wow. I explained that to you about 4 posts ago. You finally got it!!!
Mr. Water Expert most folks are only concerned with the total bill. Just ask anyone the bill breakdown. You will not get an answer. So please respect the folks that pay the bill. Mr. Water Expert there are many government bills you do not even know about. So please do not be so condescending.. I do respect your water knowledge but not your atitude toward me. Show some respect for me and the folks.
Bob,
While I may occasionally agree with you, your endless harping on the mayor and her agenda driven goals is getting to me. How exactly is that any different than any other politician, Republican, Democrat, Socialist, Independent or Libertarian? Each and every person, not just politician, is driven by their agenda. Lord knows you are too.
John I am my own person. I call the Mayor out because no one else does. i am just getting started. My suggestion is if it conscerns you then agree with mayor and move on. Occassionally is not enough. I do understand your concern but at the same time it is yours and not mine..Yes I do know I drive folks like you crazy. But at the same time think about the folks that like what I say about her and for sure call out her AGENDAS. I mainly conentrate on local politicans and do go after the CSC, anti big business {PG&E and Valero} anti crude by rail and a council that rushs to make decisions like the solar project and MCE. Just so happens all those also fit the mayors agenda. I will continue to watch the Mayor and make my comments on her agenda driven behavior.
So, it is not about politics. It is about your dislike of the mayor.
John I have never said that. I dislike the Mayor. I do dislike her very Liberal agenda driven ideals. .. I have never attacked her personally except on her political ideals. I will always address her as the Mayor. It is pure -political. I thought by now you would understand that..