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Home My WebLink About06 - Resolution Reaffirming Support of Proposition 13TO: FROM: PREPARED BY PHONE: TITLE: ABSTRACT: CITY OF NEWPORT BEACH City Council Staff Report May 26, 2015 Agenda Item No. 6 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL Dave Kiff, City Manager — (949) 644-3002, dkiff@newportbeachca.gov Rob Houston, Assistant to the City Manager (949) 644-3033 Resolution Reaffirming Support of Proposition 13 On June 6, 1978, Proposition 13 was approved by California voters, reducing property tax rates on homes, businesses and farms, and capping the rate of increase in the future. Council Member Peotter has asked for Council consideration of a resolution honoring Proposition 13 for the benefits it provides to individual homeowners, renters, local governments and to the state's overall economy. RECOMMENDATION: Adopt Resolution 2015-38, A Resolution of the City Council of the City of Newport Beach in Support of Proposition 13. FUNDING REQUIREMENTS: There is no fiscal impact related to this item. DISCUSSION: In California, most properties are assessed at 100% of their "full cash value" as of 1975, and then taxed 1 % of that value after a $7,000 homeowner exemption. In subsequent years, the value can only increase by 2% or less. A new sale of a home will re -set the full cash value at the selling price. These are the basic protections of Article XIII(A) of the California Constitution, put in place by Proposition 13 in June 1978. Prior to Proposition 13, property tax bills could move upward rapidly as home values increased outside of sales and as localities could set property tax rates annually based on local needs. Both of these can cause financial hardship to homeowners. Proponents of Proposition 13 have suggested that Proposition 13's limitations have saved the average homeowner tens of thousands of dollars over the past thirty-six years, and enabled Californians to use these savings to spur local economies, create jobs, and foster economic development. Additionally, proponents maintain that stable tax rates have also allowed local governments to accurately forecast 6-1 property tax revenues and draft their budgets accordingly. Critics to Prop 13 have suggested that the State and local governments merely moved their focus from property taxes to other revenue sources - such as special assessment districts, fees and exactions - to meet revenue needs. Per Council Member Peotter's request, the attached Council Resolution seeks to recognize the positive impact Proposition 13 has had on the State of California, and affirm the Newport Beach City Council's support for Proposition 13 and the benefit that it provides to individual homeowners, renters, local governments and to the state's overall economy. ENVIRONMENTAL REVIEW: 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, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 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). ATTACHMENTS: Description Attachment A - Resolution in Support of Prop 13 6-2 ATTACHMENT A RESOLUTION NO. 2015- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, IN SUPPORT OF PROPOSITION 13 WHEREAS, on June 6, 1978, Proposition 13, officially titled the "People's Initiative to Limit Property Taxation," and popularly known as the "Jarvis -Gann Initiative," was overwhelmingly approved by California's voters, reducing property tax rates on homes, businesses and farms, and capping the rate of increase in the future; WHEREAS, prior to the adoption of Proposition 13, California's high inflation had increased property tax bills in California to a level that forced many families to sell their homes because they could not afford to pay their taxes; WHEREAS, prior to the adoption of Proposition 13, property tax assessments showed wider divergences than assessment disparities under the current acquisition - value system; WHEREAS, with the approval of Proposition 13, real property values were adjusted to a base value equal to the 1976 assessed value of that real property, thereby introducing an objective standard upon which real property would be taxed and ending the previous subjective standard for assessment that engendered the property tax assessment abuses that occurred in the 1960s and 1970s; WHEREAS, with the passage of Proposition 13, taxpayers, for the first time, were provided a measure of certainty with respect to their property taxes; WHEREAS, following the passage of Proposition 13, the average homeowner has saved tens of thousands of dollars in property tax payments, money that was able to be spent in the economy to create jobs and foster economic development; WHEREAS, following the passage of Proposition 13, renters also benefitted as the reduction in taxes reduced upward pressure on rents; WHEREAS, the volatility of income and sales tax revenue to the state and local governments is a major flaw in California's tax system, while Proposition 13 has rendered California's property taxes as a stable and predictable source of public revenue, even during economic downturns, which has provided a major benefit to local governments throughout California; WHEREAS, since the passage of Proposition 13, proposed alternatives to Proposition 13 would have had a variety of unwelcome effects, including substantial tax increases for low-income and elderly homeowners; -1- 6-3 WHEREAS, voters intended Proposition 13 to protect all property owners, and they had rejected previous attempts to impose higher taxes on small businesses, knowing that these so-called "split roll" proposals would inflict irreparable harm on California's economy; and WHEREAS, Proposition 13 has become a nationwide symbol for taxpayer revolt and for citizens exercising control and power over their governance. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: In recognition of the positive impact Proposition 13 has had on the State of California, we formally reaffirm our support for Proposition 13 and the benefit that it provides to individual homeowners, renters, local governments and to the state's overall economy. Section 2: 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, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. Section 3: The recitals provided in this resolution are true and correct and are incorporated into the substantive portion of this resolution. Section 4: The City Council finds the adoption of this resolution in support of Proposition 13 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, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 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 26 day of May, 2015. ATTEST: Leilani I. Brown, City Clerk Edward D. Selich, Mayor -2 6-4