HomeMy WebLinkAbout10 - A Procedure to Challenge Property Related Fees, Charges and Assessments in Accordance with Assembly Bill No. 2257Q �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
July 22, 2025
Agenda Item No. 10
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Aaron Harp, City Attorney - 949-644-3131,
aharp@newportbeachca.gov
PREPARED BY: Yolanda M. Summerhill, Assistant City Attorney - 949-644-3135,
ysummerhill@newportbeachca.gov
TITLE: Resolution No. 2025-49: A Procedure to Challenge Property Related
Fees, Charges and Assessments in Accordance with Assembly Bill
No. 2257
ABSTRACT:
Assembly Bill No. 2257 (AB 2257) amends Proposition 218 to allow public agencies to
require those who challenge new or increased fees, charges, or assessments to exhaust
administrative remedies before filing a lawsuit by providing, in writing, the legal basis for
any protest. For the City Council's consideration is a resolution establishing procedures
for protesting property related fees to provide additional protection against unanticipated
legal challenges in accordance with Assembly Bill 2257.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act
(CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines
because this action will not result in a physical change to the environment, directly or
indirectly; and
b) Adopt Resolution No. 2025-49; A Resolution of the City Council of the City of Newport
Beach, California, Adopting a Procedure to Challenge Property Related Fees,
Charges and Assessments in Accordance with Assembly Bill No. 2257.
DISCUSSION:
Proposition 218, adopted by California voters in 1996, requires local governments to
follow specific procedures before imposing or increasing property -related fees and
charges. Examples of such fees include water and sewer rates, as well as solid waste
and recycling fees. These procedures include providing public notice, holding a public
hearing, and allowing for a majority protest process. Notably, Proposition 218 does not
require a ratepayer to articulate the legal basis for objection during the protest process; it
only requires general approval or disapproval of proposed new fees.
In recent years, California courts have increasingly emphasized the importance of
exhausting local administrative remedies before pursuing litigation related to such fees.
This trend stems from the recognition that legal challenges can be brought years after a
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Resolution No. 2025-49: A Procedure to Challenge Property Related Fees,
Charges and Assessments in Accordance with Assembly Bill No. 2257
July 22, 2025
Page 2
fee is adopted and implemented, raising concerns about fairness and administrative
efficiency.
To address this, the California Legislature adopted AB 2257, which added Sections
53759.1 and 53759.2 to the California Government Code. This law authorized local
agencies to adopt administrative procedures that require potential plaintiffs to first exhaust
administrative remedies before filing a lawsuit challenging the validity of property -related
fees or charges under Proposition 218. This approach is like the exhaustion requirements
found in environmental review challenges under CEQA.
Adopting administrative remedies under AB 2257 ensures meaningful public participation
during the fee adoption process, while also requiring legal objections to be raised and
addressed as part of the public record. This enhances transparency and strengthens the
legal integrity of the process.
The City's current procedure for adopting property -related fees already includes several
steps mandated by Proposition 218. These include the adoption of a resolution of
intention that sets a public hearing date at least 45 days in the future and invites
ratepayers to submit written protests. At the public hearing, the City Council may adopt
the proposed fees, provided that a majority protest has not been received.
The proposed resolution integrates AB 2257's exhaustion of administrative remedies
requirement into this existing 45-day public review process. Under this procedure, any
written protest submitted by a ratepayer must include the specific legal basis for the
objection. In response, the City will prepare a written reply that addresses the objection
and outlines the substantive basis for retaining or modifying the proposed fee, charge, or
assessment.
This process reinforces public accountability and provides a clear and timely avenue for
addressing legal challenges, thereby reducing the likelihood of protracted litigation and
ensuring compliance with both Proposition 218 and the newly enacted Government Code
Sections 53759.1 and 53759.2.
FISCAL IMPACT:
There is no fiscal impact related to this item. The City's publishes all fee studies 45-days
in advance of a public hearing prior to the adoption of property related fees subject to
Proposition 218. At the public hearing, the City responds to all protests regarding the
validity of the fee established. Therefore, adopting this procedure is not anticipated to
incur additional staff time and may result in potential savings from avoiding litigation.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has
no potential for resulting in physical change to the environment, directly or indirectly.
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Resolution No. 2025-49: A Procedure to Challenge Property Related Fees,
Charges and Assessments in Accordance with Assembly Bill No. 2257
July 22, 2025
Page 3
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — Resolution No. 2025-49
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ATTACHMENT A
RESOLUTION NO. 2025- 49
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, ADOPTING A
PROCEDURE TO CHALLENGE PROPERTY RELATED
FEES, CHARGES AND ASSESSMENTS IN
ACCORDANCE WITH ASSEMBLY BILL NO. 2257
WHEREAS, Section 200 of the City Charter, of the City of Newport Beach ("City"),
vests the City Council with the authority to make and enforce all laws, rules and
regulations with respect to municipal affairs subject only to the restrictions and limitations
contained in the City Charter and the State Constitution, and the power to exercise, or act
pursuant to any and all rights, powers, and privileges or procedures granted or prescribed
by any law of the State of California;
WHEREAS, the Proposition 218 Omnibus Implementation Act added California
Constitution Articles XIII C and XIII D in 1996 ("Proposition 218") and made numerous
changes to local government finance law including significantly changing the rules and
requirements for adopting property related fees;
WHEREAS, Proposition 218, requires local governments to follow specific
procedures before imposing or increasing property -related fees and charges;
WHEREAS, in recent years, California courts have increasingly emphasized the
importance of exhausting local administrative remedies before pursuing litigation related
to such fees because a legal challenge can be brought years after a fee is adopted and
implemented, raising concerns about fairness and administrative efficiency;
WHEREAS, to address these concerns, the California Legislature adopted
Assembly Bill No. 2257 ("AB 2257"), which added Sections 53759.1 and 53759.2 to the
California Government Code, authorizing local agencies to adopt administrative
procedures that require potential plaintiffs to first exhaust administrative remedies before
initiating litigation challenging the validity of property -related water or sewer fees or
charges under Proposition 218;
WHEREAS, to implement AB 2257, the City must adopt a resolution setting forth
the administrative procedures required by law; and
WHEREAS, this resolution integrates AB 2257's exhaustion of administrative
remedies requirement into this existing 45-day public review process.
