Bill Text: CA SB937 | 2023-2024 | Regular Session | Amended

California Senate Bill 937 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Development projects: fees and charges.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2024-09-19 - Chaptered by Secretary of State. Chapter 290, Statutes of 2024. [SB937 Detail]

Download: California-2023-SB937-Amended.html

Amended IN Assembly August 22, 2024

Amended IN Assembly June 27, 2024

Amended IN Assembly June 17, 2024

Amended IN Senate April 08, 2024

Amended IN Senate April 01, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 937

Introduced by Senator Wiener
(Coauthor: Assembly Member Grayson)

January 17, 2024

An act to amend Section 66007 ~~of, and to add Section 65914.6 to,~~ of the Government Code, relating to land use.

LEGISLATIVE COUNSEL'S DIGEST

SB 937, as amended, Wiener. Development projects: ~~permits and other entitlements:~~ fees and charges.

The Planning and Zoning Law requires each county and each city to adopt a comprehensive, long-term general plan for its physical development, and the development of specified land outside its boundaries, that includes, among other mandatory elements, a housing element. Existing law, the Permit Streamlining Act, among other things, requires a public agency that is the lead agency for a development project to approve or disapprove that project within specified time periods. Existing law extended by 18 months the period for the expiration, effectuation, or utilization of a housing entitlement, as defined, that was issued before, and was in effect on, March 4, 2020, and that would expire before December 31, 2021, except as specified. Existing law provides that if the state or a local agency extended the otherwise applicable time for the expiration, effectuation, or utilization of a housing entitlement for not less than 18 months, as specified, that housing entitlement would not be extended an additional 18 months pursuant to these provisions.
This bill would extend by 24 months the period for the expiration, effectuation, or utilization of a housing entitlement for a designated residential development project, as those terms are defined, that was issued before January 1, 2024, and that will expire before December 31, 2025, except as specified. The bill would toll this 24-month extension during any time that the housing entitlement is the subject of a legal challenge. By adding to the duties of local officials with respect to housing entitlements, this bill would impose a state-mandated local program. The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

The Mitigation Fee Act regulates fees for development projects, fees for specific purposes, including water and sewer connection fees, and fees for solar energy systems, among others. The act, among other things, requires local agencies to comply with various conditions when imposing fees, extractions, or charges as a condition of approval of a proposed development or development project.

The act prohibits a local agency that imposes fees or charges on a residential development for the construction of public improvements or facilities from requiring the payment of those fees or charges until the date of the final inspection or the date the certificate of occupancy is issued, whichever occurs first, except for utility service fees, which the local agency is authorized to collect at the time an application for utility service is received. The act exempts specified units in a residential development proposed by a nonprofit housing developer if the housing development meets certain conditions.

This bill would limit the utility service fees exception described above to utility service fees related to connections, and cap those fees at the costs incurred by the utility provider resulting from the connection activities. The bill would extend the above-described exemption for those units in a residential development that meets those conditions to any housing developer.

The act authorizes a local agency to require the payment sooner than the date of the final inspection or the date the certificate of occupancy is issued, whichever occurs first, if specified conditions are met, including if the fees or charges are to reimburse the local agency for expenditures previously made.

This bill would, for designated residential development projects, as defined, prohibit a local agency from requiring payment of fees or charges on the residential development for the construction of public improvements or facilities until the date the first certificate of occupancy or first temporary certificate of occupancy is issued, as specified. The bill would authorize the local agency to require the payment of those fees or charges at an earlier time if certain conditions are met, except as specified. For specified units, the bill would authorize a developer to guarantee payment of certain fees or charges by posting a performance bond or a letter of credit from a federally insured, recognized depository institution. If the developer does not post a performance bond or a letter of credit, the bill would authorize the city, county, or city and county to collect certain fees or charges in accordance with a specified procedure.

If any fee or charge described above is not fully paid prior to issuance of a building permit, the act authorizes the local agency issuing the building permit to require the property owner to execute a contract to pay the fee or charge as a condition of issuance of the building permit, as specified.

