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Item 5 Additional Material posted 6-02-20~o~=~ MEMORANDUM CityofPoway ~· .. -----:-, ADDITIONAL MATERIALS (Agenda Related Writings/Documents provided to City Council or Staff after distribution of the Agenda Packet for the June 2, 2020 Council Meeting) DATE: TO: FROM: CONTACT: June 2, 2020 Honorable Mayor and Members of the City Council Faviola Medina, CMC ~ (858) 668-4535 or fmedina@poway.org SUBJECT: Item #5 -Resolution for Solid Waste/Recycling Collection Service Rate Increases Attached please find correspondence received after the agenda posting deadline. Reviewed/ Approved By: Assistant City Manager 1 of3 Reviewed By: Alan Fenstermacher City Attorney Approved By: Ch~ City Manager June 2, 2020, Item #5 Ana Alarcon From: Sent: To: Cc: Subject: ADDITIONAL MATERIAL Carol Legg Monday, June 1, 2020 4:52 PM agendadocs resource Chris Hazeltine; Eric Heidemann; Izzy Murguia Additional material Item #5 6/2/20 From: Debra Bleile <debra.bleile@gmail.com> Sent: Monday, June 1, 2020 4:20 PM To: Steve Vaus <SVaus@poway.org>; Barry Leonard <BLeonard@poway.org>; John Mullin <JMullin@poway.org>; Dave Grosch <DGrosch@poway.org>; Caylin Frank <CFrank@poway.org> Subject: EDCO contract renewal public input Council Mtg June 2 Dear Mr. Mayor and Council Members, I recognize that you all have way more weighty issues on your mind, but I wanted to give you my letter to be read at the council meeting Tuesday. I was not aware of all of the the proposed changes to EDCO service until I read the details in the Chieftain today. Mailing out charts with "Service Fee Portion Formulas" did not outline the crucial change that will affect every Poway homeowner on larger lots like the Chieftain article did. I have often thought that the EDCO bi-monthly fees needed to be increased because it was such a good deal. But if you take away the option of putting out the large amounts of greenery waste generated by the large properties in Poway, I can not comprehend living in my current house. In fact, had that been proposed before I bought my current house, I never would have bought it. You may think that everybody employs a landscaping service, but some of us can not afford that and didn't put that into our calculations when picking our neighborhood. But it is not just those of us on fixed incomes that will be affected. I have wealthy friends here in Poway who do their own gardening because they like to, are able to, and choose to be frugal. Let me put it in perspective. Last week, my son and I collected 14 bags (33 gallon) of weeds to put out for collection this week. I estimate that was probably about 20 % of the total clean up needed. The annual wildflowers, both California poppies and wild sweet peas, have just finished blooming and they need to be disposed of, as well as all of the weed species that sprout every year with the winter rains. And what a rain season we just had! We personally can't do the clean up all at once. We are both challenged by chronic Lyme Disease, and I have trouble walking on some days. So it is a gradual clean up process for us. If we will not be able to dispose of more than one EDCO greenery can full of weeds, we will be forced to look for other methods of disposal. Perhaps incineration? Please, there must be some other solution to the greenery waste. Or maybe one of you would like to buy my property? Most sincerely, Debra Bleile 16752 Espola Road (858) 676-0202 2of3 1 June 2, 2020, Item #5 Ana Alarcon From: Sent: To: Subject: Attachments: City Clerk Tuesday, June 2, 2020 1 :15 PM Ana Alarcon Fwd: June 2 Solid Waste Rates Public Hearing zolly v oakland.pdf For Additional materials Get Outlook for Android From: Chris Cruse <cmcruse@cox.net> Sent: Tuesday, June 2, 2020 1:10:49 PM To: City Clerk <cityclerk@poway.org> Cc: Chris Cruse <cmcruse@cox.net> Subject: June 2 Solid Waste Rates Public Hearing Dear Council. I am opposed to renewing the contract for the exclusive solid waste hauler. Poway should rebid the contract to make sure that they are getting the best deal for the ratepayers. The contract has never been rebid since it was signed over 20 yrs ago. The best way to keep rates competitive is to put the contract out for a bid. I am also opposed to having the ratepayers pay for picking up the city's trash. I believe this violates Prop 218. Poway should pay for their own trash bill with general fund money-not by having the ratepayers pick up the tab. I believe Poway's trash franchise fee is also illegal. The CA court of Appeals has ruled that a similar franchise fee was illegal in the case, Zolly et al v City of Oakland. I have attached the decision. As Mayor Vaus has received donations from Edco within the last year, money which he used to pay himself and his family for putting on a concert, I am wondering if he is obligated to abstain from voting on this issue. Sincerely, Chris M Cruse 3 of3 1 June 2, 2020, Item #5 Filed3/30/20 CERTIFIED FORPUBLICATION INTHECOURT OFAPPEAL OFTHESTATE OFCALIFORNIA FIRST APPELLATE DISTRICT DIVISION ONE ROBERT ZOLLY etal., Plaintiffs andAppellants, A154986 v. Alameda CountyCITYOFOAKLAND, Super. Ct. No. RG16821376) Defendant andRespondent. TheCityofOakland (City) entered intovarious wastemanagement contracts withWaste Management ofAlameda County (WMAC) and California WasteSolutions Inc. (CWS). Aspartofthosecontracts, WMAC