AUGUST 2, 2005 Casting of ballots on behalf of City-owned parcels and Agency-owned parcels within the City subject to the proposed Storm Drain User Fee and discussion of concerns raised by Councilmember Gardiner regarding the ballot materials. AUGUST 2, 2005 Casting of ballots on behalf of City-owned parcels and Agency-owned parcels within the City subject to the proposed Storm Drain User Fee and discussion of concerns raised by Councilmember Gardiner regarding the ballot materials.

TO: HONORABLE MAYOR AND CITY COUNCIL HONORABLE CHAIRMAN AND MEMBERS OF THE BOARD OF THE REDEVELOPMENT AGENCY

FROM: CAROL LYNCH, CITY ATTORNEY, AND ROBIN HARRIS, DEPUTY CITY ATTORNEY

DATE: AUGUST 2, 2005

SUBJECT: Casting of ballots on behalf of City-owned parcels and Agency-owned parcels within the City subject to the proposed Storm Drain User Fee and discussion of concerns raised by Councilmember Gardiner regarding the ballot materials.

RECOMMENDATION:

Convene the meeting of the Redevelopment Agency so that it is held concurrently with the City Council meeting regarding the issue of the voting of ballots for properties that are owned by the City or the Redevelopment Agency and:

1. Determine whether to cast ballots on behalf of City-owned parcels and Agency-owned parcels that are subject to the proposed Storm Drain User Fee and, if so, how to cast the ballots (i.e., all yes; all no; some yes and some no).

2. If the City Council or the RDA Board determines to cast ballots on behalf of their respective parcels, direct the City Manager, for and on behalf of the City, and the Executive Director, for and on behalf of the Redevelopment Agency, to cast ballots for their respective parcels in the manner determined by the City Council and RDA Board.

BACKGROUND:

On June 21, 2005, the City Council authorized a mail ballot election in connection with the proposed annual Storm Drain User Fee. On July 8, 2005, ballots and ballot materials were mailed to the owners of each property in the City subject to the proposed Fee. The deadline for returning the ballots is August 30, 2005 at 8:00 p.m. The election will be canvassed and the results of the election will be declared in September 2005. The proposed Fee must receive approval by a majority of the returned ballots or it cannot be imposed.

DISCUSSION:

A. Ballots for properties that are owned by the City and the Redevelopment Agency.

The City owns 49 parcels, and the Redevelopment Agency owns 12 parcels, that will be subject to the Fee, if it is approved by the voters. The City and the Agency both are entitled to cast a ballot for each of the respective parcels they own. Accordingly, this matter has been placed on the agenda this evening so that the Council and the Redevelopment Agency Board can direct the City Manager/Executive Director as to what action, if any, should be taken regarding the ballots for the parcels that are owned by each of the respective entities.

The City Council and the Agency may each determine to:

1) Cast a yes vote for each of their parcels;

2) Cast a no vote for each of their parcels;

3) Cast a yes vote for one or more of the their parcels and cast a no vote for one or more of their parcels; or

4) Not cast any votes on behalf of their parcels.

Staff is requesting direction from the City Council and RDA Board regarding what action, if any, should be taken regarding these ballots.

B. Councilmember Gardiner’s concerns about the ballot materials.

Councilmember Gardiner has expressed a number of concerns regarding the ballot materials that were mailed to the owners of property subject to the proposed Fee. This staff report summarizes and discusses Dr. Gardiner’s concerns.

Councilmember Gardiner noted that Councilmembers were not provided a copy of the ballot to inspect and were not informed that additional material would accompany the ballots or that anything other than ballot instructions would be on the ballot itself. Councilmember Gardiner questions the City’s authority under Proposition 218 for including anything with, in, or on the ballot that goes beyond instructions on how to fill out and return the ballot. Councilmember Gardiner has expressed the further concern that the materials which accompanied the ballots constitute electioneering in favor of the proposed Fee and are specifically prohibited by Proposition 218. In support of this, he expresses his opinion that the additional material and wording on the ballots contain the exact same points made by those who favor a yes vote on the ballot and cite the same material as reasons to vote in favor of the Fee. Councilmember Gardiner has cited several statements contained in the ballot materials which he feels are examples of impermissible advocacy rather than factional information. If Dr. Gardiner’s concerns are not adequately addressed, he has suggested that the ballots be recalled and stripped of impermissible statements.

