Newport Beach Municipal Code Art. III Proceedings to Create a Special Improvement District

Proceedings for the establishment of a special improvement district may be instituted by the City Council on its own initiative and shall be instituted by the City Council when any of the following occurs:

A. A written request for the establishment of a special improvement district, signed by two members of the City Council, describing the boundaries of the territory which is proposed for inclusion in the area and specifying the type or types of facilities and services to be financed by the district, is filed with the City Council.

B. A petition requesting the institution of the proceedings signed by the requisite number of registered voters, as specified in subsection (D) of Section 3.32.200, is filed with the Clerk. The petition may consist of any number of separate instruments, each of which shall comply with all of the requirements of the petition, except as to the number of signatures.

C. A petition requesting the institution of the proceedings signed by landowners owning the requisite portion of the area of the proposed district, as specified in subsection (D) of Section 3.32.200, is filed with the Clerk.

D. The written request filed pursuant to subsection (A) of this section and the petitions filed pursuant to subsections (B) and (C) of this section shall be accompanied by the payment of a fee in an amount which the City Council determines is sufficient to compensate the City Council for all costs incurred in conducting proceedings to create a district pursuant to this Code.

(Ord. 94-40 § 2 (part), 1994)

Notwithstanding any provision of California Government Code Title 5, Division 3, Part 1, Section 56000 et seq., a local agency formation commission shall have no power or duty to review and approve or disapprove a proposal to create a special improvement district or a proposal to annex territory to, or detach territory from, such district, pursuant to this Code.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 142, 2023)

A petition requesting the institution of proceedings for the establishment of a special improvement district shall do all of the following:

A. Request the City Council to institute proceedings to establish a special improvement district pursuant to this Code.

B. Describe the boundaries of the territory which is proposed for inclusion in the district.

C. State the type or types of facilities and services to be financed by the district.

D. Be signed by not less than ten percent of the registered voters residing within the territory proposed to be included within the district or by owners of not less than ten percent of the area of land proposed to be included within the district. If the City Council finds that the petition is signed by the requisite number of registered voters residing within the territory proposed to be included within the district or by the requisite number of owners of land proposed to be included within the district, that finding shall be final and conclusive.

(Ord. 94-40 § 2 (part), 1994)

Within ninety (90) days after either a written request by two members of the City Council or a petition requesting the institution of proceedings for the establishment of a special improvement district is filed with the City Council, it shall adopt a resolution of intention to establish a special improvement district in the form specified in Section 3.32.220.

(Ord. 94-40 § 2 (part), 1994)

Proceedings for the establishment of a special improvement district shall be instituted by the adoption of a resolution of intention to establish the district, which shall do all of the following:

A. State that a special improvement district is proposed to be established under the terms of this Code and describe the boundaries of the territory proposed for inclusion in the district, which may be accomplished by reference to a map on file in the office of the Clerk, showing the proposed special improvement district. The boundaries of the territory proposed for inclusion in the district shall include the entirety of any parcel subject to taxation by the proposed district.

B. State the name proposed for the district in substantially the following form: “City of Newport Beach Special Improvement District No. __________.”

C. Describe the public facilities and services proposed to be financed by the district pursuant to this Code. The description may be general and may include alternatives and options, but it shall be sufficiently informative to allow a taxpayer within the district to understand what the funds of the district may be used to finance. If the purchase of completed public facilities or the incurring of incidental expenses is proposed, the resolution shall identify those facilities or expenses. If facilities are proposed to be financed through any financing plan, including, but not limited to, any lease, lease-purchase, or installment-purchase arrangement, the resolution shall briefly describe the proposed arrangement.

D. State that, except where funds are otherwise available, a special tax sufficient to pay for all facilities and services, secured by recordation of a continuing lien against all nonexempt real property in the district, will be annually levied within the district. The resolution shall specify the rate, method of apportionment, and manner of collection of the special tax in sufficient detail to allow each landowner or resident within the proposed district to estimate the maximum amount that he or she will have to pay. The City Council may specify conditions under which the obligation to pay the specified special tax may be prepaid and permanently satisfied.

In the case of any special tax to pay for public facilities and to be levied against any parcel used for private residential purposes, (1) the maximum special tax shall be specified as a dollar amount which shall be calculated and thereby established not later than the date on which the parcel is first subject to the tax because of its use for private residential purposes, which amount shall not be increased by more than two percent per year, (2) the resolution shall specify a tax year after which no further special tax subject to this sentence shall be levied or collected, and the resolution shall specify that under no circumstances will the special tax levied against any parcel subject to this sentence be increased by more than ten (10) percent as a consequence of delinquency or default by the owner of any other parcel or parcels within the district. For purposes of this subsection (D), a parcel shall be considered “used for private residential purposes” not later than the date on which an occupancy permit for private residential use is issued. Nothing in this subsection is intended to prohibit the City Council from establishing different tax rates for different categories of residential property, or from changing the dollar amount of the special tax for a parcel if the size of the residence is increased or if the size or use of the parcel is changed.