This bill would authorize the governing body of a local agency to authorize an officer or employee of the local agency to approve and execute contracts described above, and would require the local agency to post a model form of contract on its internet website, if it maintains an internet website, before requiring execution of a contract under the provisions described above.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
~~This bill would provide that no reimbursement is required by this act for a specified reason.~~

Vote: MAJORITY Appropriation: NO Fiscal Committee: ~~YES~~NO Local Program: ~~YES~~NO

The people of the State of California do enact as follows:

SECTION 1.Section 65914.6 is added to the Government Code, to read:
65914.6.
(a)Except as provided in subdivision (b), notwithstanding any law, including any inconsistent provision of a local agency’s general plan, ordinances, or regulations, the otherwise applicable time for the expiration, effectuation, or utilization of a housing entitlement for a designated residential development project that is within the scope of the timeframes specified in paragraphs (1) and (2) is extended by 24 months. For the purposes of this section, housing entitlements that are extended are entitlements where both of the following apply:
~~(1)It was issued prior to and was in effect on January 1, 2024.~~
~~(2)It will expire prior to December 31, 2025.~~
The otherwise applicable time for the utilization of a housing entitlement provided by this section includes any requirement to request the issuance of a building permit within a specified period of time.
(b)If the state or a local agency extends, on or after January 1, 2024, but before the effective date of the act adding this section, the otherwise applicable time for the expiration, effectuation, or utilization of a housing entitlement for not less than 24 months and pursuant to the same conditions provided in subdivision (a), that housing entitlement shall not be extended for an additional 24 months by operation of subdivision (a).
~~(c)For purposes of this section, the following definitions apply:~~
~~(1)“Designated residential development project” means a residential development project that meets any of the following conditions:~~
~~(A)The project dedicates 100 percent of units, exclusive of a manager’s unit or units, to lower income households, as defined by Section 50079.5 of the Health and Safety Code.~~
~~(B)The project meets the requirements described in Section 65662.~~
~~(C)The project is approved by a local government pursuant to Article 2 (commencing with Section 65912.110) or Article 3 (commencing with Section 65912.120) of Chapter 4.1.~~
~~(D)The project meets the requirements described in subdivision (a) of Section 65913.4.~~
~~(E)The project meets the criteria described in subdivision (c) of Section 65913.16.~~
~~(F)The project is entitled to a density bonus pursuant to subdivision (b) of Section 65915.~~
~~(G)The project includes 10 or fewer units.~~
~~(2)“Housing entitlement” means any of the following:~~
~~(A)A legislative, adjudicative, administrative, or any other kind of approval, permit, or other entitlement necessary for, or pertaining to, a housing development project issued by a state agency.~~
~~(B)An approval, permit, or other entitlement issued by a local agency for a housing development project that is subject to Chapter 4.5 (commencing with Section 65920).~~
~~(C)A ministerial approval, permit, or entitlement by a local agency required as a prerequisite to issuance of a building permit for a housing development project.~~
~~(D)A requirement to submit an application for a building permit within a specified period of time after the effective date of a housing entitlement described in subparagraph (B) or (C).~~
~~(E)A vested right associated with an approval, permit, or other entitlement described in subparagraphs (A) to (D), inclusive.~~
~~(3)For the purposes of this section, a housing entitlement does not include any of the following:~~
~~(A)A development agreement issued pursuant to Article 2.5 (commencing with Section 65864).~~
~~(B)An approved or conditionally approved tentative map that is extended for a minimum of 24 months pursuant to Section 66452.6 on or after January 1, 2024.~~
~~(C)A preliminary application as defined in Section 65941.1.~~
(4)“Housing development project” means a residential development or mixed-use development in which at least two-thirds of the square footage of the development is designated for residential use. Both of the following apply for the purposes of calculating the square footage usage of a development for purposes of this section:
~~(A)The square footage of a development shall include any additional density, floor area, and units, and any other concession, incentive, or waiver of development standards pursuant to Section 65915.~~
~~(B)The square footage of a development shall not include any underground space, including, but not limited to, a basement or underground parking garage.~~
(5)“Local agency” means a county, city, whether general law or chartered, city and county, school district, special district, authority, agency, any other municipal public corporation or district, or other political subdivision of the state.
~~(d)The extension granted pursuant to subdivision (a) shall be tolled during any time that the housing entitlement is the subject of a legal challenge.~~
~~(e)Nothing in this section is intended to preclude a local government from exercising its existing authority to provide an extension to an entitlement identified in this section.~~
(f)The Legislature finds and declares that ensuring planned housing projects can continue without delays due to expiring entitlements is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this section applies to all cities, including charter cities.

SEC. 2.SECTION 1.

Section 66007 of the Government Code is amended to read:

66007.

(a) Except as otherwise provided in subdivisions (b) and (h), any local agency that imposes any fees or charges on a residential development for the construction of public improvements or facilities shall not require the payment of those fees or charges, notwithstanding any other provision of law, until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first. However, utility service fees related to connections may be collected at the time an application for service is received, provided that those fees do not exceed the costs incurred by the utility provider resulting from the connection activities. If the residential development contains more than one dwelling, the local agency may determine whether the fees or charges shall be paid on a pro rata basis for each dwelling when it receives its final inspection or certificate of occupancy, whichever occurs first; on a pro rata basis when a certain percentage of the dwellings have received their final inspection or certificate of occupancy, whichever occurs first; or on a lump-sum basis when the first dwelling in the development receives its final inspection or certificate of occupancy, whichever occurs first.

