Assembly Constitutional Amendment No. 10
RESOLUTION CHAPTER 134
Assembly Constitutional Amendment No. 10—A resolution directing the Secretary of State to mak e amendments in Assembly Constitutional Amendment No. 1 (Resolution Chapter 173 of the Statutes of 2023) relating to local government finance.
[Filed with Secretary of State June 27, 2024.]
legislative counsel’s digest
ACA 10, Aguiar-Curry. Local government financing: affordable housing and public infrastructure: voter approval.
Assembly Constitutional Amendment No. 1 of the 2023–24 Re gular Session (ACA 1) would, if adopted by the people, amend Section 4 of Article XIII A, Section 2 of Article XIII C, and Section 3 of Article XIII D of, and would add Section 2.5 of Article XIII C to, the California Constitution, relative to local finance. Under these pro visions, ACA 1 would condition the imposition, extension, or increase of a sales and use tax or transactions and use tax imposed in accordance with specified la w or a parcel tax by a local go vernment for the purposes of funding the construction, reconstruction, rehabilitation, or replacement of public infrastructure, affordable housing, including do wnpayment assistance, or permanent supportive housing, or the acquisition or lease of real property for those purposes, on the proposition proposing that tax being approved by a majority vote of the membership of the governing board of the local government and by 55% of its voters voting on the proposition and the proposition includes specified accountability requirements. ACA 1 would also make conforming changes.
This measure w ould remove the abo ve-described provisions of ACA 1 relating to special taxes and make conforming changes in other provisions of ACA 1. The measure would direct the Secretary of State to mak e those amendments in ACA 1.
ACA 1 w ould create an additional e xception to the 1% ad v alorem property tax rate limit for an ad v alorem tax or special assessment to pay the interest and redemption charges on bonded indebtedness incurred by a city, county , or special district, as defined, to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure, affordable housing, including do wnpayment assistance, or permanent supportive housing, or the acquisition or lease of real property for those purposes, if the proposition proposing that tax is appro ved by 55% of the voters of the city, county, city and county, or special district, as applicable, voting on the proposition on or after the effective date of ACA 1 and on the proposition including specified accountability requirements. ACA 1 would
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provide that this exception applies to an ad valorem tax for these purposes that is submitted at the same election as ACA 1.
This measure w ould specify that the proposition proposing bonded indebtedness for which an ad v alorem tax may be imposed under ACA 1, and any measure imposing an ad v alorem tax for these purposes, may be voted on at the same election as ACA 1 or at a later election held after the effective date of ACA 1. The measure would also modify the definition of affordable housing for these purposes to include housing developments, or portions of housing developments, that are affordable to individuals, families, seniors, people with disabilities, v eterans, or first-time homeb uyers, who are lower income households or middle-income households earning up to 150% of countywide median income, capitalized operating reserv es, downpayment assistance programs, first-time homeb uyer programs, permanent supportive housing, as defined, and associated facilities, if used to serve residents of af fordable housing. The measure would also modify the definition of public infrastructure for these purposes to include, among other things, facilities or infrastructure for the deli very of public services, including education, police, fire protection, parks, recreation, open space, emergency medical, public health, libraries, flood protection, streets or highways, public transit, railroad, airports, and seaports. The measure would make conforming changes and direct the Secretary of State to mak e those amendments in ACA 1.
ACA 1 would authorize the Legislature, subject to a2⁄3 vote, to enact laws establishing additional accountability measures consistent with the purposes and intent of the bonded indebtedness provisions of ACA 1.
This measure would additionally authorize the Legislature, subject to a2⁄3 vote, to enact la ws imposing additional conditions or restrictions on the acquisition or lease of real property for purposes described in the bonded indebtedness provisions of ACA 1. The measure w ould also require that any repeal of those conditions or restrictions be subject to a 2⁄3 vote.
ACA 1 would require the approval of 55% of the voters of the city, county, city and county , or special district, as applicable, to incur bonded indebtedness, exceeding in an y year the income and re venue provided in that year, that is in the form of general obligation bonds issued to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure, affordable housing, or permanent supportive housing projects, if the proposition proposing that bond includes specified accountability requirements. ACA 1 would specify that this 55% threshold applies to any proposition for the incurrence of indebtedness by a city , county, city and county, or special district for these purposes that is submitted at the same election as ACA 1.
