Walter Mencken 11 a.m., Nov. 27
City Attorney Warns City Against Formation of Assessment Districts
It wasn't easy, definitely no walk in the park, but after years of fighting the legality of their neighborhood assessment district, residents of Golden Hill finally seem to have convinced the City to reevaluate their approach to property and business improvement districts.
On July 27, City Attorney Jan Goldsmith warned the Mayor and city councilmembers about the legality of improvement districts. The warnings were brought on by a 2011 court decision which ruled the Greater Golden Hill Maintenance Assessment District invalid due to a flawed engineer's report and over a lack of proof showing actual benefits from the assessment.
"The decision called into question the way the City has historically analyzed special and general benefits," reads Goldsmith's July 27 memo. "With the [maintenance assessment districts] and the Downtown [property and business improvement district], it has been the practice of the City to look at what the City would provide, but-for the existence of the district. That level of service would then become the “baseline.” Then, the City would look at what services the district would provide. The services or service levels that would otherwise not be provided to those within the district were considered 100% special benefit, and therefore could be fully funded by the property-based assessments."
The ruling forced the City Attorney to take a new look at Proposition 26, the law which allows the City to create improvement districts only if program directly benefits those paying the assessment and not the general public.
Separating the benefits received by general public -- i.e. those not paying the assessment-- and direct benefits for those paying into the assessment is the hard part. If the City is not cautious then it may be forced to spend time and money defending lawsuits similar to the one filed by residents of Golden Hill and South Park (note: the City Attorney's office says that because the case was handled by attorneys in-house, the City did not have to pay to defend the case.)
"...the [Greater Golden Hill] engineer’s report [stated] that “properties outside the District do not receive the benefit of the Services funded by the District” does not establish that the general public within and outside the District would not receive some benefit from those services. A number of the services specified in the engineer’s report, including trail beautification, homelessness patrolling, website information, and special events, provide obvious benefit to the general public."
To avoid future lawsuits, Goldsmith cautioned city councilmembers and city staff against imposing any assessment without voter approval unless improvements from the assessment can be limited to only those properties, not the general public.
Two solutions, says Goldsmith, may be to have the City or private neighborhood associations or developers pay for those improvements which benefit the general public.
"The current legal landscape with respect to both business-based and property-based assessment districts is treacherous. The passage of Prop 26 has left the legality of business-based assessments in limbo until it is clarified by legislation or litigation. The Golden Hill holding has imposed upon the City and its hired assessment engineers the seemingly impossible task of dividing nearly every improvement and activity into special and general benefit and quantifying each based on solid, credible evidence. Golden Hill Neighborhood Assn. 199 Cal. App. 4th 416 at 438.
"One could imagine the difficulty in attempting to quantify how much special benefit accrues to the assessed parcels versus how much general benefit accrues to the general public for improvements and activities like decorative streetlights, public benches, sidewalk cleaning, security patrols, or neighborhood signage...
"...Yet, if such analysis is determined to be insufficient by a court, it is ultimately the City that is liable. A potential solution to this dilemma is for the businesses or property owners to form their own private association and “assess” each of the members for the benefit conferred. The association could also consider recording instruments that would act as a lien on their businesses or property to ensure payment and participation. There is nothing preventing interested businesses or property owners from doing so."
Go here to read the entire memo
More like this:
- Tenacious G — Nov. 10, 2014
- Pretty slick, City — Aug. 28, 2014
- City can’t drag its heels any longer — May 17, 2014
- City to Implement "Pay First, Litigate Later" on Disputed Tax Assessments? — April 20, 2012
- Golden Hill Residents Aren't MAD Anymore — Sept. 22, 2011