The Infrastructure Financing Team, which consisted of Staff and consultants that were retained by the City, developed the materials that were sent to the property owners as part of the majority protest process. Elected and appointed officials were not included in that process. Although several of the consultants were not utilized in the preparation of the ballot materials, the same general process was used in developing the ballot materials. Accordingly, elected and appointed City officials were not consulted in connection with the development of the ballot materials. Although a different process could have been used, and certain portions of the ballot materials could have been worded differently, for the reasons discussed below, we continue to believe that the ballot materials comply with the law and need not be recalled.

Case law has established that a governmental agency may not spend public funds to advocate the passage or defeat of a ballot measure. The California Supreme Court has stated that advocacy occurs when express words of advocacy are used such as "vote for" or "support." In addition, advocacy occurs when the communication, taken as a whole, unambiguously urges a particular result in an election. Where express words of advocacy are not used, the communication must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a measure. Words can be deemed advocacy only if they present a clear plea for action, and words that are merely informative are not deemed advocacy. (Stanson v. Mott (1976) 17 Cal. 3rd 206.)

A fairly recent case, Schroeder v. City Council of the City of Irvine, (2002) 97 Cal. App. 4th 174, provides additional guidance for determining whether a particular public communication constitutes "election campaigning" or an "impartial presentation of the facts." In Schroeder, the Irvine City Council commissioned an effort to increase voter registration and voter participation in connection with a Countywide vote on the reuse of a closed military facility. Although the City had taken a public position in favor of the proposed ballot measure, the materials it distributed did not advocate any particular vote on the measure and rarely mentioned the measure at all. A taxpayer challenged the expenditures as illegal "partisan campaigning" under Stanson. The court held that the City’s expenditures would have been unlawful under Stanson only if the communications expressly advocated, or taken as a whole unambiguously urged, the passage or defeat of the measure. Because the City’s communications only urged the reader to vote and not how to vote, the Schroeder court held the City had not violated Stanson. Further, although the petitioner argued that the unambiguous implication of the City’s communications was for a yes vote, the court held when reasonable minds can differ as to the message being conveyed, there has been no express advocacy in violation of Stanson.

Proposition 218 also plays a significant role in this analysis because it provides that a property-related fee such as the proposed Storm Drain User Fee may not be imposed unless the City complies with the notice requirements, hearing requirements and voter-approval requirements of Proposition 218. However, Proposition 218 does not specify procedures for the conduct of fee elections or what ballot materials may be provided to the property owners. Instead, it simply imposes the election requirement. Thus, Stanson and Schroeder continue to apply and provide guidance on the issue of what information can be disseminated in connection with the election.

While Proposition 218 does not specify the contents of the ballot materials, Proposition 218 does provide that the notice of the protest hearing must specify the amount of the fee to be imposed upon each parcel, the basis upon which the amount of the proposed fee was calculated, and the reason for the proposed fee. We advised that the ballot materials should contain information similar to the information that was contained in the notice of the protest hearing regarding the fee to ensure that the requirements of Proposition 218 were satisfied and that the property owners were fully informed about the issue. While the information was previously disseminated prior to the protest hearing, all property owners may not have retained the notices, and property owners who very recently acquired their properties might never have received the notice at all. We did not think it was advisable to place the burden on the property owners of requiring them to contact the City or to go online in order to get information about the Fee.

The cover letter that accompanied the ballot encourages property owners to "Please vote." As discussed above, promoting voter participation does not constitute advocacy. The ballot materials do not use express words of advocacy such as "vote for" or "support" the proposed Storm Drain User Fee. Nor, in our view, do the ballot materials unambiguously urge a particular result in the election on the proposed Fee.

Instead the ballot materials present an impartial presentation of facts about the proposed Fee, such as what the Fee would be used for, how long the Fee could be collected, the rates of the Fee for different types of properties, the annual CPI adjustment, the establishment of the User Fee Assistance Program, the annual process for levying the Fee in subsequent years, the mail back ballot process, and the effect of voter approval (i.e., the Fee could be established) or voter disapproval of the Fee (i.e., the Fee could not be imposed). Although the ballot materials are lengthy, one full page is devoted to explaining how the fee was calculated. Thus, in our view, content, not length, is the key factor in determining if the materials that were included with the ballot are proper.