andCWSagreedtopayfranchise feestotheCity, andtheCityredesignated partofWMAC’sfranchise feeasafeeimposed pursuant toPublic Resource Codesection41901 (theRedesignated Fee). Plaintiffs RobertZolly, Ray McFadden, andStephen Clayton filed acomplaint fordeclaratory relief againsttheCity, challenging thelegality ofthose feesundertheCalifornia 1Constitution, article XIIIC (articleXIIIC). TheCitydemurred, arguing thefranchise feeswerenotsubject to articleXIIIC, theRedesignated Feechallenge wastime-barred, andthe Redesignated Feewasproperly imposed. Thetrialcourt granted theCity’s demurrer without leavetoamendastothefranchise feesbutwithleave to 1Unspecified references to “article” aretotheCalifornia Constitution. amend astofuture increases totheRedesignated Fee. Plaintiffs declined to amend, andjudgment wasentered. Weaffirmthejudgment inpartastothe Redesignated Feeandreverseinpartastothefranchise fees. I. BACKGROUND Because thisappeal challenges atrial courtorder sustaining a demurrer, wedrawtherelevant factsfromthecomplaint andmatterssubject 2 Yvanovav. NewCenturyMortgage Corp. (2016) tojudicial notice. 62Cal.4th919, 924.) A. Factual Background TheCityinitiated arequest forproposal procurement process forthree franchise contracts regarding garbage, mixed materials andorganics, and residential recycling services. Theinitial procurement process resulted inthe City’sPublicWorks Department (PWD) receiving contract proposals from onlytwofirms, WMACandCWS. PWDrecommended theCityaward all threecontracts toWMAC, statingthestructure “provided thelowest overall rateoption forOakland residents.” Rather thanaccept PWD’srecommendation, theCitydirected PWDto solicit newbestandfinalbidsfromWMAC andCWS. PWD again recommended theCityaward allthreecontracts toWMAC. TheCity instead awarded allthreecontracts toCWS. Following alawsuit byWMAC regarding theprocurement process, WMAC andCWS reached asettlement in whichWMAC would receivethegarbage andmixed materials andorganics contracts, andCWSwould receive theresidential recycling contract, subject 2OnMarch 8, 2019, plaintiffs requested thiscourttakejudicial notice ofanexcerpt fromthe “2015–2016Alameda County GrandJuryFinal Report.” Wedeny thisrequest because theexhibit isunnecessary toresolve theissues raisedinthisappeal. 2 totheCity’sagreement. The Cityapproved thesettlement andamended the ordinance awarding thefranchise contracts. TheCity’sordinance approving themixed materials and organics contract provided foraninitialfranchise feeof $25,034,000, withsubsequent franchise fees “ ‘adjusted annually bythepercentage changeintheannual average oftheFranchise Feecostindicator.’ ” Similarly, theCity’sordinance approving theresidential recycling contract provided foraninitialfranchise feeof $3million, with subsequent franchise fees “ ‘adjusted annually bythe percentage changeintheannual average oftheFranchise Feecost indicator.’ ” Thereafter, theCitypassedanordinance reducing WMAC’sfranchise feeby $3.24million anddesignated thatamount astheRedesignated Feeto compensate theCityforthecostof “preparing, adopting, andimplementing theAlameda County Integrated WasteManagement Plan.” Theordinance imposing theRedesignated Feeprovides forapossible annual adjustment to reflect theimpacts ofinflationifcertaincriteria aremet. Intheevent the Redesignated Feeisinvalidated ortheCityisunable tocollectthatamount, thenWMAC’sfranchise feeisincreased bytheamount leftuncollected. Basedon “citizen complaints,” anAlameda County grandjury undertook acomprehensive investigation related tothesolicitation and award of \[theCity’s\] ZeroWaste contracts.” Thegrandjuryfound the franchise feespaidbyhaulers weredisproportionately higherthan the franchise feespaidtootherBayArea municipalities andspecial districts. Thatgrandjury alsofound theCity’sprocurement process wasmishandled andsubject topolitical considerations. 3 B. Procedural Background Plaintiffs filedaninitialcomplaint, seeking declaratory andinjunctive relief. Thecomplaint allegedviolations ofarticleXIII D, section 6, subdivision (b)(1), (2), and (3). Thecomplaint asserted boththeratescharged forrefuse, recycling, anddisposal collection andthefranchise feewere excessive, notrepresentative oftheactual service costsorotherwise supported byanylegitimate costjustification, andamounted toan improperly imposed taxthatshould besubject toarticleXIIIC. TheCityfiledademurrer totheinitialcomplaint. Thedemurrer allegedthecomplaint failedtostate acauseofaction, anyclaimsregarding theRedesignated Feeswerebarred bythestatuteoflimitations, and plaintiffs failedtoexhaust their administrative remedies. Thetrialcourt sustained thedemurrer with leave toamend. Thecourt concluded allthreecauses ofactioncontained insufficient allegations “that theallegedly ‘excessive anddisproportional refuse, recycling anddisposal collection charges . . . beingimposed onPlaintiffs’ multifamily dwelling MFD”) properties’ . . . area ‘feeorcharge’ asdefined inarticle XIIID, section6, orarebeing ‘extended, imposed, orincreased byanyagency’ within section6, subdivision (b).” Specifically, thecourt emphasized thecomplaint doesnotallegethefranchise feeorrates are “ ‘imposed byanagency’—i.e. by theCity—asdistinguished frombeing charged toratepayers bytheprivate entities whocontracted withtheCity.” Thecourt alsonoted plaintiffs didnot address theCity’sargument thattheRedesignated