Existing law defines who is a peace officer and specifies the powers of peace officers. Under existing law, specified categories of people are not peace officers but are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, as specified, if they receive a course in the exercise of those powers. Included in this classification is a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the persons primary duty is enforcement of, and investigations relating to, specified provisions of law under the purview of the department.

This bill would add to the classification of persons who are not peace officers but who are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, if trained as specified, a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the persons primary duty is enforcement of, and investigations relating to, commercial cannabis activity. The bill would also make technical, nonsubstantive changes to these provisions.

Existing law defines who is a peace officer and specifies the powers of peace officers. Under existing law, specified categories of people are not peace officers but are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, as specified, if they receive a course in the exercise of those powers. Included in this classification is a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the persons primary duty is enforcement of, and investigations relating to, specified provisions of law under the purview of the department.

This bill would add to the classification of persons who are not peace officers but who are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, if trained as specified, a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the persons primary duty is enforcement of, and investigations relating to, commercial cannabis activity. The bill would also make technical, nonsubstantive changes to these provisions.

Existing property tax law requires the auditor of each county with qualifying cities, as defined, to make certain property tax revenue allocations to those cities in accordance with an established Tax Equity Allocation (TEA) formula and to make corresponding reductions in the amount of property tax revenue that is allocated to the county, as specified.

This bill, commencing with the 201819 fiscal year, would prohibit the auditor of the County of Los Angeles from reducing the amount distributed to the City of Palmdale by reason of that city receiving property taxes previously allocated to a maintenance or improvement district pursuant to a specified provision.

This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Palmdale.

By imposing new duties upon local county officials with respect to the allocation of ad valorem property tax revenues, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

By increasing the amount of ad valorem property tax revenue allocated from the County of Los Angeles to the City of Palmdale, this bill would change the pro rata shares in which ad valorem property tax revenues are allocated among local agencies in a county, within the meaning of paragraph (3) of subdivision (a) of Section 25.5 of Article XIII of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 873

Author:(Lackey)

As Amended Ver:April 9, 2018

Majority vote

(vote not relevant)

Original Committee Reference: L. GOV.

SUMMARY: Grants the powers to arrest and to serve warrants to people who are employed by the California Department of Food and Agriculture (CDFA) and designated by the CDFA Secretary as an investigator, investigator supervisor, or investigator manager whose primary duty is enforcement of commercial cannabis.

The Senate amendments delete the Assembly version of this bill, and instead:

1. State that a person employed by the CDFA and designated by the CDFA Secretary as an investigator whose primary duty is enforcement of commercial cannabis activity is not a peace officer, but has the powers of arrest and the power to serve warrants if they meet specified training requirements.
2. Make other technical, non-substantive changes.

EXISTING LAW:

1. Specifies categories of people that are not peace officers but are authorized to exercise the powers of arrest and the power to serve warrants, as specified, if they receive a course in the exercise of those powers. Included in this classification is a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the person's primary duty is enforcement of, and investigations relating to, specified provisions of law under the purview of the department. (Penal Code Section (PEN) 830.11.)
2. Provides that all persons authorized to exercise powers of arrest of a peace officer do get limited liability for lawful arrests. (PEN 847.)
3. Provides that an arrest is taking a person into custody, in a case and in the manner authorized by law and that an arrest may be made by a peace officer or a private person. (PEN 834.)
4. Provides that an arrest is made by an actual restraint of the person, or by submission to the custody of an officer. The person arrested may be subjected to such restraint as is reasonable for his or her arrest and detention. (PEN 835.)
5. Provides, with limited exceptions, a peace officer may arrest a person when the officer has reasonable cause to believe the person to be arrested has committed a public offense in the officer's presence, when the person arrested has committed a felony regardless of whether it was committed in the officer's presence, and when the officer has reasonable cause to believe the person to be arrested has committed a felony. (PEN 836.)
6. Provides that a private person may arrest another person for a public offense committed or attempted in his or her presence, when the person arrested has committed a felony regardless of whether it was committed in his or her presence, and when a felony has been committed and he or she has reasonable cause for believing the person to be arrested has committed it. (PEN 837.)
7. Establishes the CDFA, which has specified duties and functions, including preventing fraud and deception in packing or labeling, or in any phase of the marketing, of any agricultural product which is governed by the Food and Agriculture Code; the labeling and marketing of any commodity that is governed by the code, which is sold to producers for use in the production of crops; and other enumerated duties. (Food and Agricultural Code Section (FAC) 101 et seq.)
8. Provides that any person in whom the enforcement of any provision of the Food and Agriculture code is vested shall have the authority, as a public officer, to arrest, without a warrant, another person whenever such officer has reasonable cause to believe that the person to be arrested has, in his presence, violated any provision of this code, the violation of which is declared to be a public offense. If such violation is a felony, or if the arresting officer has reasonable cause to believe that the person to be arrested has violated a provision of this code which is declared to be a felony, although no felony has in fact been committed, he or she may make an arrest although the violation or suspected violation did not occur in his presence. (FAC 7.)
9. Creates the Medicinal and Adult-Use Cannabis Regulation and Safety Act with the intent to establish a comprehensive system to control and regulate the cultivation, distribution, transport, storage, manufacturing, processing, and sale of both medicinal and adult-use cannabis for adults 21 years of age and older. (Business and Professions Code Section 26000, et seq.)