This measure w ould specify that this 55% threshold applies to an y proposition for the incurrence of indebtedness by a city , county, city and county, or special district for these purposes that is submitted at the same election as ACA 1 or at a later election held after the effective date of ACA
1. The measure w ould direct the Secretary of State to mak e those amendments in ACA 1.
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Resolved by the Assembly, the Senate concurring , That the Le gislature of the State of California at its 2023–24 Re gular Session commencing on the fifth day of December 2022, two-thirds of the membership of each house concurring, hereby directs the Secretary of State to mak e amendments in Assembly Constitutional Amendment No. 1 of the 2023–24 Regular Session (Resolution Chapter 173 of the Statutes of 2023) by removing Section 4 of Article XIII A of, Section 2 of Article XIII C of, and Section 3 of Article XIIID of, the Constitution, as proposed to be amended by that measure, and by removing Section 2.5 of Article XIII C of the Constitution, as proposed to be added by that measure; and be it further
Resolved, That the Le gislature hereby directs the Secretary of State to make amendments in Assembly Constitutional Amendment No. 1 of the 2023–24 Regular Session (Resolution Chapter 173 of the Statutes of 2023) by removing Section 1 of Article XIIIA, and Section 18 of Article XVI, of the Constitution, as proposed to be amended by that measure, and replacing those sections with the following Section 1 and Section 18, respectively:
That Section 1 of Article XIII A thereof is amended to read:
SECTION 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed 1 percent of the full cash v alue of that property.
The 1 percent tax shall be collected by the counties and apportioned according to law to the districts within the counties.
(b) The limitation provided for in subdi vision (a) shall not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on any of the following:
(1) Indebtedness approved by the voters before July 1, 1978. (2) Bonded indebtedness to fund the acquisition or improvement of real property approved on or after July 1, 1978, by tw o-thirds of the votes cast by the voters voting on the proposition.
(3) Bonded indebtedness incurred by a school district, community college district, or county office of education for the construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters of the district or county, as appropriate, voting on the proposition on or after No vember 8, 2000. This paragraph shall apply only if the proposition appro ved by the voters and resulting in the bonded indebtedness includes all of the following accountability requirements:
(A) A requirement that the proceeds from the sale of the bonds be used only for the purposes specified in this paragraph and not for an y other purpose, including teacher and administrator salaries and other school operating expenses.
(B) A list of the specific school f acilities projects to be funded and certification that the school district board, community colle ge board, or county office of education has e valuated safety, class size reduction, and information technology needs in developing that list.
(C) A requirement that the school district board, community colle ge board, or county office of education conduct an annual, independent 95 Res. Ch. 134 — 3 —
performance audit to ensure that the funds have been expended only on the specific projects listed.
(D) A requirement that the school district board, community colle ge board, or county office of education conduct an annual, independent financial audit of the proceeds from the sale of the bonds until all of those proceeds have been expended for the school facilities projects.
(4) (A) Bonded indebtedness incurred by a city, county, city and county, or special district for the construction, reconstruction, rehabilitation, or replacement of public infrastructure or affordable housing, or the acquisition or lease of real property for public infrastructure or af fordable housing, approved by 55 percent of the v oters of the city , county, city and county , or special district, as appropriate, voting on the proposition submitted at the same election as the measure adding this paragraph or at a later election held after the ef fective date of the measure adding this paragraph. This paragraph shall apply only if the proposition appro ved by the v oters and resulting in the bonded indebtedness includes all of the follo wing accountability requirements:
(i) A requirement that the proceeds from the sale of the bonds be used only for the purposes specified in this paragraph, and not for an y other purpose, including city, county, city and county, or special district employee salaries and other operating e xpenses. The administrative cost of the city , county, city and county , or special district e xecuting the projects and programs of the proposition shall not exceed 5 percent of the proceeds from the sale of the bonds.