Feewasuntimely. Plaintiffs subsequently filedafirstamended complaint, againseeking declaratory relief andalleging violations ofarticleXIIICandarticle XIIID, section 6, subdivision (b)(1), (2), and (3). Theamended complaint asserted theCityimposedanexcessive franchise fee, failed todetermine “howmuch 4 thefranchise feeswould needtobetosolely offsetthecosttothe \[City\] ofthe waste haulers’ operations,” andpassed those feesontoratepayers toavoid thelimitations ofProposition 218. The amended complaint contended the Cityimposed suchincreased rates “through theguise ofnegotiated contracts,” fullyknowing thefranchisees would passthecharges onto ratepayers. TheCitydemurred totheamended complaint, arguing thefranchise feeswerebeyond thepurview ofProposition 218 andnoting plaintiffs failed tocure thestatute oflimitations bartotheRedesignated Feechallenge. Thetrialcourtagaingranted theCity’sdemurrer withleave toamend. ThecourtnotedtheSupremeCourt’srecentdecision inJacksv. CityofSanta Barbara (2017) 3Cal.5th248 (Jacks), andstatedinpart, “Toproperly state a claimthatafranchise feeviolates Proposition 218, aparty challenging the feemust establish thatthefeebearsnorational relationship tothevalueof theproperty interestconveyed bythecitytothefranchisee.” Thecourtnoted theamended complaint “erroneously focuses onwhether thefranchise fee charged by \[theCity\] exceedsthe ‘proportional costoftheservice attributable’ toeachindividual parcel, rather than . . . the ‘value ofthe franchise’ itself.” Thecourtalsoheld, inaccordance with itspriordecision, plaintiffs’ challenge totheRedesignated Feewasbarredbythestatute of limitations. Plaintiffs filedasecond amended complaint (SAC) fordeclaratory relief, alleging thefranchise feeandRedesignated Feeviolated articleXIIIC. Specifically, theSACalleged “\[n\]either ofthefranchise feesbears a reasonable relationship tothevalue received fromthegovernment andthey arenotbasedonthevalue ofthefranchises conveyed . . . .” TheSAC 5 challenged thevalidity oftheRedesignated Fee, andfurther claimed the challenge wastimely astoallfuture increases totheRedesignated Fee. TheCityagain demurred, restating itspriorarguments andasserting Jacks, supra, 3Cal.5th248isdistinguishable fromthecurrent situation and doesnotapply. Itfurther argued plaintiffs’ challenge toanyannual increases totheRedesignated Feefailed tostateaclaim andwastime- barred. Thetrialcourtsustained thedemurrer withleave toamend astothe Redesignated Feeincreases, but “onlytotheextent Plaintiffs canlegitimately allege . . . thatthe \[Redesignated Fee\] infactwas increased asofJuly1, 2016 orthereafter.” Thecourt deniedleavetoamendallotheraspects oftheSAC. Notably, thecourtconcluded thelackofadirect pass-through ofthefranchise feestothecustomers distinguished thefranchise feeinJacksfromthat charged bytheCity. Plaintiffs declined toamend. Thecourtsubsequently entered judgment against plaintiffs anddismissed thematter withprejudice. Plaintiffs timely appealed. II. DISCUSSION A. Standard ofReview Weindependently review atrialcourt’sorder sustaining ademurrer. Brownv. DeutscheBankNational TrustCo. (2016) 247Cal.App.4th275, 279.) “Indoingso, thiscourt’sonlytaskistodetermine whether the complaint states acauseofaction. \[Citation.\] Weaccept astrueallwell- pleadedallegations intheoperative complaint, andwewillreverse thetrial court’sorderofdismissal ifthefactual allegations stateacauseofactionon anyavailable legaltheory. \[Citation.\] Wetreat defendants’ demurrer as admitting allproperly pleaded material facts, butnotcontentions, 6 deductions, orconclusions offactorlaw.” (Ibid.) “ ‘Wealsoconsider matters whichmaybejudicially noticed.’ \[Citation.\] . . . \[and\] givethecomplaint a reasonable interpretation, reading itasawholeanditsparts intheir context.” (Blankv. Kirwan (1985) 39Cal.3d311, 318.) W\]henademurrer issustained withleave toamend, buttheplaintiff electsnottoamend, itispresumed onappeal thatthecomplaint states the strongest casepossible.” (Ramv. OneWestBank, FSB (2015) 234Cal.App.4th 1, 10.) A. Article XIIIC InCitizensforFairREURatesv. CityofRedding (2018) 6Cal.5th1, theCalifornia Supreme Courtsummarized thescope and application of articleXIIIC: “California voters have, overthepastfour decades, adopted a seriesofinitiatives designed tolimit theauthority ofstateandlocal governments toimposetaxeswithout voterapproval. (Jacks, \[supra, 3Cal.5th\] atp. 257.) \[¶\] Thefirst oftheseinitiatives wasProposition 13, adopted in1978. Itadded article XIIIAtothestateConstitution ‘toassure effective realproperty taxrelief bymeans ofan “interlocking ‘package’ ” ’ of fourprovisions. (SinclairPaintCo. v. StateBd. ofEqualization (1997) 15Cal.4th866, 872 (SinclairPaint).) Thefirstprovision capped thead valorem realproperty taxrateat1percent (art. XIII A, § 1); thesecond limitedannual increases inrealproperty assessments to2percent art. XIIIA, § 2); thethirdrequired thatanyincrease instatewide taxes be approved bytwo-thirdsofboth housesoftheLegislature (art. XIIIA, § 3); andthefourthrequired thatanyspecial taximposed byalocalgovernment entitybeapproved bytwo-thirdsofthe qualified electors (art. XIIIA, § 4). Thus, withitsfirsttwoprovisions, Proposition 13limited local government authority toincrease property taxes. Further, ‘since anytaxsavings 7 resulting fromtheoperation of \[thefirsttwoprovisions\] couldbewithdrawn ordepleted byadditional orincreased stateorlocal leviesofotherthan property taxes, sections 3and4combine toplace restrictions uponthe imposition ofsuchtaxes.’ (AmadorValleyJointUnionHighSch. Dist. v. StateBd. ofEqualization (1978) 22Cal.3d208, 231.) In1996, thevoters adopted Proposition 218, known asthe ‘ “Right to VoteonTaxesAct.” ’ (Jacks, supra, 3Cal.5thatp. 259.) Itaddedarticles XIIICandXIIIDtothestate Constitution. Article XIIID, like thefirsttwo provisions ofarticle XIIIA, limitstheauthority oflocal governments to assesstaxesandothercharges onrealproperty. (See \[Cityof\] San Buenaventura \[v. UnitedWaterConservation Dist. (2017)\] 3Cal.5th \[1191,\] 1203–1204.) ArticleXIIICbuttresses articleXIIIDbylimiting theother methods bywhich localgovernments canexact revenue using feesandtaxes notbasedonrealproperty valueorownership. Asenacted, article XIIIC provided that ‘\[a\]lltaxes imposed byanylocalgovernment shallbedeemed to beeithergeneral taxes orspecial taxes.’ (Art. XIIIC, § 2, subd. (a).) Local governments maynotimpose, increase, orextend: (1) anygeneral tax, unless approved byamajority voteatageneral election; or (2) anyspecial tax, unless approved byatwo-thirdsvote. (Art. XIIIC, § 2, subds. (b), (d).) Significantly, Proposition 218didnotdefinetheterm ‘tax.’ That definition wasprovided 14yearslater, withthepassage ofProposition 26in November 2010. Proposition 26’sfindingsstatedthat, despite theadoption of Propositions 13and218, ‘California taxeshavecontinued toescalate.’ (Voter Information Guide, Gen. Elec. (Nov. 2, 2010) textofProposition 26, § 1, subd. (c), p. 114.) Thefindings alsotooknoteofa ‘recent phenomenon whereby theLegislature andlocalgovernments havedisguised newtaxesas fees” inordertoextractevenmorerevenue fromCalifornia taxpayers 8 without having toabideby \[the\] constitutional voting requirements.’ (Id., subd. (e), p. 114.)” (CitizensforFairREURatesv. CityofRedding, supra, 6Cal.5thatpp. 10–11.) Toensure theeffectiveness ofPropositions 13and218, Proposition 26 madetwo changes toarticleXIIIC. First, itspecifically defined ‘ “tax,” ’ and didsobroadly, toinclude ‘anylevy, charge, orexaction ofanykindimposed byalocalgovernment.’ (Art. XIIIC, § 1, subd. (e).) However, thenew definition hasseven exceptions. Achargethatsatisfies anexception is, by definition, notatax.” (Citizens forFairREURatesv. CityofRedding, supra, 6Cal.5thatp. 11.) Asrelevant here, oneexception involves charges imposed forentrance tooruseoflocalgovernment property . . . .” Art. XIIIC, § 1, subd. (e)(4).) Second, Proposition 26requires thelocalgovernment toprove ‘bya preponderance oftheevidence that . . . \[an\] exaction isnotatax, thatthe amount isnomorethannecessary tocover thereasonable costsofthe governmental activity, andthatthemanner inwhich thosecosts are allocated toapayorbearafairorreasonable relationship tothepayor’s burdens on, orbenefits received from, thegovernmental activity.’ Art. XIIIC, § 1, subd. (e).)” (CitizensforFairREURatesv. CityofRedding, supra, 6Cal.5thatp. 11.) B. Whether theFranchise FeeisaTax Plaintiffs contend whether theSACalleged anadequate causeofaction isgoverned byJacks, supra, 3Cal.5th248. Plaintiffs argue, pursuant to Jacks, afranchise feeisvalidonlyifitisreasonably related tothevalue of theproperty interests transferred, anditsvalidity isnotimpacted by whether itisdirectly orindirectly imposed onratepayers. Because theSAC asserts theCity’sfranchise feebearsnoreasonable relationship tothe 9 franchises’ values andwasindirectly imposed bytheCity, plaintiffs contend theyadequately alleged avalidcauseofaction. 1. Whether Franchise FeesAreSubject toArticle XIII C InJacks, theCityofSanta Barbara andSouthern California Edison SCE) entered intoanagreement toinclude achargeonSCE’selectricity bills equal to1percent ofSCE’sgross receipts from thesaleofelectricity within Santa Barbara, which SCEwouldthentransfer toSanta Barbara (the surcharge). (Jacks, supra, 3Cal.5th. atp. 254.) This charge, alongwith another 1percent charge, constituted thefeeSCEpaidfortheprivilege of usingcity property todeliver electricity. (Ibid.) Utility consumers filed a classactionchallenging thesurcharge asanillegal taxunder Proposition 218. (Jacks, atp. 256.) Thetrialcourtheldafranchise feeisnotataxunder Proposition 218andthusthesurcharge wasnotsubject tovoterapproval. Jacks, atp. 256.) TheCourtofAppeal reversed, concluding thesurcharge wasataxrequiring voterapproval under Proposition 218because its primary purpose isfortheCity toraiserevenue fromelectricity usersfor general spending purposes.’ ” (Jacks, atp. 257.) TheCalifornia Supreme Courtaffirmed inpartandreversed inpart. Jacks, supra, 3Cal.5thatp. 274.) Itexplained “following theenactment of Proposition 13, theLegislature andcourtsviewed various feesasoutside the scope oftheinitiative.” (Id. atp. 260.) Thecourt noted “\[t\]hecommonality among these categories ofcharges \[thatarefeesratherthan taxes\] isthe relationship between thecharge imposed andabenefit orcostrelatedtothe payor.” (Id. atp. 261.) “However, ifthecharges exceed thereasonable cost of theactivity onwhich theyarebased, thecharges areleviedforunrelated revenue purposes, andaretherefore taxes.” (Ibid., citingSinclair Paint, supra, 15Cal.4thatpp. 