AS PASSED BY THE ASSEMBLY, this bill prohibited a reduction in the City of Palmdale's property tax equity allocation as a result of the dissolution of a maintenance district

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: According to the author, "California is in the midst of a large transition as the state works to implement Proposition 64. Despite cannabis now being legal for adult-use, California's illicit black market continues to thrive. Under current law, the California Department of Food and Agriculture has been placed in charge of regulating cultivation licenses, however, CDFA investigators do not have non-peace officer status. This means that if an investigator observes violations that merit probable cause for a search warrant, they would not be able to develop, apply for, and serve a search warrant, resulting in the halt of the Department's investigation.

"AB 873 would simply give CDFA investigators non-peace officer status in order to ensure that investigations can move forward to help in our fight against the black market."

This bill was substantially amended in the Senate and the Assembly-approved version of this bill was deleted. This bill, as amended in the Senate, is inconsistent with Assembly actions and the provisions of this bill, as amended in the Senate, have not been heard in an Assembly policy committee.

Analysis Prepared by: Matthew Fleming / PUB. S. / (916) 319-3744 FN: 0003631

 THIRD READING  

Bill No: AB 873

Author:

:

Vote:

SENATE PUBLIC SAFETY COMMITTEE: 7-0, 6/12/18

AYES: Skinner, Anderson, Bradford, Jackson, Mitchell, Stone, Wiener

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: Not relevant

SUBJECT:

SOURCE: Author

DIGEST:

This bill specifies that persons employed by the California Department of Food and Agriculture (CDFA) and designated by the CDFA Secretary as an investigator whose primary duty is enforcement of commercial cannabis activity is not a peace officer, but has the powers of arrest of a peace officer and the power to serve warrants if they meet specified training requirements.

ANALYSIS:

Existing law:

1. Defines who is a peace officer and specifies the powers of peace officers. (Pen. Code, § 830.11)
2. Specifies categories of people are not peace officers but are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, as specified, if they receive a course in the exercise of those powers. Included in this classification is a person employed by the CDFA and designated by the CDFA Secretary as an investigator, investigator supervisor, or investigator manager, provided that the person’s primary duty is enforcement of, and investigations relating to, specified provisions of law under the purview of the department. (Pen. Code, § 830.11)
3. Provides that all persons authorized to exercise powers of arrest of a peace officer do get limited liability for lawful arrests. (Pen. Code, § 847.)
4. Provides that:
   1. An arrest is taking a person into custody, in a case and in the manner authorized by law and that an arrest may be made by a peace officer or a private person. (Pen. Code, § 834.)
   2. An arrest is made by an actual restraint of the person, or by submission to the custody of an officer. The person arrested may be subjected to such restraint as is reasonable for his or her arrest and detention. (Pen. Code, § 835.)
   3. A private person may arrest another person for a public offense committed or attempted in his or her presence, when the person arrested has committed a felony regardless of whether it was committed in his or her presence, and when a felony has been committed and he or she has reasonable cause for believing the person to be arrested has committed it. (Pen. Code, § 837.)
   4. With limited exceptions, a peace officer may arrest a person when the officer has reasonable cause to believe the person to be arrested has committed a public offense in the officer's presence, when the person arrested has committed a felony regardless of whether it was committed in the officer's presence, and when the officer has reasonable cause to believe the person to be arrested has committed a felony. (Pen. Code, § 836.)
5. Provides the following:
   1. Creates the CDFA, which has specified duties and functions, including preventing fraud and deception in packing or labeling, or in any phase of the marketing, of any agricultural product which is governed by the Food and Agriculture Code; the labeling and marketing of any commodity that is governed by the code, which is sold to producers for use in the production of crops; and other enumerated duties. (Food and Ag. Code, § 101 et seq.)
   2. Provides that any person in whom the enforcement of any provision of the Food and Agriculture Code is vested shall have the authority, as a public officer, to arrest, without a warrant, another person whenever such officer has reasonable cause to believe that the person to be arrested has, in his presence, violated any provision of this code, the violation of which is declared to be a public offense. If such violation is a felony, or if the arresting officer has reasonable cause to believe that the person to be arrested has violated a provision of this code which is declared to be a felony, although no felony has in fact been committed, he or she may make an arrest although the violation or suspected violation did not occur in his presence. (Food and Ag. Code, § 7.)
   3. Provides that the CDFA shall enforce provisions of law pertaining to weights and measures, as specified. (Bus. and Prof. Code, § 12001 et seq.)