(ii) A requirement that the proceeds from the sale of the bonds only be spent on projects and programs that serve the jurisdiction of the city, county, city and county, or special district.
(iii) The specific local program or ordinance through which projects will be funded and a certification that the city, county, city and county, or special district has evaluated alternative funding sources.
(iv) A requirement that the city, county, city and county, or special district conduct an annual, independent performance audit to ensure that the funds have been expended pursuant to the local program or ordinance specified in clause (iii).
(v) A requirement that the city, county, city and county, or special district conduct an annual, independent financial audit of the proceeds from the sale of the bonds until all of those proceeds ha ve been e xpended for the public infrastructure or affordable housing projects, as applicable. (vi) A requirement that the city, county, city and county, or special district post the audits required by clauses (i v) and (v) in a manner that is easily accessible to the public.
(vii) A requirement that the audits required by clauses (i v) and (v) will be submitted to the California State Auditor for review. (viii) (I) A requirement that the city, county, city and county, or special district appoint a citizens’ oversight committee to ensure that bond proceeds are expended only for the purposes described in the measure appro ved by the voters.
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(II) Members appointed to an oversight committee established pursuant to subclause (I) shall recei ve educational training about bonds and fiscal oversight.
(ix) A requirement that an entity owned or controlled by a local official that votes on whether to put a proposition on the ballot pursuant to this paragraph will be prohibited from bidding on an y w ork funded by the proposition.
(B) Notwithstanding any other law, if the voters of the city, county, city and county , or special district ha ve pre viously appro ved a proposition pursuant to this paragraph, the city , county, city and county , or special district shall not place a proposition on the ballot pursuant to this paragraph until all funds from the pre vious proposition are committed to programs and projects listed in the proposition’s specific local program or ordinance described in clause (iii) of subparagraph (A).
(C) (i) The Legislature may, by two-thirds vote, enact laws establishing accountability measures in addition to those listed in subparagraph (A), provided such la ws are consistent with the purposes and intent of this paragraph.
(ii) The Le gislature may , by tw o-thirds v ote, enact la ws imposing additional conditions or restrictions on the acquisition or lease of real property for the purposes described in this paragraph. Any repeal of conditions or restrictions on the acquisition or lease of real property for the purposes described in this paragraph shall require a two-thirds vote. (D) The Le gislature may , by majority v ote, enact la ws for the downpayment assistance programs established pursuant to this paragraph, provided that those laws further the purposes of this paragraph. (E) For purposes of this paragraph:
(i) (I) “Affordable housing” shall include housing de velopments, or portions of housing developments, that are affordable to individuals, families, seniors, people with disabilities, v eterans, or first-time homeb uyers, who are lower income households or middle-income households earning up to 150 percent of countywide median income, as those terms are defined in state law. Affordable housing shall include capitalized operating reserv es, as the term is defined in state law.
(II) “Affordable housing” shall also include any of the following:
(ia) Downpayment assistance programs.
(ib) First-time homebuyer programs.
(ic) Permanent supportive housing, including, but not limited to, housing for persons at risk of chronic homelessness, including, b ut not limited to, persons with mental illness.
(id) Associated facilities, if used to serve residents of affordable housing. (ii) “At risk of chronic homelessness” includes, b ut is not limited to, persons who are at high risk of long-term or intermittent homelessness, including persons with mental illness e xiting institutionalized settings, including, but not limited to, jail and mental health f acilities, who were homeless prior to admission, transition age youth experiencing homelessness 95 Res. Ch. 134 — 5 —
or with significant barriers to housing stability , and others, as defined in program guidelines.
(iii) “Permanent supportive housing” means housing with no limit on length of stay, that is occupied by the tar get population, and that is link ed to onsite or of fsite services that assist residents in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.
(iv) “Public infrastructure” shall include any of the following:
(I) Facilities or infrastructure for the delivery of public services, including education, police, fire protection, parks, recreation, open space, emergency medical, public health, libraries, flood protection, streets or highways, public transit, railroad, airports, and seaports.
(II) Utility, common carrier or other similar projects, including energy-related, communication-related, water-related, and wastewater-related facilities or infrastructure.
