Item 09 - Rental Registry Fee Study

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Pg. 08 CHAPTER I – THE NEED FOR USER FEES City of Santa Ana Rent Stabilization Program Fee – March 2023 wake of all of the changes wrought by Proposition 13 comes out of that little phrase. The importance, and the deeper meaning, is detailed in this section of the author’s intent documents: “The phrase ‘costs reasonably borne by such entity in providing the regulation, product, or service’ is intended to incorporate all appropriations by an entity for reasonable costs appropriate for the continuation of service over time. This includes ongoing expenses such as operation costs and a reasonable allocation for overhead and administration, but it also includes responsible allocations for capital replacement, expansion of services, and repayment of related bond issuances would be considered ‘costs reasonably borne’.” Then, Proposition 218, passed in 1996 and became Articles XIIIC & D, further restricting municipal utility rates charged on property owners. Prop 13, 4 and 218 have had, and will continue to have, a profound effect on California governments. But it was left to the passage of Proposition 26, passed in 2010, to codify many of the fee setting practices of the previous 30 years. Article XIII C of the State Constitution was amended to formally declare that fees are not considered taxes if they do not exceed the reasonable costs of the service. Government Code Section 66014 further defined that statement for development fees. Some of the types of services for which reasonable fees are allowable are:  A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.  A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.  A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. Article XIII C also provides that a local government agency must demonstrate that the amount of revenue to be generated by a fee is no more than necessary to cover the reasonable costs of the governmental activity supported by the fee, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received