874, 881.) Thecourt notedsucharelationship 10 serves Proposition 13’spurpose oflimiting taxes.” (Jacks, atp. 261.) The courtfurther explained “\[a\]lthough SinclairPaint . . . focused onrestrictions imposed byProposition 13, itsanalysis ofthecharacteristics offees thatmay beimposed without voter approval remains sound.” (Jacks, atp. 261.) Inanalyzing howfranchise feesfitwithinthisframework, theSupreme Court noted “\[h\]istorically, franchise feeshavenotbeen considered taxes,” andneitherProposition 218norProposition 26evidence anintent tochange thathistorical characterization. (Jacks, supra, 3Cal.5thatpp. 262–263.) It explained, however, while “sums paid fortherighttouseajurisdiction’s rights-of-wayarefeesrather thantaxes. . . . , toconstitute compensation for thevalue received, thefeesmustreflectareasonable estimate ofthevalueof thefranchise.” (Id. atp. 267.) TheSupreme Court further explained “fees imposed inexchange foraproperty interest must bearareasonable relationship tothevalue received fromthegovernment. Totheextent a franchise feeexceeds anyreasonable valueofthefranchise, theexcessive portionofthefeedoes notcomewithintherationale that justifies the imposition offeeswithout voterapproval. Therefore, theexcessive portion is atax. Ifthiswerenottherule, franchise feeswouldbecome avehicle for generating revenueindependent ofthepurpose ofthefees.” (Id. atp. 269.) Thecourtthusheld “afranchise feemustbebasedonthevalueofthe franchise conveyed inordertocomewithin therationale foritsimposition without approval ofthevoters.” (Id. atp. 270.) TheCityarguesJacksisinapposite becausethecourtadjudicated the surcharge—afeeplaced directly onthecustomers’ bills—rather than the other1percentfeeencompassed inSCE’selectricity rates. Wedisagree. The structure ofthefeeatissue—whether thesurcharge inJacksorthefranchise feeintheinstant matter—doesnotalterthekeyquestion: whether acharge 11 constitutes alegitimate feeoranunlawful tax. BothJacksandthepresent caseraise thissamequestion. AndJacksthusguidesour analysis. Whileatruefranchise feeisindisputably anontax, Jacksinstructs us tolookbeyondanylabel anddetermine whether suchafee “reflect\[s\] a reasonable estimate ofthevalueofthefranchise.” (Jacks, supra, 3Cal.5that p. 267.) TheSupreme Court didnotlimit thisanalysis tothesurcharge, but ratheraddressed all “charges thatconstitute compensation fortheuse of government property.” (Id. atp. 254.) TheSupreme Courtexplained while compensation foruseofgovernment property isexempt from Proposition 218’srequirements, imposed charges onlyconstitute suchcompensation if thereis “areasonable relationship tothevalue ofthepropertyinterest.” Jacks, atp. 254.) Any imposed chargebeyond suchanamount constitutes a taxandrequires voter approval. (Ibid.) TheCitynextcontends Jacksisinapposite because itanalyzes franchise feesunderProposition 218rather thanunderthelater-adopted Proposition 26. TheCityargues thestatusofthefranchise feesinsteadare controlled byarticleXIIIC, which expressly exempts franchise feesfrom the definition oftaxes. Theinterpretation ofconstitutional orstatutory provisions presents a legalquestion, which wedecide denovo.” (Wunderlichv. CountyofSanta Cruz (2009) 178Cal.App.4th680, 694.) “Theaimofconstitutional interpretation istodetermine andeffectuate theintent ofthosewhoenacted theconstitutional provision atissue. \[Citations.\] When theconstitutional provision wasenacted byinitiative, theintentofthevoters istheparamount consideration. \[Citation.\] Todetermine thevoters’ intent, courts lookfirstto theconstitutional text, giving wordstheirordinary meanings. \[Citations.\] Butwhere aprovision intheConstitution isambiguous, acourt ordinarily 12 mustadoptthatinterpretation which carries outtheintentandobjective of thedrafters oftheprovision andthepeople bywhose vote itwasenacted. Citations.\] Newprovisions oftheConstitution mustbeconsidered with reference tothesituation intended toberemedied orprovided for.” (League ofWomenVotersofCaliforniav. McPherson (2006) 145Cal.App.4th1469, 1481; seealsoPerskyv. Bushey (2018) 21Cal.App.5th810, 819 \[“Ifnecessary, extrinsic evidence ofthevoters’ intent mayinclude theanalysis bythe Legislative Analyst andtheballotarguments forandagainst the initiative.”\].) Section 1, subdivision (e) ofarticle XIIICdefines “ ‘tax’ ” as “anylevy, charge, orexaction ofanykindimposed byalocalgovernment, exceptfor” sevenexemptions. Relevant hereisthefourth exemption, which applies to Achargeimposed forentrance tooruseoflocalgovernment property, orthe purchase, rental, orlease oflocalgovernment property.” (Cal. Const., art. XIIIC, § 1, subd. (e)(4).) Thefourthexemption doesnotexpressly state the charge forentrance tooruseoflocal government property mustbe reasonable. Thisabsence contrasts withthefirstthreeexemptions, which do explicitly include sucharequirement. (Seeid., § 1, subd. (e)(1) \[“Acharge imposed foraspecific benefit conferred orprivilege granted directly tothe payor thatisnotprovided tothosenot charged, andwhich doesnotexceed thereasonable coststothelocalgovernment ofconferring thebenefit or granting theprivilege.”\]; id., subd. (e)(2) \[“Acharge imposed foraspecific government service orproduct provided directly tothepayor thatisnot provided tothose notcharged, andwhich doesnotexceed thereasonable costs tothelocal government ofproviding theserviceorproduct.”\]; id., subd. (e)(3) Acharge imposed forthereasonable regulatory coststoalocal government forissuing licenses andpermits, performing investigations, inspections, and 13 audits, enforcing agricultural marketing orders, andtheadministrative enforcement andadjudication thereof.”