(III) Projects identified by the State or local go vernment for reco very from natural disasters.
(IV) Equipment related to fire suppression, emer gency response equipment, or interoperable communications equipment for direct and exclusive use by fire, emergency response, police, or sheriff personnel. (V) Projects that provide protection of property from sea level rise. (VI) Projects that pro vide public broadband internet access service expansion in underserved areas.
(VII) Private uses incidental to, or necessary for, the public infrastructure. (VIII) Grants to homeowners for the purposes of structure hardening of homes and structures, as defined in state law.
(v) “Special district” has the same meaning as pro vided in subdivision (c) of Section 1 of Article XIIIC and specifically includes a transit district, a regional transportation commission, and an association of go vernments, except that “special district” does not include a school district, redevelopment agency, or successor agency to a dissolved redevelopment agency. (F) This paragraph shall apply to an y city, county, city and county , or special district measure imposing an ad valorem tax to pay the interest and redemption charges on bonded indebtedness for those purposes described in this paragraph that is submitted at the same election as the measure adding this paragraph or at a later election held after the ef fective date of the measure adding this paragraph.
(c) (1) Notwithstanding an y other pro visions of la w or of this Constitution, a school district, community college district, or county office of education may le vy a 55-percent v ote ad v alorem tax pursuant to paragraph (3) of subdivision (b).
(2) Notwithstanding any other provisions of law or this Constitution, a city, county, city and county, or special district may levy a 55-percent vote ad valorem tax pursuant to paragraph (4) of subdivision (b).
That Section 18 of Article XVI thereof is amended to read:
SEC. 18. (a) A county, city, town, township, board of education, or school district, shall not incur an y indebtedness or liability in an y manner 95 — 6 — Res. Ch. 134
or for any purpose exceeding in any year the income and revenue provided for that year , without the assent of tw o-thirds of the v oters of the public entity voting at an election to be held for that purpose, e xcept that with respect to any such public entity that is authorized to incur indebtedness for public school purposes, any proposition for the incurrence of indebtedness in the form of general oblig ation bonds for the purpose of repairing, reconstructing, or replacing public school b uildings determined, in the manner prescribed by law, to be structurally unsafe for school use, shall be adopted upon the appro val of a majority of the v oters of the public entity voting on the proposition at the election; nor unless before or at the time of incurring such indebtedness pro vision shall be made for the collection of an annual tax sufficient to pay the interest on such indebtedness as it f alls due, and to pro vide for a sinking fund for the payment of the principal thereof, on or before maturity , which shall not e xceed 40 years from the time of contracting the indebtedness. A special district, other than a board of education or school district, shall not incur any indebtedness or liability exceeding an y applicable statutory limit, as prescribed by the statutes governing the special district as the y currently read or may thereafter be amended by the Legislature.
(b) (1) Notwithstanding subdi vision (a), an y proposition for the incurrence of indebtedness in the form of general oblig ation bonds for the purposes described in paragraph (3) or (4) of subdi vision (b) of Section 1 of Article XIII A shall be adopted upon the appro val of 55 percent of the voters of the school district, community colle ge district, county office of education, city , county , city and county , or other special district, as appropriate, voting on the proposition at an election. This subdivision shall apply to a proposition for the incurrence of indebtedness in the form of general obligation bonds for the purposes specified in this subdivision only if the proposition meets all of the accountability requirements of paragraph (3) or (4) of subdivision (b), as appropriate, of Section 1 of Article XIII A. (2) The amendments made to this subdi vision by the measure adding this paragraph shall apply to an y proposition for the incurrence of indebtedness in the form of general oblig ation bonds pursuant to this subdivision for the purposes described in paragraph (4) of subdi vision (b) of Section 1 of Article XIII A that is submitted at the same election as the measure adding this paragraph or at a later election held after the effective date of the measure adding this paragraph.
(c) When two or more propositions for incurring an y indebtedness or liability are submitted at the same election, the v otes cast for and ag ainst each proposition shall be counted separately, and if two-thirds or a majority or 55 percent of the voters, as the case may be, voting on any one of those propositions, vote in favor thereof, the proposition shall be deemed adopted.
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