This bill adds to the classification of persons who are not peace officers but who are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, if trained as specified, a person employed by the CDFA and designated by the CDFA Secretary as an investigator, investigator supervisor, or investigator manager, provided that the person’s primary duty is enforcement of, and investigations relating to, commercial cannabis activity.

Background

SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017) was the cannabis trailer bill for the Budget Act of 2017. The bill established a single system of administration for cannabis laws in California. It contained changes related to the Budget Act of 2017 that were necessary for state licensing entities to implement a regulatory framework pursuant to the Medical Cannabis Regulation and Safety Act (MCRSA), established by AB 266 (Bonta, Chapter 689, Statutes of 2015), AB 243 (Wood, Chapter 688, Statutes of 2015), SB 643 (McGuire, Chapter 719, Statutes of 2015), and SB 837 (Committee on Budget and Fiscal Review, Chapter 32, Statutes of 2016), and the Adult Use of Marijuana Act (AUMA) of 2016 (Proposition 64). The bill conformed MCRSA and AUMA into a single system that prioritizing consumer safety, public safety and tax compliance. Among other things, the bill created agricultural cooperatives, a method for collecting and remitting taxes, a process for testing and packaging, and a process for collecting data related to driving under the influence.

According to the author, the MCRSA failed to authorize CDFA to have authority to pursue criminal investigations and to enforce the Governor’s priority of protection the health and safety of Californians and the environment by promoting a safety and healthy food supply.

Organizational studies are conducted by Commission on Peace Officer Standards and Training (POST) with respect to public officers and feasibility studies are conducted by POST with respect to peace officers. CDFA contracted with POST to conduct a management review of its investigative programs. In September 2003, POST completed the organizational study of the CDFA. In that study, POST recommended that the CDFA "seek legislative amendments to Penal Code Section 803.11 to add CDFA investigators, and seek legal clarification of the powers of a public officer and training required."

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/25/18)

None received

OPPOSITION: (Verified 6/25/18)

California Public Defenders Association

Prepared by: Gabe Caswell / PUB. S. /

6/27/18 9:29:10

**** END ****

SENATE COMMITTEE ON PUBLIC SAFETY

Senator Nancy Skinner, Chair

2017 - 2018 Regular

Bill No: AB 873 Hearing Date: June 12, 2018

Subject: Department of Food and Agriculture: Commercial Cannabis Activity Inspectors: Peace Officer Duties

HISTORY

Source: Author

Prior Legislation: AB 900 (Benoit), Ch. 190, Stats. of 2005

Support: Unknown

Opposition: None known

Assembly Floor Vote: 77 - 0

PURPOSE

The purpose of this bill is to specify that persons employed by the California Department of Food and Agriculture (CDFA) and designated by the CDFA Secretary as an investigator whose primary duty is enforcement of commercial cannabis activity is not a peace officer, but has the powers of arrest of a peace officer and the power to serve warrants if they meet specified training requirements.

Existing law defines who is a peace officer and specifies the powers of peace officers. (Pen. Code, § 830.11)

Existing law specifies categories of people are not peace officers but are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, as specified, if they receive a course in the exercise of those powers. Included in this classification is a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the person’s primary duty is enforcement of, and investigations relating to, specified provisions of law under the purview of the department. (Pen Code, § 830.11)

Existing law provides that all persons authorized to exercise powers of arrest of a peace officer do get limited liability for lawful arrests. (Penal Code 847.)

Existing law further provides that:

1. An arrest is taking a person into custody, in a case and in the manner authorized by law and that an arrest may be made by a peace officer or a private person. (Penal Code, § 834.)
   
2. An arrest is made by an actual restraint of the person, or by submission to the custody of an officer. The person arrested may be subjected to such restraint as is reasonable for his or her arrest and detention. (Penal Code, § 835.)
   
3. A private person may arrest another person for a public offense committed or attempted in his or her presence, when the person arrested has committed a felony regardless of whether it was committed in his or her presence, and when a felony has been committed and he or she has reasonable cause for believing the person to be arrested has committed it. (Penal Code, § 837.)
   
4. With limited exceptions, a peace officer may arrest a person when the officer has reasonable cause to believe the person to be arrested has committed a public offense in the officer's presence, when the person arrested has committed a felony regardless of whether it was committed in the officer's presence, and when the officer has reasonable cause to believe the person to be arrested has committed a felony. (Penal Code, § 836.)