E. Fix a time and place for a public hearing on the establishment of the district which shall not be less than thirty (30) nor more than sixty (60) days after the adoption of the resolution.

F. Describe the proposed voting procedure.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 143, 2023)

At the time of the adoption of the resolution of intention to establish a special improvement district, the City Council shall direct each of its officers who is or will be responsible for providing one or more of the proposed types of public facilities or services to be financed by the district, if it is established, to study the proposed district and, at or before the time of the hearing, file a report with the City Council containing a brief description of the public facilities and services by type which will in his or her opinion be required to adequately meet the needs of the district and his or her estimate of the cost of providing those public facilities and services. If the purchase of completed public facilities or the payment of incidental expenses is proposed, the City Council shall direct its appropriate officer to estimate the fair and reasonable cost of those facilities or incidental expenses. If removal or remedial action for the cleanup of any hazardous substance is proposed, the City Council shall (A) direct its responsible officer to prepare, or cause to be prepared, a remedial action plan based upon factors comparable to those described in California Health and Safety Code Section 25356.1(d) or (B) determine, on the basis of the particular facts and circumstances, which shall be comparable to those described in California Health and Safety Code Section 25356.1(h)(3), that the remedial action is not required. All of those reports shall be made a part of the record of the hearing on the resolution of intention to establish the district.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 144, 2023)

A. The Clerk shall publish a notice of the hearing pursuant to California Government Code Sections 6060 and 6061 in a newspaper of general circulation published in the area of the proposed district. Publication shall be complete at least seven days prior to the date of the hearing.

B. The notice shall contain all of the following information:

1. The text or a summary of the resolution of intention to establish the district which may refer to documents on file in the office of the Clerk for detail.

2. The time and place of the hearing on the establishment of the district.

3. A statement that at the hearing the testimony of all interested persons or taxpayers for or against the establishment of the district, the extent of the district, or the furnishing of specified types of public facilities or services will be heard. The notice shall also describe, in summary, the effect of protests made by registered voters or landowners against the establishment of the district, the extent of the district, the furnishing of a specified type of facilities or services, or a specified special tax, as provided in Section 3.32.270.

4. A description of the proposed voting procedure.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 145, 2023)

The Clerk may also give notice of the hearing by first-class mail to each registered voter and to each landowner within the proposed district. This notice shall be mailed at least fifteen (15) days before the hearing and shall contain the same information as is required to be contained in the notice published pursuant to Section 3.32.240.

(Ord. 94-40 § 2 (part), 1994)

At the hearing, protests against the establishment of the district, the extent of the district, or the furnishing of specified types of public facilities or services within the district may be made orally or in writing by any interested persons or taxpayer. Any protests pertaining to the regularity or sufficiency of the proceedings shall be in writing and shall clearly set forth the irregularities and defects to which objection is made. All written protests shall be filed with the Clerk on or before the time fixed for the hearing. The City Council may waive any irregularities in the form or content of any written protest and at the hearing may correct minor defects in the proceedings. Written protests may be withdrawn in writing at any time before the conclusion of the hearing.

(Ord. 94-40 § 2 (part), 1994)

If fifty (50) percent or more of the registered voters, or six registered voters, whichever is more, residing within the territory proposed to be included in the district, or the owners of one-half or more of the area of the land in the territory proposed to be included in the district and not exempt from the special tax, file written protests against the establishment of the district, and protests are not withdrawn so as to reduce the value of the protests to less than a majority, no further proceedings to create the specified special improvement district or to levy the specified special tax shall be taken for a period of one year from the date of the decision of the City Council.

If the majority protests of the registered voters or of the landowners are only against the furnishing of a specified type or types of facilities or services within the district, or against levying a specified special tax, those types of facilities or services or the specified special tax shall be eliminated from the resolution of formation, but the formation may otherwise proceed.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 146, 2023)

The hearing may be continued from time to time, but shall be completed within thirty (30) days, except that if the City Council finds that the complexity of the proposed district or the need for public participation requires additional time, the hearing may be continued from time to time for a period not to exceed six months. The City Council may modify the resolution of intention by eliminating proposed facilities or services, or by changing the rate or method of apportionment of the proposed special tax so as to reduce the maximum special tax for all or a portion of the owners of property within the proposed district, or by removing territory from the proposed district. Any modifications shall be made by action of the City Council at the public hearing. If the City Council proposes to modify the resolution of intention in a way that will increase the probable special tax to be paid by the owners of any lot or parcel, it shall direct that a report be prepared that includes a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by the owners of lots or parcels in the district, and shall receive and consider the report before approving the modifications or any resolution of formation which includes those modifications. At the conclusion of the hearing, the City Council may abandon the proposed establishment of the special improvement district or may, after passing upon all protests, determine to proceed with establishing the district.

