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Effects of Proposition 218 Proposition 218, commonly referred to as the "Right to Vote on Taxes Act," was passed by the voters on November 5, 1996. The Proposition amends the State's Constitution by adding Articles XIII(C) and XIII(D) to do the following: Limit the authority of local governments (including cities, counties, special districts, school districts, and redevelopment agencies) to impose taxes and property related assessments, fees, and charges. Establish procedures for implementing annual assessments which includes benefit assessments, special assessments, and maintenance assessments, etc. The procedures include a requirement that the City develop an engineering report which identifies the benefit that will accrue to each individJai property as a result of the assessment. Further, subject to certain exceptions, it establishes that the majority of the property owners in the assessment dislrict must vote in favor of the assessment for it to be implemented each year. Fees or charges for sewer, water, and refuse collection services are exempted from the Proposition. Further, general tax assessments for police, fire, and emergency medical programs are prohibited. If the District was formed prior to Proposition 218 and pursuant to a petition signed by the property owner(s) of all the parcels subject to the assessment, the District is exempt from the requirement that a majority of the property owners must vote each year in favor of the assessment. Here, all the existing Lighting and Landscape Assessment Districts were formed pursuant to such a petition prior to the passage of Proposition 218. Accordingly, as none of the assessments are proposed to be increased, no vote is required of the current property owners. Should an increase in the annual assessment be required in the future, the City will follow the process set forth in Proposition 218. Existing assessment districts must comply with Proposition 218's requirement that only special benefits, not general benefits, may be assessed when evaluating lighting and landscape maintenance districts. The definition of a special benefit is "a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large." General enhancement of property value does not constitute "special benefit." To the extent an assessment provides both general benefits and special benefits, the City must separate the general benefits from the special benefits and pay for the general benefits out of another revenue source, typically the City's General Fund. With these adjustments for Proposition 218, staff believes that the existing Lighting and Landscape Districts should continue. The landscaping being maintained under each district is of specific benefit to the property owners comprising each district, and the Lighting and Landscaping Assessment process provides an efficient and effective means for maintenance to be assured. Page 3 of 7