Existing law provides the following:

1. Creates the California Department of Food and Agriculture (CDFA), which has specified duties and functions, including preventing fraud and deception in packing or labeling, or in any phase of the marketing, of any agricultural product which is governed by the Food and Agriculture Code; the labeling and marketing of any commodity that is governed by the code, which is sold to producers for use in the production of crops; and other enumerated duties. (Food and Ag. Code, § 101 et seq.)
   
2. Provides that any person in whom the enforcement of any provision of the Food and Agriculture code is vested shall have the authority, as a public officer, to arrest, without a warrant, another person whenever such officer has reasonable cause to believe that the person to be arrested has, in his presence, violated any provision of this code, the violation of which is declared to be a public offense. If such violation is a felony, or if the arresting officer has reasonable cause to believe that the person to be arrested has violated a provision of this code which is declared to be a felony, although no felony has in fact been committed, he or she may make an arrest although the violation or suspected violation did not occur in his presence. (Food and Ag. Code, § 7.)
   
3. Provides that the Department of Food and Agriculture shall enforce provisions of law pertaining to weights and measures, as specified. (Bus. and Prof. Code, § 12001 et seq.)

This bill adds to the classification of persons who are not peace officers but who are authorized to exercise the powers of arrest of a peace officer and the power to serve warrants, if trained as specified, a person employed by the Department of Food and Agriculture and designated by the Secretary of Food and Agriculture as an investigator, investigator supervisor, or investigator manager, provided that the person’s primary duty is enforcement of, and investigations relating to, commercial cannabis activity.

COMMENTS

1. Need for This Bill

According to the author:

Under the provision of the (Medicinal and Adult-Use Cannabis Regulation and Safety Act ) MAUCRSA enacted through SB 94, the CDFA is responsible for establishing a commercial cannabis cultivation licensing program for both medicinal and adult-use cannabis cultivation.

However, PC Section 830.11(a)(7) does not include Business and Professions Code (BPC) Division 10 (commencing with Section 26000) which allows the Department and its investigators to exercise their application and execution of a search warrant and arrest powers for violations of the program they are mandated to regulate.

If a CDFA investigator observes violations that merit probable cause for a search warrant application without the inclusion of BPC Division 10 into PC 830.11(a)(7), they would not be able to develop, present to a magistrate, secure or serve a search warrant, resulting in the halt of the Department’s investigation. Halting an investigation may result in harm to the public, diversion of cannabis to the black-market, and hamper the Department’s ability to pursue disciplinary actions against noncompliant or fraudulent licensed cultivators.

While lead responsibility for pursuing criminal investigation and prosecution of illegal commercial cannabis cultivation resides with law enforcement (i.e., Peace Officers), it is critical for CDFA investigators to effectively coordinate and support their efforts to protect the legal/licensed commercial cannabis marketplace.

This proposal is consistent with the Governor's Office policy and priority of protecting the health and safety of the citizens of California and the environment. It is in accordance with the primary mission of CDFA, which is to promote and protect a safe and healthy food supply and to enhance local and global agricultural trade, through efficient management, innovation and sound science, with a commitment to environmental stewardship. The Legislature clearly demonstrated its support for protecting Californians by recognizing the adverse impacts to the public health and safety of the citizens of California, and to the environment associated with noncompliant or fraudulent licensed cannabis cultivators.

1. Medical Cannabis Regulation and Safety Act (MCRSA)

SB 94 (Budget), Chapter 27, Statutes of 2017 was the cannabis trailer bill for the Budget Act of 2017. The bill established a single system of administration for cannabis laws in California. It contained changes related to the Budget Act of 2017 that were necessary for state licensing entities to implement a regulatory framework pursuant to the Medical Cannabis Regulation and Safety Act (MCRSA), established by AB 266 (Bonta, Chapter 689, Statutes of 2015), AB 243 (Wood, Chapter 688, Statutes of 2015), SB 643 (McGuire, Chapter 719, Statutes of 2015), and SB 837 (Committee on Budget and Fiscal Review, Chapter 32, Statutes of 2016), and the Adult Use of Marijuana Act (AUMA) of 2016 (Proposition 64). The bill conformed MCRSA and AUMA into a single system that prioritizing consumer safety, public safety and tax compliance. Among other things, the bill created agricultural cooperatives, a method for collecting and remitting taxes, a process for testing and packaging, and a process for collecting data related to driving under the influence.

According to the author, the MCRSA failed to authorize CDFA to have authority to pursue criminal investigations and to enforce the governor’s priority of protection the health and safety of Californians and the environment by promoting a safety and healthy food supply.

3. POST Organizational Study

Organizational studies are conducted by POST with respect to public officers and feasibility studies are conducted by POST with respect to peace officers. CDFA contracted with POST to conduct a management review of its investigative programs. In September 2003, POST completed the organizational study of the CDFA. In that study, POST recommended that the CDFA "seek legislative amendments to Penal Code Section 803.11 to add CDFA investigators, and seek legal clarification of the powers of a public officer and training required."