(b) (1) Notwithstanding subdivision (a), the local agency may require the payment of those fees or charges at an earlier time if (A) the local agency determines that the fees or charges will be collected for public improvements or facilities for which an account has been established and funds appropriated and for which the local agency has adopted a proposed construction schedule or plan before final inspection or issuance of the certificate of occupancy or (B) the fees or charges are to reimburse the local agency for expenditures previously made. “Appropriated,” as used in this subdivision, means authorization by the governing body of the local agency for which the fee is collected to make expenditures and incur obligations for specific purposes.

(2) (A) Paragraph (1) does not apply to units reserved for occupancy by lower income households included in a residential development proposed by a ~~nonprofit~~ housing developer in which at least 49 percent of the total units are reserved for occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined in Section 50053 of the Health and Safety Code. In addition to the contract that may be required under subdivision (d), a city, county, or city and county may require the posting of a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this paragraph. Fees and charges exempted from paragraph (1) under this paragraph shall become immediately due and payable when the residential development no longer meets the requirements of this paragraph.

(B) The exception provided in subparagraph (A) does not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 17620) of Part 10.5 of Division 1 of Title 1 of the Education Code.

(1) If a local agency imposes any fees or charges on the residential development for the construction of public improvements or facilities, then all of the following conditions apply:

(A) (i) Notwithstanding any other law, the local agency shall not require the payment of those fees or charges until the date the first certificate of occupancy or first temporary certificate of occupancy is issued, whichever occurs first.

(ii) Notwithstanding clause (i), utility service fees related to connections may be collected at the time an application for service is received, provided that those fees do not exceed the costs incurred by the utility provider resulting from the connection activities.

(iii) Clause (i) shall not apply if construction of the residential development does not begin within five years of the date upon which the building permit is issued.

(B) The amount of the fees and charges shall be the same amount as would have been paid had the fees and charges been paid prior to the issuance of building permits, and the local agency shall not charge interest or other fees on any amount deferred pursuant to this paragraph.

(C) If the development contains more than one dwelling, the local agency may determine whether the fees or charges described shall be paid on a pro rata basis for each dwelling when it receives its certificate of occupancy, on a pro rata basis when a certain percentage of the dwellings have received their certificate of occupancy, or on a lump-sum basis when all the dwellings in the development receive their certificate of occupancy.

(D) Notwithstanding any other law, the local agency may withhold a certificate of occupancy or a temporary certificate of occupancy until payment of those fees or charges is received.

(2) (A) Notwithstanding paragraph (1), the local agency may require the payment of those fees or charges at an earlier time if ~~(i) the~~ either of the following conditions is met:

(i) The fees or charges are to reimburse the local agency for expenditures previously made to the extent those expenditures have not been paid or reimbursed by another party.

(ii) The local agency determines that the fees or charges will be collected for public improvements or facilities for which an account has been established and funds appropriated and for which the local agency has adopted a proposed construction schedule or plan prior to final inspection or issuance of the certificate of occupancy or (ii) the fees or charges are to reimburse the local agency for expenditures previously made. “Appropriated,” both of the following:

(I) The fees or charges will be collected for any of the following public improvements or facilities:
(ia) Public improvements or facilities related to providing water service to the residential development.
(ib) Public improvements or facilities related to providing sewer or wastewater service to the residential development.
(ic) Public improvements or facilities related to providing fire, public safety, and emergency services to the residential development.
(id) Roads, sidewalks, or other public improvements or facilities for the transportation of people that serve the development, including the acquisition of all property, easements, and rights-of-way that may be required to carry out the improvements or facilities.
(ie) Construction and rehabilitation of school facilities, if a school district has a five-year plan pursuant to subdivision (c) of Section 17017.5 of Education Code.

(II) An account has been established and funds appropriated for the public improvements or facilities described in subclause (I). “Appropriated,” as used in this ~~paragraph,~~ subclause, means authorization by the governing body of the local agency for which the fee is collected to make expenditures and incur obligations for specific purposes.

(B) (i) Subparagraph (A) does not apply to units reserved for occupancy by lower income households included in a residential development proposed by a ~~nonprofit~~ housing developer in which at least 49 percent of the total units are reserved for occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined in Section 50053 of the Health and Safety Code. In addition to the contract that may be required under subdivision (d), a city, county, or city and county may require the posting of a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this paragraph. Fees and charges exempted from subparagraph (A) under this subparagraph shall become immediately due and payable when the residential development no longer meets the requirements of this subparagraph.