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Resolution No. 2025-
Page 2 of 3
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The City Council does hereby adopt the procedures, attached hereto
as Exhibit A, which are incorporated herein by reference, requiring exhaustion of
administrative remedies related to property related fees, charges and assessments.
Section 2: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 3: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this resolution. The City
Council hereby declares that it would have passed this resolution, and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 4: The City Council finds the adoption of this resolution is not subject to
the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly or
indirectly. This action simply establishes the procedure to protest fees, charges, and
assessments adopted by the City, therefore, will not result is not a project, nor will it result
in any physical change to the environment.
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Resolution No. 2025-
Page 3 of 3
Section 5: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 22nd day of July, 2025.
Joe Stapleton
Mayor
ATTEST:
Molly Perry
Interim City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
2",
Aaron C Harp
City Atto ney
Attachment(s): Exhibit A — Procedure to Protest Property Related Fees, Charges and
Assessments
90
Exhibit "A"
Procedure to Protest Property Related Fees, Charges and Assessments
A. Scope. The duty to exhaust administrative remedies imposed by this
section extends to:
1. Any fee or charge subject to Articles XIII C or XIII D of the California
Constitution;
2. Any assessment on real property levied by the City; and
3. The methodology used to develop and levy such a fee, charge, or
assessment.
B. Definition. "Hearing" as used in this section means the hearing
referenced in Subsection D(4).
C. Duty to Exhaust Issues. No person may bring a judicial action or
proceeding alleging noncompliance with the California Constitution or
other applicable law for any new, increased, or extended fee, charge,
or assessment levied by the City, unless that person submitted to the
City Clerk a timely, written objection to that fee, charge, or assessment
specifying the grounds for alleging noncompliance. The issues raised in
any such action or proceeding shall be limited to those raised in such
objection unless a court finds the issue could not have been raised in
an objection by those exercising reasonable diligence.
D. Procedures. The City shall:
1. Make available to the public any proposed fee, charge, or
assessment to which this section is to apply no less than 45 days
before the deadline for a ratepayer or assessed property owner to
submit an objection pursuant to Subsection D(4) below.
2. Post on its internet website a written basis for the fee, charge, or
assessment, such as a cost of service analysis or an engineer's
report, and include a link to the internet website in the written notice
of the Hearing, including, but not limited to, a notice pursuant to
subdivision (c) of Section 4 or paragraph (1) of subdivision (a) of
Section 6 of Article XIII D of the California Constitution.
3. Mail the written basis described in Subsection D(2) to a ratepayer or
property owner on request.
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4. Provide at least 45 days for a ratepayer or assessed property owner
to review the proposed fee or assessment and to timely submit to the
City Clerk a written objection to that fee, charge, or assessment that
specifies the grounds for alleging noncompliance. Any objection shall
be submitted before the end of the public comment portion of a
Hearing on the rate, charge or assessment.
5. Include in a written notice of the Hearing, a statement in bold-faced
type of 12 points or larger that:
a) All written objections must be submitted to the City Clerk by the
end of public comment period at the Hearing and that a failure
to timely object in writing bars any right to challenge that fee,
charge, or assessment in court and that any such action will be
limited to issues identified in such objections.
b) All substantive and procedural requirements for submitting an
objection to the proposed fee, charge, or assessment such as
those specified for a property -related fee under California
Constitution, Article XIII D, section 6(a) or for an assessment
on real property under California Constitution, Article XIII D,
section 4(e).
E. Council Consideration; City Responses. Before or during the Hearing,
the City Council shall consider and the City shall respond in writing to,
any timely written objections. The City Council may adjourn the Hearing
to another date if necessary to respond to comments received after the
agenda is posted for the meeting at which the Hearing occurs. The City's
responses shall explain the substantive basis for retaining or altering
the proposed fee, charge, or assessment in response to written
objections, including any reasons to reject requested amendments.
F. City Council Determinations. The City Council, in exercising its
legislative discretion, shall determine whether:
1. The written objections and the City's response warrant clarifications
to the proposed fee, charge, or assessment;
2. To reduce the proposed fee, charge or assessment;
3. To further review the proposed fee, charge, or assessment before
determining whether clarification or reduction is needed; and
4. To proceed with the Hearing, to continue it, or to abandon the
proposal.
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