The report went on to say:

CDFA investigators are designated as public officers…and are granted the authority to make arrests, without a warrant or issue a citation and release the violator if the offense is committed in their presence or if the offense is a felony, arrest on probable cause…POST staff found that investigators do in fact conduct activities that are considered hazardous during the course of an investigation, and that there have been threats, in some cases near assaults and, unfortunately in one instance, a death…[T]he authority already given CDFA investigators, as public officers, in the Food and Agriculture Code (FAC) and the Business and Professions Code (BPC) is very similar to that of Penal Code Section 830.11. There is no training requirement for public officers in the FAC or the BPC. All investigators agree they do not make physical arrests - they call the local law enforcement agency to assist them in making arrests if it is necessary. Investigators also conduct investigations that result in the need for a search warrant to obtain necessary evidence.

…Although the law in the FAC and the BPC cited above provides the authority to make arrests and issue citations, there is no consistency with the [CDFA] regarding this authority. Some branches allow investigators to issue citations, which is an arrest with a release, while others do not. . . . Several investigators have completed the course prescribed in Penal Code Section 832 at their own expense, while other investigators do not have the training. In order to diminish the exposure to liability, all investigators should be required to complete a course in arrest, search, and seizure pursuant to Penal Code Section 832.

If an investigator has not completed the training, he/she should not be allowed to issue citations until the prescribed training is completed… All investigators have indicated they are hampered in their ability to perform effective investigations because they do not have access to the criminal history of those individuals they are investigating. Access to criminal history information is usually limited to peace officers; however, Penal Code Section…[830.11(c)] enumerates those persons authorized to make arrests and serve warrants in the course and within the scope of their employment, providing they receive a course in the exercise of those powers pursuant to Penal Code Section 832. If the persons are enumerated in Penal Code Section 830.11, they are entitled to access to criminal histories the same as peace officers. An amendment to Penal Code Section 830.11 to include CDFA investigators would provide access to criminal history information and would also provide authority to serve warrants. The FAC and the BPC do not grant public officers the authority to serve warrants.

…The addition of CDFA investigators to Penal Code Section 830.11 would expand the present capabilities of CDFA investigators, and increase their effectiveness and efficiency in conducting investigations. In addition, it would reduce the potential for liability that now exists. Even though the statutes provide the authority to arrest, CDFA should adopt a written policy that requires a uniformed officer's presence in situations requiring a peace officer, such as an arrest or service of a warrant. The full peace officer support will greatly reduce the probability of resistance and potential injury to investigators.

Committee staff has conferred with POST on the provisions of the present bill and they do not have an objection to the provisions of this legislation.

-- END –

ASSEMBLY THIRD READING

ATR Bill Id:AB 873

Author:(Lackey)

As Introduced Ver:February 16, 2017

2/3 vote

SUMMARY: Prohibits a reduction in the City of Palmdale's property tax equity allocation as a result of the dissolution of a maintenance district. Specifically, this bill:

1. Prohibits, beginning with the 2018-19 fiscal year, the Los Angeles Auditor from reducing the amount of property tax revenue distributed to the City of Palmdale under the statutory tax equity allocation (TEA) formula if the City receives property tax revenues previously allocated to a maintenance or improvement district.
2. Requires the City of Palmdale to reimburse the Auditor for the actual and reasonable costs incurred by the Auditor to administer this bill.
3. Finds and declares that a special statute is necessary and that a general statute cannot be made applicable because of the unique circumstances facing the City of Palmdale in meeting established timelines in the dissolution and merger of its streetlight district and to simplify city accounting and to give the city maximum general fund budget flexibility.
4. Provides that no reimbursement is required because the bill provides for reimbursement to a local agency in the form of additional revenues that are sufficient in amount to fund the new duties that this bill imposes.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. This bill allows for the retention of the streetlight district's local property tax revenues by the successor city, Palmdale, while statutorily protecting the Palmdale TEA payment. However, the dissolution of the district could free up property tax revenues that would be distributed according to law, including to school districts. If a school district received increased property tax allocations, the state backfill for schools would be reduced. With the enactment of this bill, the property tax would go to the City of Palmdale in the event of the dissolution and the state would not receive the benefit of the reduced backfill.
2. In 2015-16 the Palmdale Streetlight District had approximately $3.0 million in total revenues and $2.6 million in total expenses. Of the $3.0 million in total revenues, $469,509 (15.5%) was ad valorem property tax revenues. These property tax revenues, previously restricted to streetlight district uses, would be transferred to the city's general fund for discretionary use. Absent this bill, a portion of the property tax revenue would go to schools, likely in the range of $141,000 to $ 234,000 (30% to 50% depending on the local allocation), thereby reducing the GF backfill allocation by the same amount.
3. Minor, non-reimbursable mandate costs to the Los Angeles County Auditor. The bill requires county auditor costs to be reimbursed by the City of Palmdale.