(ii) The exception provided in clause (i) does not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 17620) of Part 10.5 of Division 1 of Title 1 of the Education Code.

(iii) (I) The developer may elect to post a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this subparagraph.
(II) If the developer does not post a performance bond or letter of credit pursuant to subclause (I), the city, county, or city and county may collect any fees and charges subject to this subparagraph that are not paid at the time the first certificate of occupancy or first temporary certificate of occupancy is issued, whichever occurs first, in accordance with the following procedure:
(ia) On or before August 10 of each year, the building official of the local agency shall furnish in writing to the county auditor a description of each parcel of land for which a performance bond or letter of credit has not been posted within the local agency’s jurisdiction upon which fees or charges are unpaid and the amount of the unpaid fees or charges.
(ib) The amount of the unpaid fees or charges shall constitute a lien upon the land for which the fees or charges are unpaid.
(ic) The unpaid fees or charges shall be collected in the same manner and at the same time as county ad valorem taxes.
(id) The unpaid fees or charges shall be subject to the same penalties, lien priority, and procedure and sale in case of delinquency that apply to county ad valorem taxes.
(ie) All laws applicable to the levy, collection, and enforcement of county ad valorem taxes shall be applicable to the unpaid fees and charges.
(iv) Clause (iii) does not apply to projects that dedicate 100 percent of units, exclusive of a manager’s unit or units, to lower income households, as defined by Section 50079.5 of the Health and Safety Code, and have a recorded regulatory agreement with the California Tax Credit Allocation Committee, the California Debt Limit Allocation Committee, or the Department of Housing and Community Development.

(3) If the local agency does not issue certificates of occupancy for the type of residential developments described in this subdivision, the final inspection shall serve as the certificate of occupancy.

(4) For purposes of this subdivision, “designated residential development project” means a residential development project that meets any of the following conditions:

(A) The project dedicates 100 percent of units, exclusive of a manager’s unit or units, to lower income households, as defined by Section 50079.5 of the Health and Safety Code.

(B) The project meets the requirements described in Section 65662.

(C) The project is approved by a local government pursuant to Article 2 (commencing with Section 65912.110) or Article 3 (commencing with Section 65912.120) of Chapter 4.1.

(D) The project meets the requirements described in subdivision (a) of Section 65913.4.

(E) The project meets the criteria described in subdivision (c) of Section 65913.16.

(F) The project is entitled to a density bonus pursuant to subdivision (b) of Section 65915.

(G) The project includes 10 or fewer units.

(d) (1) If any fee or charge specified in subdivision (a) or (c) is not fully paid prior to issuance of a building permit for construction of any portion of the residential development encumbered thereby, the local agency issuing the building permit may require the property owner, or lessee if the lessee’s interest appears of record, as a condition of issuance of the building permit, to execute a contract to pay the fee or charge, or applicable portion thereof, within the time specified in subdivision (a) or (c). If the fee or charge is prorated pursuant to subdivision (a) or (c), the obligation under the contract shall be similarly prorated.

(2) The obligation to pay the fee or charge shall inure to the benefit of, and be enforceable by, the local agency that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fee or charge, which shall be enforceable against successors in interest to the property owner or lessee at the time of issuance of the building permit. The contract shall be recorded in the grantor-grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local agency shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated pursuant to subdivision (a) or (c).

(3) The contract may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local agency imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller.

(4) The governing body of a local agency may authorize an officer or employee of the local agency to approve and execute contracts under this subdivision on behalf of the local agency.

(5) Before requiring execution of a contract under this subdivision, the local agency shall post a model form of contract on its internet website, if it maintains an internet website.

(e) This section applies only to fees collected by a local agency to fund the construction of public improvements or facilities. It does not apply to fees collected to cover the cost of code enforcement or inspection services, or to other fees collected to pay for the cost of enforcement of local ordinances or state law.

(f) “Final inspection,” “temporary certificate of occupancy,” or “certificate of occupancy,” as used in this section, has the same meaning as described in Sections 305 and 307 of the Uniform Building Code, International Conference of Building Officials, 1985 edition.

(g) Methods of complying with the requirement in subdivision (b) that a proposed construction schedule or plan be adopted, include, but are not limited to, (1) the adoption of the capital improvement plan described in Section 66002, or (2) the submittal of a five-year plan for construction and rehabilitation of school facilities pursuant to subdivision (c) of Section 17017.5 of the Education Code.

(h) A local agency may defer the collection of one or more fees up to the close of escrow. This subdivision shall not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 17620) of Part 10.5 of Division 1 of Title 1 of the Education Code.

SEC. 3.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.