BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: AB 1084 HEARING: 6/17/09
AUTHOR: Adams FISCAL: Yes
VERSION: 6/10/09 CONSULTANT: Detwiler
DEVELOPER FEES
Background and Existing Law
The Mitigation Fee Act governs how cities and counties
impose fees on development, both fees for processing
permits and fees that impose exactions on development
projects. Processing fees for zoning changes, use permits,
building permits, and other development applications shall
"not exceed the estimated reasonable cost of providing the
service for which the fee is charged." Cities and counties
can impose exaction fees as a condition of approving a
development project to pay for the cost of public
facilities that are directly related to the project.
Before cities and counties impose exaction fees they must:
Identify the fee's purpose.
Identify the public facilities for which the fee
will be used.
Determine a reasonable relationship between the
fee's use and the development project.
Determine a reasonable relationship between the
need for the public facility and the development
project.
Developers, planners, and their legal advisors call this
statutory requirement the "nexus test," because there must
be a connection between the fee and the project.
To levy fees, there must be a public meeting, noticed 14
days in advance. Local officials must mail notices to
anyone who files a written request and pays a reasonable
annual charge. Cost data must be available 10 days before
the meeting. Local officials must adopt their fees by
resolution or ordinance which can't take effect for 60
days, unless the officials adopt urgency measures. There
is a 120-day deadline for filing lawsuits to challenge the
resolution or ordinance. In a lawsuit, the local agency
--- not the plaintiff --- has the burden of proof.
Anyone can ask for an independent audit to determine
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whether local fees or charges exceed the amount reasonably
necessary to cover the cost of the product or service. The
person asking for the audit must pay the auditor's costs.
The current recession has depressed the cost of
construction materials and land. Builders worry that local
exactions for public facilities as a condition of approving
development projects may be based on outdated cost
estimates.
Proposed Law
Assembly Bill 1084 clarifies that an audit of local
developer fees and charges can also cover the cost of
public facilities, as defined by existing law. AB 1084
tells local officials that they don't have to conduct an
audit if an audit has been performed on the same fee within
the previous 12 months. If the audit shows that the fee or
charge doesn't meet the statutory requirements, local
officials must adjust the fee accordingly.
The bill also requires cities and counties to mail public
notice of the time and place and a general explanation of a
public meeting on new or increased fees to any interested
party who files a written request and pays a reasonable
annual charge. They must mail or electronically send the
notices 14 days before the meeting. Cost data must be
available 10 days before the meeting. Local officials must
adopt their fees by resolution or ordinance which can't
take effect for 60 days, unless the officials adopt urgency
measures. These requirements don't apply to:
Water or sewer connection fees.
School developer fees.`
Water, sewer, or electrical rates.
Fees that are already covered by existing notice
and hearing requirements.
Comments
1. What goes up should come down . Before the recession
started, demand pressures in the global economic markets
resulted in higher costs for the materials needed for
public works projects. Some cities and counties raised
their exaction fees to cover the higher costs of cement,
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asphalt, steel, wiring, and pipes. Demand pressures in
local real estate markets resulted in escalating prices for
the land needed for parks, fire stations, sewer plants, and
other public facilities. Now that these prices are
starting to fall, builders want to be sure that they can
ask local agencies to audit their fees. AB 1084 clarifies
that the current opportunities for audits apply to exaction
fees for public facilities. The bill also clarifies that
when costs fall, exaction fees should follow.
2. Nice, but not necessary . Builders were instrumental in
drafting the 1987 Mitigation Fee Act and the current
statute reflects their active participation. No reasonable
observer disputes that any person can ask for an audit of
exaction fees for public facilities. Similarly, when an
audit shows that fees aren't reasonable, local officials
must change their fees. To that extent, AB 1084 restates
the generally accepted interpretation of existing law.
Further, the bill's new language for public notice and
audits mirrors existing law for public notice and audits.
The Committee may wish to consider whether AB 1084 provides
something that's not already available.
Assembly Actions
Assembly Local Government Committee: 7-0
Assembly Appropriations Committee:16-0
Assembly Floor: 77-0
Support and Opposition (6/11/09)
Support : California Building Industry Association,
California Business Properties Association, California
Chamber of Commerce, International Council of Shopping
Centers, National Association of Industrial and Office
Properties.
Opposition : County of Sacramento, Transportation Agency of
Monterey County.