COMMENTS:

1. Property Tax. Proposition 13 (1978) established a single, countywide property tax rate of 1%. Proposition 13 cut statewide property tax revenue by 57% and removed local autonomy, shifting the power to allocate remaining property tax revenues from local governments to the Legislature. The Legislature established a methodology for allocating property tax revenues to counties, cities, special districts, and school districts based on each local agency's historical share of property tax revenues. In 1979, AB 8 (Greene) established the formula for the allocation of property taxes, using the historical share as a base and apportioning revenues from the change in assessed valuation among each local agency serving a particular property. Each local agency's share of property tax reflects the tax rate of each jurisdiction relative to the rates of other taxing agencies in the jurisdiction.

Approximately 30 cities that never levied a property tax before Proposition 13 are called no property-tax cities, and about 60 cities that levied only low property tax rates are known as low property-tax cities. The no/low cities were impacted differently by the restructuring of property tax allocation because AB 8 formulas are based on the historical share of property tax received by a city for the three years preceding the adoption of Proposition 13. Therefore, the Legislature established a "tax equity allocation" (TEA) formula to provide no/low cities a minimum amount of property tax revenue to remedy the absence of property tax revenue or low property tax revenue being used to determine future property tax allocation. Existing law requires county auditors to provide a TEA to increase the property tax shares of qualifying cities by shifting a portion of county property tax revenues to no/low cities. Existing law defines a qualifying city as a city that incorporated prior to June 5, 1987, and received less than 7% of property tax revenues collected within its jurisdiction. In most counties, these no/low cities now receive 7% of the property tax revenues generated within their city limits as a result of TEA.

Existing law prohibits property tax allocations for no/low cities from being reduced when they receive additional property tax revenues from other specified sources. A county auditor is prohibited from reducing TEA payments if a city receives additional property tax revenues as a result of a consolidation or merger of a special district into a city.

1. Bill Summary. The City of Palmdale is a no/low property city that is concerned that the dissolution of the Streetlight Maintenance Districts will impact their TEA payments. This bill prohibits the Los Angeles County Auditor from reducing the TEA payment to the City of Palmdale as a result of the City receiving property taxes previously allocated to a maintenance or improvement district. This bill also requires the City to reimburse the county auditor's costs related to administering the reallocation of property taxes as a result of this bill. This bill is sponsored by the City of Palmdale.
2. City of Palmdale. There are five Streetlight Maintenance Assessment Districts in the City of Palmdale that cover over 40,770 parcels. The streetlight maintenance assessment districts were formed under the provision of the Street Lighting Act of 1919 to serve as a financing mechanism to provide lighting maintenance services. Existing law authorizes local officials to levy benefit assessments on property owners to pay for those public improvements and services that specifically benefit their property. A benefit assessment is an involuntary charge that appears on a property owner's annual property tax bill. The amount of the assessment is directly related to the amount of the benefit their property receives. According to the City of Palmdale, only one of the five streetlight maintenance assessment districts receives ad valorem property tax. The other four districts are funded by benefit assessments.
3. Author's Statement. According to the author, "This bill allows the City of Palmdale the necessary flexibility and financing tool to assume operational and fiscal responsibilities of its streetlight maintenance district and become the district's successor entity. The bill simply reallocates property taxes already approved and collected, and it does not increase taxes.

AB 873 will allow the City to maintain, operate and improve all streetlights in the future and make payments to all debts associated with the acquisition and improvements of streetlights. Such improvements include retrofitting to LED lights which would reduce energy usage by 67%."

1. Prior Legislation. AB 468 (Smyth), Chapter 319, Statues of 2011, prohibited a reduction in the TEA payments to the City of Simi Valley as a result of the City serving as the successor agency of a dissolved maintenance district. This bill is substantially similar to AB 468.
2. Arguments in Support. According to the City of Palmdale, "AB 873 will allow streetlight maintenance district funds to be merged with the general purpose fund to give the City more funding flexibility to support the acquisition of streetlights from SCE [Southern California Edison], and conversion of existing streetlights to energy efficient LED lights."
3. Arguments in Opposition. None on file.

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0000609

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 873

Author:(Lackey) – As Introduced Ver:February 16, 2017

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY: This bill prohibits a reduction in the City of Palmdale's property tax equity allocation as a result of the dissolution of a maintenance district. Specifically, this bill:

1. Prohibits, beginning with the 2018-19 fiscal year, the Los Angeles Auditor from reducing the amount of property tax revenue distributed to the City of Palmdale under the statutory tax equity allocation (TEA) formula if the City receives property tax revenues previously allocated to a maintenance or improvement district.
2. Requires the City of Palmdale to reimburse the Auditor for the actual and reasonable costs incurred by the Auditor to administer this bill.

