Proposition 218, which was approved by California voters in 1996, established “Property-Related Fees.” A property-related fee is a fee or charge imposed upon a parcel “as an incident of property ownership.” The procedure for property-related fees includes two primary steps: a public hearing at which property owners may lodge a protest; and then a ballot proceeding to gain approval of voters (consisting of property owners).
However, Proposition 218 exempted water, sewer and refuse collection fees from the second step. Stormwater fees were not explicitly called out. In 1999, the City of Salinas adopted storm drainage fees without balloting under the presumption that storm drainage was a type of sewer. The city was challenged in the courts. In the 2002 Proposition 218 case, Howard Jarvis Taxpayers Association v. City of Salinas (98 Cal.App.4th 1351), the Court of Appeal for the Sixth Appellate District held that a “storm water drainage fee” was illegally imposed by the City of Salinas. This decision clarified the position that a property-related fee is the appropriate vehicle for storm drainage services, not a benefit assessment, and that the fee is subject to the balloting requirement.
Property-Related Fee Process
The property-related fee process requires public approval in two distinct steps, both of which must be completed successfully for the fee to be approved. The first step is a public notice mailed to each property owner followed by a public hearing 45 days later held by municipality. If a majority of all affected property owners protest the proposed fee at this initial protest hearing, the proposed fee cannot be imposed, and the process is concluded for that year. If a majority protest is not received, the municipality may take the second step: submit the fee to a balloting of property owners subject to a simple majority (or, alternately, all registered voters subject to a two-thirds majority).
The mailed ballot must contain the amount of the proposed fee to be imposed on the owner’s property or properties, the basis for calculating the proposed fee, the reason for the fee, and a place upon which an owner can indicate his/her support or opposition for the proposed fee. A simple majority of ballots cast by property owners is required to approve the fee. The balloting must be held at least 45 days after the public hearing.
- Mailed Notices of Rate Proposal/Opportunity to Protest/Public Hearing (see Appendix 1 for examples)
- Resolutions initiating Proposition 218 process and adopting Proposition 218 procedures
- Fee Report and Presentation for Public Hearing
- Resolution concluding public hearing and directing the mailing of ballots (assumes < 50% protest)
- Ordinance (first reading) adopting fees (some municipalities have opted for a resolution only)
- Mailed Ballots (assumes Council approval/direction to submit to vote)
- Resolution certifying ballot results and adopting rate ordinance (assumes >50% support)
The Proposition 218 process will take at least four months, but usually longer after considering the lead time required to schedule governing board meetings and print and mail notices and ballots.
Examples of Proposition 218 Proceedings
Since 2002 approximately two dozen attempts have been made statewide for a Proposition 218-compliant stormwater fee. Here is a list of recent Prop 218 measures. The entries at the bottom of the list are the known municipalities that are currently studying or considering a Proposition 218 fee proceeding.
Three municipalities have been highlighted for comparison purposes: Contra Costa Clean Water Program (2012), City of Palo Alto (2017), and City of San Clemente (2013). See the comparison table. In addition, here is a summary of the Contra Costa Clean Water Program measure from 2012.