\].) However, subdivision (e) also contains abroadstatement regarding thegovernment’sburdenofproof: “The local government bearstheburden ofproving byapreponderance ofthe evidence thatalevy, charge, orotherexaction isnotatax, thattheamount is nomorethannecessary tocover thereasonable costsofthegovernmental activity, andthatthemanner inwhichthose costsareallocated toapayor bear afairorreasonable relationship tothepayor’sburdens on, orbenefits received from, thegovernmental activity.” (Cal. Const., art. XIIIC, § 1, subd. (e).) This provision requires thatacharge be “nomore thannecessary tocoverthereasonable costsofthegovernmental activity” inordertobe exemptfrom the “tax” definition. (Ibid.) However, thesubdivision issilent astowhether thisrequirement applies toallsevenexemptions, oronlytothe firstthree exemptions thatexplicitly include areasonableness requirement. Onthisquestion, wefindtheprovision ambiguous andlook totheintentand objective ofthevotersinenacting theprovision toguideourinterpretation. Theballotmaterials uniformly indicate adesiretoexpandthe definition ofwhatconstituted a “tax” forpurposes ofarticleXIIIC. “Oneof thedeclared purposes ofProposition 26wastohaltevasions ofProposition 218.” (Brooktrails TownshipCommunity Services Dist. v. Boardof Supervisors ofMendocinoCounty (2013) 218Cal.App.4th195, 203; Schmeer v. CountyofLosAngeles (2013) 213Cal.App.4th1310, 1322 \[Proposition 26 wasanefforttoclose perceived loopholes inPropositions 13and218”\].) The Findings andDeclarations ofPurpose forProposition 26state: “Since the enactment ofProposition 218in1996, theConstitution oftheState of California hasrequired thatincreases inlocaltaxesbeapproved bythe voters. \[¶\] . . . Despite theselimitations, California taxeshavecontinued to 14 escalate. Ratesfor . . . amyriadofstate andlocalbusiness taxesareatall- timehighs. Californians aretaxedatoneofthehighest levels ofanystatein thenation. \[¶\] . . . \[¶\] . . . Thisescalation intaxation doesnotaccount forthe recent phenomenon whereby . . . localgovernments havedisguised newtaxes as ‘fees’ inordertoextract evenmore revenue fromCalifornia taxpayers without having toabidebytheseconstitutional voting requirements. . . . \[¶\] Inordertoensure theeffectiveness oftheseconstitutional limitations, thismeasure . . . defines a ‘tax’ forstateandlocalpurposes sothatneither theLegislature norlocalgovernments cancircumvent theserestrictions on increasing taxes bysimply defining neworexpanded taxes as ‘fees.’ ” (Voter Info. Guide, Gen. Elec. (Nov. 2, 2010) textofProp. 26, § 1, subds. (b), (c), (e), f), p. 114.) Likewise, theanalysis bytheLegislative Analyst explained Proposition 26 “expands thedefinition ofataxandataxincrease sothatmoreproposals wouldrequire approval bytwo-thirdsoftheLegislature orbylocalvoters.” Voter Info. Guide, Gen. Elec. (Nov. 2, 2010) analysis ofProp. 26bythe Legislative Analyst, p. 57.) Itfurther states: “Thismeasure broadens the definition ofastate orlocaltaxtoinclude many payments currently considered tobefeesorcharges,” while notingotherfeesandcharges “Are Not Affected.” (Id. atp. 58.) Nowhere doestheanalysis identify any narrowing ofthedefinition ofastateorlocaltax. Here, theintent andobjective ofthevoters inpassing Proposition 26is clear. The purpose wastoexpandthedefinition of “tax” torequire more typesoffees andcharges beapproved bytwo-thirds oftheLegislature orby localvoters. Proposition 26’sFindings andDeclarations ofPurpose expressly note itwaspassed inresponse to “therecent phenomenon whereby the Legislature andlocalgovernments havedisguised newtaxesas ‘fees’ inorder 15 toextract evenmore revenue from California taxpayers without having to abidebythese constitutional voting requirements.” (VoterInfo. Guide, Gen. Elec. (Nov. 2, 2010) textofProp. 26, § 1, subd. (e), p. 114.) Asnoted bythe California Supreme Court, thepurpose ofProposition 26 “wastoreinforcethe voterapproval requirements setforthinPropositions 13and218.” (Jacks, supra, 3Cal.5thatpp. 262–263.) Inlight ofthisextensive evidence regarding thevoters’ intentin passing Proposition 26, weconclude afranchise fee, arguably subject tothe fourthexemption inarticleXIIIC, section1, subdivision (e), muststillbe reasonably relatedtothevalue ofthefranchise. (Jacks, supra, 3Cal.5that p. 267.) Onlythatportion with areasonable relationship maybeexempt from the “tax” definition. (SeeCityofSanBuenaventura v. United Water Conservation Dist., supra, 3Cal.5thatp. 1214 \[“itisclearfromthetext \[of Proposition 26\] itselfthatvotersintended toadopttwoseparate requirements: Toqualify asanontax ‘fee’ under article XIIIC, asamended, a chargemustsatisfyboththerequirement thatitbefixedinanamount thatis nomorethannecessarytocoverthereasonable costsofthegovernmental activity,’ andtherequirement that ‘themanner inwhichthose costsare allocated toapayor bearafairorreasonable relationship tothepayor’s burdenson, orbenefits received from, thegovernmental activity.’ ” (italics added, italicsomitted)\].) Finally, theCitycontends thefranchise feedoesnotqualify asa “tax” under articleXIIICbecause itwasnot “ ‘imposed bylocalgovernment.’ ” Specifically, theCityasserts thefranchise feeconstitutes contract consideration andisnotimposed merely because itispassed onto ratepayers. However, ifweaccept theCity’sreasoning, anylocal government couldavoidrunning afoulofarticle XIIICbymerely contracting withathird 16 partytoimposethedesired taxonresidents ratherthanenacting itdirectly. Thisresult would directly conflict withthepurpose ofPropositions 218and 26. (SeeHowardJarvisTaxpayersAssn. v. CityofSanDiego (2004) 120 Cal.App.4th374, 394 \[purpose ofProp. 218isto “ ‘protect\[ \] taxpayers by limiting themethods bywhich local governments exact revenue from taxpayers without their consent’ ”\]; CitizensforFairREURatesv. Cityof Redding, supra, 6Cal.5thatp. 11 \[Prop. 26adopted “Toensure the effectiveness ofPropositions 13and218”\].) Moreover, theCalifornia Supreme Courtimplicitly rejected thisargument inJacks. There, thecharge atissuewasestablished “\[p\]ursuant toanagreement between \[SCE\] and defendant CityofSanta Barbara.” (Jacks, supra, 3Cal.5thatp. 254.) Nonetheless, itscontractual formation didnotautomatically exempt the charge frombeingdefined asa “tax.” Rather, thecourtheld “fees imposed in exchange foraproperty interest must bearareasonable relationship tothe value received fromthegovernment. Totheextent afranchise feeexceeds anyreasonable valueofthefranchise, . . . . theexcessive portion isatax.” Id. atp. 269.) Neither ofthetwocasescitedbytheCity, CountyofTularev. Cityof Dinuba (1922) 188Cal. 664andCitizensAssn. ofSunsetBeachv. Orange CountyLocalAgencyFormation Com. (2012) 209Cal.App.4th1182, alterour analysis. InCountyofTulare, thecourt addressed inpartwhether a subsequent constitutional amendment couldvoidapreexisting statutory charge imposed onfranchises. (CountyofTulare, atp. 667.) While thecourt noted thefeewas “notimposed bylawbutbyhisacceptance ofthefranchise,” itdidnotconclude thefeewasnot “imposed” underarticleXIIICbutmerely thatitwas “imposed . . . byhisacceptance ofthefranchise.” (Countyof Tulare, atp. 670.) Likewise, CitizensAssociation ofSunsetBeach, involved 17 theextension ofpreexisting taxes, rather thanacreation ofnew taxes. Citizens Assn. ofSunsetBeach, atpp. 1185–1186.) Inassessing whether the preexisting taxeshadtobeapproved byatwo-thirdsvoteunderProposition 218, thecourtnoted “\[t\]heword ‘impose’ usually referstothefirstenactment ofatax, asdistinct fromanextension through operation ofaprocess suchas annexation.” (CitizensAssn. ofSunsetBeach, atp. 1194; accord California CannabisCoalition v. CityofUpland (2017) 3Cal.5th924, 944 \[“impose” construed assynonymous toenacted, created, orestablished\].) Inthepresent matter, however, nooneassertsthefranchise feeisnot “thefirstenactment” ofthecharge. 2. Whether theSACAdequately Alleged aCause ofAction Asweconclude inthepriorsection, afranchise feemayconstitute atax subject toarticleXIIICtotheextent itisnotreasonably related tothevalue received fromthegovernment. TheSAC adequately raises suchallegations. First, theSACrecounts themannerinwhich thecontracts wereawarded and notestheordinance approving thefinalcontracts provided forthefollowing franchise fees: (1) aninitial franchise feeof $25,034,000forthemixed materials andorganics contract, withsubsequent franchise fees “ ‘adjusted annually bythepercentage change intheannualaverage oftheFranchise Feecostindicator’ ”; (2) aninitialfranchise feeof $3millionforthe residential recycling services contract, withsubsequent franchise fees adjusted annually bythepercentage change intheannual average ofthe Franchise Feecostindicator.’ ” Next, theSACassertsthesecontracts “were nottheproduct ofbonafide negotiations” and, asaresult, various financial analyses werenotperformed. TheSACfurtherstates theCity “didnot complete avalueanalysis ofthegovernment property interests conveyed.” Asaresult, alleges theSAC, agrand juryfound these franchise fees “are 18 disproportionately higherthanfranchise feespaidtoother BayArea municipalities andspecial districts,” andtheCity’sprocurement process was mishandled andsubject topolitical considerations. TheSAC supports these allegations bynoting theplaintiffs’ rateincreases ranged from79.76percent to155.37percent. TheSACalsostates noevidence waspresented tothe grand jurythattheCityanalyzed serviceordisposal costs. TheSACthus claimsthefranchise feesdonot “bear\[ \] areasonable relationship tothevalue received fromthegovernment,” “arenotbased onthevalue ofthefranchises conveyed,” andweresetbased onthepriorfranchise fee “without any analysis ordetermination ofthevalue oftheprior franchise.” These allegations sufficiently stateaclaimunder thestandard setforth inJacks. C. Redesignated Fee TheCitypassed anordinance creating theRedesignated Fee, pursuant toPublicResources Codesection 41901, toredesignate partofWMAC’s franchise feeasafeetocompensate theCityforthecostof “preparing, adopting, andimplementing theAlameda County Integrated Waste Management Plan.” Whileplaintiffs arenotchallenging theinitialcreation oftheRedesignated Fee, theordinance alsoprovided forpossible annual increases totheRedesignated Fee. Plaintiffs contend theSACadequately sought declaratory relief astothevalidity ofthosefutureRedesignated Fee increases. WhiletheSACdoesnotcontend anyRedesignated Feeincreases have occurred andplaintiffs acknowledge suchincreases arenotguaranteed tohappenevery year, plaintiffs contend declaratory reliefisappropriate because theparties haveanactualcontroversy aboutthevalidity ofthe automatic” Redesignated Feeincreases. The ‘actual controversy’ language inCodeofCivil Procedure section 1060encompasses aprobable future controversy relatingtothelegalrights 19 anddutiesoftheparties. \[Citation.