FISCAL EFFECT:

1. This bill allows for the retention of the streetlight district's local property tax revenues by the successor city, Palmdale, while statutorily protecting the Palmdale TEA payment. However, the dissolution of the district could free up property tax revenues that would be distributed according to law, including to school districts. If a school district received increased property tax allocations, the state backfill for schools would be reduced. With the enactment of this bill, the property tax would go to the City of Palmdale in the event of the dissolution and the state would not receive the benefit of the reduced backfill.

In 2015-16 the Palmdale Streetlight District had approximately $3.0 million in total revenues and $2.6 million in total expenses. Of the $3.0 million in total revenues, $469,509 (15.5%) was ad valorem property tax revenues. These property tax revenues, previously restricted to streetlight district uses, would be transferred to the city’s general fund for discretionary use. Absent this bill, a portion of the property tax revenue would go to schools, likely in the range of $141,000 to $ 234,000 (30% to 50% depending on the local allocation), thereby reducing the GF backfill allocation by the same amount.

1. Minor, non-reimbursable mandate costs to the Los Angeles County Auditor. The bill requires county auditor costs to be reimbursed by the City of Palmdale.

COMMENTS:

1. Purpose. The City of Palmdale would like to dissolve its five Streetlight Maintenance Assessment Districts and serve as the successor agency to the districts by retaining district revenues and maintaining the responsibilities and obligations of the districts. This bill is intended to alleviate the city's concern that any shift in district property tax revenues will impact their TEA payments.

According to the author and sponsor, the City of Palmdale is in the process of purchasing the districts' streetlights from Southern California Edison (SCE) in a series of phases, in order to retrofit and convert the lights to LED lights to reduce energy usage by 67%. The City wishes to become a successor entity to the streetlight districts and become operationally and financially responsible for the streetlights. By clarifying how property taxes will be distributed once the districts are merged into the City, this bill will allow streetlight maintenance district funds to be merged with the City general purpose fund to give the city more funding flexibility to support the acquisition of streetlights from SCE, and conversion of existing streetlights to energy efficient LED lights.

1. Background. Following the passage of Proposition 13 in 1978, the Legislature established a methodology for allocating property tax revenues that resulted in cities receiving an amount based on their historical shares. About 30 cities that never levied a property tax before Proposition 13 are called no property-tax cities, and about 60 cities that levied only low property tax rates are known as low property-tax cities. As part of a broader history related to the realignment of trial court funding, the Legislature established a minimum property tax entitlement to no/low cities by requiring counties to transfer a portion of their own property taxes to these cities. Under these “tax equity allocation” (TEA) formulas, no/low cities generally receive 7% of the property tax revenues generated in their jurisdictions.

Existing law prohibits property tax allocations for no/low cities from being reduced when they receive additional property tax revenues from other specified sources, including a consolidation or merger of a special district into that city.

1. City of Palmdale. In order to fund improvements, maintenance, operation and servicing of certain streetlights, the City of Palmdale has formed five Streetlight Maintenance Assessment Districts that cover over 40,770 parcels. The streetlight maintenance assessment districts were formed under the provision of the Street Lighting Act of 1919 to serve as a financing mechanism to provide lighting maintenance services. Existing law authorizes local officials to levy benefit assessments on property owners to pay for those public improvements and services that specifically benefit their property. The amount of the assessment is directly related to the amount of the benefit their property receives. According to the City of Palmdale, the five streetlight maintenance assessment districts will levy over $3.6 million total in benefit assessments in 2016-17. Only one of the five assessment districts, District 5, receives ad valorem property tax revenues impacted by this bill.
2. Prior Legislation. This bill is substantially similar to AB 468 (Smyth), Chapter 319, Statues of 2011, which prohibited a reduction in the TEA payments to the City of Simi Valley as a result of the City serving as the successor agency of a dissolved maintenance district.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 5, 2017

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 873 (

Author:Lackey) – As Introduced Ver:February 16, 2017

SUBJECT: Property taxes: TEA formula allocation: City of Palmdale.

SUMMARY: Prohibits a reduction in the City of Palmdale's property tax equity allocation as a result of the dissolution of a maintenance district. Specifically, this bill:

1. Prohibits, beginning with the 2018-19 fiscal year, the Los Angeles Auditor from reducing the amount of property tax revenue distributed to the City of Palmdale under the statutory tax equity allocation (TEA) formula if the City receives property tax revenues previously allocated to a maintenance or improvement district.
2. Requires the City of Palmdale to reimburse the Auditor for the actual and reasonable costs incurred by the Auditor to administer this bill.
3. Finds and declares that a special statute is necessary and that a general statute cannot be made applicable because of the unique circumstances facing the City of Palmdale in meeting established timelines in the dissolution and merger of its streetlight district and to simplify city accounting and to give the city maximum general fund budget flexibility.
4. Provides that no reimbursement is required because the bill provides for reimbursement to a local agency in the form of additional revenues that are sufficient in amount to fund the new duties that this bill imposes.