(Ord. 94-40 § 2 (part), 1994)

A. If the City Council determines to establish the district, it shall adopt a resolution of formation establishing the district.

The resolution of formation shall contain all of the information required to be included in the resolution of intention to establish the district specified in Section 3.32.220. If a special tax is proposed to be levied in the district to pay for any facilities or services and the special tax has not been eliminated by majority protest pursuant to Section 3.32.270, the resolution shall:

1. State that the proposed special tax to be levied within the district has not been precluded by majority protest pursuant to Section 3.32.270.

2. Identify any facilities or services proposed to be funded with the special tax.

3. Set forth the name, address, and telephone number of the office, department, or bureau which will be responsible for preparing annually a current roll of special tax levy obligations by assessor’s parcel number and which will be responsible for estimating future special tax levies pursuant to Section 3.32.640.

4. State that upon recordation of a notice of special tax lien pursuant to California Streets and Highways Code Section 3114.5, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property in the district and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax by the City ceases.

5. Set forth the County of Recordation and the book and page in the Book of Maps of Assessments and Community Facilities Districts in the County Recorder’s office where the boundary map of the proposed special improvement district has been recorded pursuant to California Streets and Highways Code Sections 3111 and 3113.

B. In the resolution of formation adopted pursuant to subsection (A) of this section, the City Council shall determine whether all proceedings were valid and in conformity with the requirements of this Code. If the City Council determines that all proceedings were valid and in conformity with the requirements of this Code, it shall make a finding to that effect and that finding shall be final and conclusive.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 147, 2023)

A tax imposed pursuant to this Code is a special tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property. However, a special tax levied pursuant to this Code may be on or based on benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel, or other reasonable basis as determined by the City Council. A special tax apportioned on any of these bases shall not be construed to be on or based upon the ownership of real property.

(Ord. 94-40 § 2 (part), 1994)

A. A special improvement district may include areas of territory that are not contiguous.

B. In establishing the boundaries of the district, the City Council may alter the exterior boundaries of the district to include less territory than that described in the notice of the hearing but it may not include any territory not described in the notice of the hearing.

(Ord. 94-40 § 2 (part), 1994)

The City Council may submit a proposition to establish or change the appropriations limit, as defined by subdivision (h) of § 8 of Article XIII B of the California Constitution, of a special improvement district to the qualified electors of a proposed or established district. The proposition establishing or changing the appropriations limit shall become effective if approved by the qualified electors voting on the proposition and shall be adjusted for changes in the cost of living and changes in populations, as defined by California Government Code Sections 7901(b) and (c), except that the change in population may be estimated by the City Council in the absence of an estimate by the Department of Finance, and in accordance with § 1 of Article XIII B of the California Constitution. For purposes of adjusting for changes in population, the population of the district shall be deemed to be at least one person during each calendar year.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 148, 2023; Ord. 2025-37, 1/13/2026)

A. The City Council shall then submit the levy of any special taxes to the qualified electors of the proposed special improvement district subject to the levy or to the qualified electors of the territory to be annexed by the special improvement district subject to the levy in the next general election or in a special election to be held, notwithstanding any other requirement, including any requirement that elections be held on specified dates, contained in the California Elections Code, at least ninety (90) days, but not more than one hundred eighty (180) days, following the adoption of the resolution of formation. The City Council shall provide the resolution of formation, a certified map of sufficient scale and clarity to show the boundaries of the district, and a sufficient description to allow the election official to determine the boundaries of the district to the official conducting the election within three business days after the adoption of the resolution of formation. Assessor’s parcel numbers for the land within the district shall be included if it is a landowner election or the district does not conform to an existing district’s boundaries and if requested by the official conducting the election. If the election is to be held less than one hundred twenty-five (125) days following the adoption of the resolution of formation, the concurrence of the election official conducting the election shall be required. However, any time limit specified by this section or requirement pertaining to the conduct of the election, including any time limit or requirement applicable to any election conducted pursuant to Article VI of this chapter, may be waived with the unanimous consent of the qualified electors of the proposed district and the concurrence of the election official conducting the election.

B. Except as otherwise provided in subsection (C) of this section, if at least twelve (12) persons, who need not necessarily be the same twelve (12) persons, have been registered to vote within the territory of the proposed special improvement district for each of the ninety (90) days preceding the close of the protest hearing, the vote shall be by the registered voters of the proposed district, with each voter having one vote. Otherwise, the vote shall be by the landowners of the proposed district and each land-owner who is the owner of record at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed special improvement district. The number of votes to be voted by a particular landowner shall be specified on the ballot provided to that landowner.