\] Foraprobable future controversy to constitute an ‘actual controversy,’ however, theprobable future controversy mustberipe. \[Citation.\] A ‘controversy is “ripe” whenithasreached, but hasnotpassed, thepoint thatthefacts havesufficiently congealed topermit anintelligent anduseful decision tobemade.’ ” (Environmental Defense ProjectofSierraCountyv. CountyofSierra (2008) 158Cal.App.4th877, 885.) Itdoesnot embrace controversies that are ‘conjectural, anticipated tooccur inthefuture, oranattempttoobtainanadvisory opinion from thecourt.’ ” Wilson & Wilsonv. CityCouncilofRedwood City (2011) 191Cal.App.4th 1559, 1582.) “ ‘ “Whether aclaim presents an ‘actual controversy’ withinthe meaning ofCodeofCivil Procedure section 1060isaquestion oflawthatwe review denovo.” ’ ” (Ibid.) Aripeness inquiry involves atwo-stepanalysis: First, whether the issueisappropriate forimmediate judicial resolution; andsecond, whether thecomplaining party willsufferahardship fromarefusal toentertain its legal challenge. \[Citation.\] \[¶\] Under thefirsttest, ‘ “courts willdecline to adjudicate adispute if ‘theabstract posture oftheproceeding makes it difficult toevaluate . . . theissues’ \[citation\], ifthecourtisaskedtospeculate ontheresolution ofhypothetical situations \[citation\], orifthecasepresents a contrived inquiry’ \[citation\].” \[Citation.\]’ \[Citation.\] \[¶\] Underthesecond test, courtsgenerally willnot consider issues basedonspeculative future harm. \[Citation.\] This isparticularly true wherethecomplaining partywill havetheopportunity topursue appropriate legal remedies should the anticipated harm evermaterialize.” (Metropolitan WaterDist. ofSouthern California v. Winograd (2018) 24Cal.App.5th881, 892–893.) Here, therecord indicates plaintiffs’ challenge tofutureRedesignated Feeincreases doesnotpresent anactualcontroversy proper foradjudication. 20 AnyfutureRedesignated Feeincrease isbased onthepercentage change in theannual “Consumer Price Index—AllUrban Consumers, SeriesID cuura422sa0, NotSeasonally adjusted, SanFrancisco-Oakland-SanJose.” Thatpotential increase, however, isnotimplemented foranyparticular year ifWMAC’sgrossreceipts forthepriorcalendar yearwerelessthanthe calendar yearbefore that. Thus, whiletheordinance imposing the Redesignated Feeprovides forfeeincreases, itisuncertain whether orwhen thosewilloccur and, iftheydo, theactual amount ofsuchanincrease. Nor doplaintiffs explain howthecourtcould assess whether those future unknown increases exceed theCity’sfuture costsfor “preparing, adopting, andimplementing theplan, aswellasinsetting andcollecting thelocal fees.” SeePub. Resource Code, § 41901.) Plaintiffs contend ifthecurrent Redesignated Feeexceeds theCity’s currentcosts, asalleged inthecomplaint, thenanyfutureRedesignated Fee increase would also exceed theCity’scosts. Butthispresumes theCity’s costsremain static, andtheSACcontains nosuchallegations. Rather, itis reasonable toassume theCity’scostsmayincrease bythetimeofany Redesignated Feeincrease. Thedegree ofanysuchcostincrease, however, is unknown, andtheSAC isentirely silent regarding thisissue. Norareplaintiffs’ arguments regarding hardship persuasive. Plaintiffs contend theyincursuchhardship because theyarecurrently paying a Redesignated Feethatexceeds theamount allowable bylaw. Butthetrial courtconcluded plaintiffs’ challenge tothecurrentRedesignated Feewas time-barred, andplaintiffs havenotchallenged thatruling onappeal. Instead, plaintiffs onlycontendtheSAC “adequately alleges aclaimfor declaratory reliefastotheautomatic increases.” Accordingly, anyharm plaintiffs currently areincurring isbased ontheir ownfailure totimely 21 challenge theRedesignated Fee. Asdiscussed above, what, ifany, harm plaintiffs mayincurfromfuture feeincreases isuncertain atthistime, and plaintiffs havenotdemonstrated theywillbeunable “topursueappropriate 3 Metropolitanlegalremediesshouldtheanticipatedharmevermaterialize.” WaterDist. ofSouthernCaliforniav. Winograd, supra, 24Cal.App.5that p. 893.) Accordingly, plaintiffs’ challenge tofutureRedesignated Fee increases isnotripeforadjudication. III. DISPOSITION Thetrialcourt’sjudgment isaffirmed inpartandreversed inpart. We affirmthecourt’sordersustaining theCity’sdemurrer astotheRedesignated Feeincrease. However, we reverse thetrialcourt’sordersustaining the City’sdemurrer astothevalidity ofthefranchise fee. Theparties shallbear theirowncostsonappeal. (SeeCal. RulesofCourt, rule8.278(a)(5).) 3Thetrialcourtrejected theCity’sargument thatplaintiffs’ challenge tothefuture Redesignated Feeincreases arealsotime-barred, andtheCity didnotcontest thatruling. Wedonotindependently opineonthatholding or whether otherlegal arguments maybarsuchaclaiminthefutureasneither partyhasraised sucharguments inthisappeal. 22 Margulies, J. Weconcur: Humes, P. J. Banke, J. A154986 Zollyv. CityofOakland 23 Trial Court: Superior Court ofAlameda County TrialJudge: Hon. PaulD. Herbert Counsel: Zacks, Freedman & Patterson and Andrew M. Zacks; Katz Appellate Law andPaulJ. Katz forPlaintiffs andAppellants. Barbara Parker, Doryanna Moreno, MariaBee, DavidPeredaandCelso Ortiz, CityAttorney; Chao ADR, PCandCedric C. Chao; DLA PiperLLP, TamaraShepard andMauricio Gonzalez, forDefendant andRespondent. 24