CAA sues San Francisco over its alarm ordinance

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Sunday, June 1, 2003

SAN FRANCISCO - A lawsuit to prevent city officials here from going forward with an alarm ordinance has been filed by state alarm industry officials, who said they object to certain provisions of the policy that require alarm companies to be responsible for collecting and remitting alarm fees to the city.

In February, the Board of Supervisors for the City and County of San Francisco approved changes to the Police Emergency Alarm Ordinance that made alarm companies operating in the city responsible for collecting and handing over to city tax collectors any fees related to San Francisco’s alarm registration fee or false alarm fines. Not only would the alarm company be required to collect those fees, but would also be financially responsible for any uncollected debts as a result of those charges.

“The city proposed the ordinance because of false alarm problems and the current economic problems,” said Tom Ow-en, deputy city attorney with the City Attorney’s Office for the City and County of San Francisco. “It became harder to justify subsidizing the false alarms.”

Owen said the city is facing a revenue shortfall of $350 million on a total annual budget of about $2 billion.

Alarm industry officials from the California Alarm Association, which filed the lawsuit, contend that forcing the local alarm companies to act as “tax collectors” would put an undue administrative and financial burden on the companies while putting them in the unorthodox position of a third-party administrator for the city.

“They can’t possibly keep track of the varying requirements, such as when to bill, when to charge interest, when to rebill, what reasonable efforts to make to collect the fee,” said Arthur Fine, an attorney with Mitchell, Silberberg & Knupp who is representing the CAA in the lawsuit. “There is almost an endless number of things that an alarm company would have to keep track of.”

Currently the city’s emergency communications department, in conjunction with the tax collector’s office, administers the registration fee and false alarm fine collections. The city projects that it will generate about $6 million in registration fees and false alarm fees under the revised ordinance.

Fine and the CAA also contend the fee collection requirement violates the state’s Alarm Company Act, which limits the parameters of what individual municipalities can require alarm companies to do. What is allowed under the act includes the use of business licenses or alarm company permits, requiring alarm system owners to register their systems and pay fines for false alarms.

Contract monitoring companies, which frequently are directly billing alarm end-users, would also be a party in the collection services for the city, despite the fact the monitoring companies have no direct contractual relationship with the alarm end-user, Fine said.

San Francisco officials argue alarm companies are a fitting candidate to assume the city’s fee collection since “they derive a unique economic benefit from the city’s public safety system,” Owen said. “The provision in the ordinance only kicks in if the alarm company simply refuses to do the billing altogether and not if they in good faith ask the customer to pay.”

The sides met in court May 21.