FISCAL EFFECT: This bill is keyed fiscal and contains a state mandated local program.

COMMENTS:

1. Property Tax. Proposition 13 (1978) established a single, countywide property tax rate of 1%. Proposition 13 cut statewide property tax revenue by 57% and removed local autonomy, shifting the power to allocate remaining property tax revenues from local governments to the Legislature. The Legislature established a methodology for allocating property tax revenues to counties, cities, special districts, and school districts based on each local agency's historical share of property tax revenues. In 1979, AB 8 (Greene) established the formula for the allocation of property taxes, using the historical share as a base and apportioning revenues from the change in assessed valuation among each local agency serving a particular property. Each local agency's share of property tax reflects the tax rate of each jurisdiction relative to the rates of other taxing agencies in the jurisdiction.

Approximately 30 cities that never levied a property tax before Proposition 13 are called no property-tax cities, and about 60 cities that levied only low property tax rates are known as low property-tax cities. The no/low cities were impacted differently by the restructuring of property tax allocation because AB 8 formulas are based on the historical share of property tax received by a city for the three years preceding the adoption of Proposition 13. Therefore, the Legislature established a "tax equity allocation" (TEA) formula to provide no/low cities a minimum amount of property tax revenue to remedy the absence of property tax revenue or low property tax revenue being used to determine future property tax allocation. Existing law requires county auditors to provide a TEA to increase the property tax shares of qualifying cities by shifting a portion of county property tax revenues to no/low cities. Existing law defines a qualifying city as a city that incorporated prior to June 5, 1987, and received less than 7% of property tax revenues collected within its jurisdiction. In most counties, these no/low cities now receive 7% of the property tax revenues generated within their city limits as a result of TEA.

Existing law prohibits property tax allocations for no/low cities from being reduced when they receive additional property tax revenues from other specified sources. A county auditor is prohibited from reducing TEA payments if a city receives additional property tax revenues as a result of a consolidation or merger of a special district into a city.

1. Bill Summary. The City of Palmdale is a no/low property city that is concerned that the dissolution of the Streetlight Maintenance Districts will impact their TEA payments. This bill prohibits the Los Angeles County Auditor from reducing the TEA payment to the City of Palmdale as a result of the City receiving property taxes previously allocated to a maintenance or improvement district. This bill also requires the City to reimburse the county auditor's costs related to administering the reallocation of property taxes as a result of this bill. This bill is sponsored by the City of Palmdale.
2. City of Palmdale. There are five Streetlight Maintenance Assessment Districts in the City of Palmdale that cover over 40,770 parcels. The streetlight maintenance assessment districts were formed under the provision of the Street Lighting Act of 1919 to serve as a financing mechanism to provide lighting maintenance services. Existing law authorizes local officials to levy benefit assessments on property owners to pay for those public improvements and services that specifically benefit their property. A benefit assessment is an involuntary charge that appears on a property owner's annual property tax bill. The amount of the assessment is directly related to the amount of the benefit their property receives. According to the City of Palmdale, only one of the five streetlight maintenance assessment districts receives ad valorem property tax. The total assessed amount for District 5 in the 2016-17 fiscal year was $283,446. The other four districts are funded by benefit assessments.
3. Author's Statement. According to the author, "This bill allows the City of Palmdale the necessary flexibility and financing tool to assume operational and fiscal responsibilities of its streetlight maintenance district and become the district's successor entity. The bill simply reallocates property taxes already approved and collected, and it does not increase taxes.
   AB 873 will allow the City to maintain, operate and improve all streetlights in the future and make payments to all debts associated with the acquisition and improvements of streetlights. Such improvements include retrofitting to LED lights which would reduce energy usage by 67%."
4. Prior Legislation. AB 468 (Smyth), Chapter 319, Statues of 2011, prohibited a reduction in the TEA payments to the City of Simi Valley as a result of the City serving as the successor agency of a dissolved maintenance district. This bill is substantially similar to AB 468.
5. Arguments in Support. According to the City of Palmdale, "AB 873 will allow streetlight maintenance district funds to be merged with the general purpose fund to give the City more funding flexibility to support the acquisition of streetlights from SCE [Southern California Edison], and conversion of existing streetlights to energy efficient LED lights."
6. Arguments in Opposition. None on file.

REGISTERED SUPPORT / OPPOSITION:

Support

City of Palmdale [SPONSOR]

Los Angeles County Sheriff's Department

Opposition

None on file

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958