We believe it is significant that the ballot materials indicate that the only consequence of voter disapproval is that the Fee cannot be established; the ballot materials do not threaten the voters—with, for example, the discontinuation or reduction of other City services if the Fee does not pass.

In our view, simply providing instructions on how to fill out and return the ballot would not fulfill the City’s obligation to present information to the voters about the proposed Fee and could compromise the election results if the Fee passed because someone could assert that the election would have turned out differently if the voters had been provided with more information, such as the 30-year duration of the Fee, for example.

Providing the ballot materials to the Councilmembers in advance would have allowed Dr. Gardiner to raise his concerns prior to the time the ballot materials were mailed to the property owners. However, as with the materials that were provided in connection with the majority protest process, the ballot materials were not provided in advance to any elected or appointed City official, in an attempt to help ensure that the ballot materials remained neutral and did not reflect the views of any elected or appointed individuals.

Councilmember Gardiner has expressed the concern that the wording on the ballots contain the exact same points made by those who favor a "yes" vote on the ballot and cite the same material as reasons to vote in favor of the Fee. However, reliance by proponents upon the facts and circumstances that form the basis for imposing the Fee do not convert those facts into advocacy. Indeed, if property owners disagree with the factual foundation of the Fee or the program would be funded by the Fee, their remedy is to vote against the Fee. If, on the other hand, a discussion of the facts and program were not included with the ballot materials, one could argue that the voters were not adequately informed. It is for this reason that we determined that including the materials was appropriate to ensure compliance with Proposition 218.

Councilmember Gardner has expressed concerns with particular provisions of the ballot materials as follows:

(i) The ballot materials state that "the Council approved …," without stating that it was by a 4-1 vote. We agree that the ballot materials could have included this information, but we are of the opinion that this information was not required to be included in order to avoid advocacy. Since a city council acts through the majority vote of its members, the statement at issue is not misleading and does not state or imply that the vote was unanimous.

(ii) The ballot materials state, "the Council could terminate the Fee" or "reduce the Fee to zero" without stating that "the Council could decide not to terminate the Fee" or "never reduce the Fee at all." We acknowledge that the ballot materials could have used the language suggested by Dr. Gardiner. We believe that point is clear, however, since the materials state that the Fee can be levied at the maximum rate for a period of 30 years.

(iii) Dr. Gardiner asserts that the portion of the ballot materials relating to the City having to make repairs, and not having sufficient reserves to pay for the funding is based on an assumption that revenues from the Transient Occupancy Tax generated by the Long Point Resort Hotel may never materialize and that many disagree with this assumption. He points out that the "reserves argument" is a point constantly made by those who argue in favor of the Fee. However, the ballot materials are careful to point out that the City does not currently have sufficient Reserves or net revenues to fund the Program. This is a factual statement even if it some consider it as a reason to support the Fee. The ballot materials do not predict whether or not the Destination Resort Hotel will be built or when it will be built or when Reserves will or will not be sufficient.

(iv) The ballot materials announce a 30-year sunset without mentioning that this sunset is regarded by the residents as totally unacceptable. Some residents favor a 30-year sunset while other residents find it to be unacceptable. Those who find it unacceptable have the option of voting no on the proposed Fee.

CONCLUSION:

Since Proposition 218 does not provide specific guidance on many of these issues, we cannot provide the very specific authority for the inclusion of the ballot materials that Dr. Gardiner has requested. Nonetheless, it is our view that the purpose of the ballot materials is to educate the voters about the proposed Fee, how it was calculated and the program that it will be used to support, in accordance with the provisions of Proposition 218. We do not find that any of the materials advocates a particular result either expressly or otherwise. Accordingly, it is our view that the City is not required to recall the ballots, although the Council certainly has the legal ability to do so.

Respectfully Submitted,

Carol Lynch Robin Harris

City Attorney Deputy City Attorney

Reviewed by,

Les Evans

City Manager

Attachment:

List of City and RDA-owned parcels