C. If the proposed special tax will not be apportioned in any tax year on any portion of property in residential use in that tax year, as determined by the City Council, the City Council may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the tax if it were levied at the time of the election. Each of these landowners shall have one vote for each acre, or portion thereof, that the landowner owns within the proposed district which would be subject to the proposed tax if it were levied at the time of the election.

D. Ballots for the special election authorized by subsection (A) of this section may be distributed to qualified electors by mail with return postage prepaid or by personal service by the election official. The official conducting the election may certify the proper mailing of ballots by an affidavit, which shall constitute conclusive proof of mailing in the absence of fraud. The voted ballots shall be returned to the election officer conducting the election not later than the hour specified in the resolution calling the election. However, if all the qualified voters have voted, the election may be closed with the concurrence of the official conducting the election.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 149, 2023)

A. Except as otherwise provided in this Code, the provisions of law regulating elections of the City, insofar as they may be applicable, shall govern all elections conducted pursuant to this Code. Except as provided in subsection (B) of this section, there shall be prepared and included in the ballot material provided to each voter an impartial analysis pursuant to California Elections Code Section 9280, and arguments and rebuttals, if any, pursuant to California Elections Code Sections 9281 through 9287.

B. If the vote is to be by the landowners of the proposed district, analysis and arguments may be waived with the unanimous consent of all the land-owners and shall be so stated in the order for the election.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 150, 2023)

A. If the election is to be conducted by mail ballot, the election official conducting the election shall provide ballots and election materials pursuant to subsection (D) of Section 3.32.330 and Section 3.32.340, together with all supplies and instructions necessary for the use and return of the ballot.

B. The identification envelope for return of mail ballots used in landowner elections shall contain the following:

1. The name of the landowner.

2. The address of the landowner.

3. A declaration, under penalty of perjury, stating that the voter is the owner of record or the authorized representative of the landowner entitled to vote and is the person whose name appears on the identification envelope.

4. The printed name and signature of the voter.

5. The address of the voter.

6. The date of signing and place of execution of the declaration described in subsection (B)(3) of this section.

7. A notice that the envelope contains an official ballot and is to be opened only by the canvassing board.

(Ord. 94-40 § 2 (part), 1994)

After the canvass of returns of any election pursuant to Section 3.32.330, the City Council may levy any special tax as specified in the resolution of formation adopted pursuant to subsection (A) of Section 3.32.290 within the territory of the district if two-thirds of the votes cast upon the question of levying the tax are in favor of levying that tax.

(Ord. 94-40 § 2 (part), 1994)

Upon a determination by the City Council that the requisite two-thirds of votes cast in an election held pursuant to Section 3.32.330 are in favor of levying the special tax, the Clerk shall record the notice of special tax lien provided for in California Streets and Highways Code Section 3114.5 whereupon the lien of the special tax shall attach as provided in California Streets and Highways Code Section 3115.5. The notice of special tax lien shall be recorded in the office of the County Recorder in each county in which any portion of the district is located.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 151, 2023)

California Streets and Highways Code Section 3100 et seq. applies with respect to any proceedings undertaken pursuant to this Code. This Code is a “principal act” as that term is defined in California Streets and Highways Code Section 3100.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 152, 2023)

After the canvass of returns of any election conducted pursuant to Section 3.32.330, the City Council shall take no further action with respect to levying the specified special tax within the special improvement district for one year from the date of the election if the question of levying that specified special tax fails to receive approval by two-thirds of the votes cast upon the question.

(Ord. 94-40 § 2 (part), 1994)

A. The owners of three-fourths of the area of lands taxed or liable to be taxed, or their agents (who shall declare under penalty of perjury that they are such owners or agents), shall not be required to present sealed proposals or bids when the City Council calls for bids preparatory to letting a contract or contracts to do work financed pursuant to this Code, but may, within ten days after the publication of the notice of the award of the contract, elect to perform the work and enter into a written contract to do the whole work at prices not exceeding the prices specified in the bid of the bidder to whom the contract was awarded, and all work done under the contract shall be subject to any regulations as may be prescribed by the City Council.

B. If the owners elect not to perform the work and not to enter into a written contract for that work within ten days of publication of the notice of the award of the contract, or to commence the work within fifteen (15) days after the date of the written contract entered into between the owners and the City, and to continue that work with diligence to completion, as determined by the City Council, a contract shall be entered into by the City with the original bidder to whom the contract was awarded at the prices specified in his or her bid.

C. If, in the opinion of the City Council, the public interest will not be served by allowing the property owners to enter into a contract in accordance with subsection (A) of this section, the City Council may so provide in the resolution of intention adopted pursuant to Section 3.32.220.

(Ord. 94-40 § 2 (part), 1994)