BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 1222 (Leno) -Solar energy: permits. Amended: May 1, 2012 Policy Vote: G&F 6-2 Urgency: No Mandate: Yes Hearing Date: May 14, 2012 Consultant: Mark McKenzie This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1222 would limit the fees that cities and counties charge for permits related to the installation of rooftop solar energy systems. Fiscal Impact: Unknown reimbursable mandate costs (General Fund). In order for a city or county to charge a permit fee that exceeds the specified limits, it must provide substantial evidence of the administrative cost to issue a permit in a written finding and an adopted resolution or ordinance, as specified. This additional administrative burden places a higher level of service on local entities than the current standard specifying that a fee cannot exceed the estimated reasonable cost of providing the service for which the fee is charged. (see staff comments) Background: Existing law, the Mitigation Fee Act, generally prohibits permit fees charged by a local agency from exceeding the estimated reasonable cost of providing the service for which the fee is charged, as specified. A fee that exceeds reasonable costs must be approved by a two-thirds vote of the electorate. Permit fees generally are set at a level sufficient to cover a local agency's cost to review and approve project plans and perform a site inspection, and may include additional administrative costs related to the permit process. Currently, each local authority having jurisdiction over solar installations determines its fee structure for rooftop solar permits, and fees vary widely by jurisdiction. According to a December 2011 survey provided by the author's office that includes 402 jurisdictions in 25 counties, the City of Lawndale charges the highest fee at $1,471 for a 3 kilowatt (kW) system, while 34 jurisdictions have a $0 permit fee for these small residential systems. The average solar permit fee across all SB 1222 (Leno) Page 1 cities and counties surveyed is $343. Proposed Law: SB 1222 would prohibit a city or county from charging permit fees for rooftop solar energy systems that exceed $400 for a system that produces 15 kW or less, or $400 plus $5 for each kilowatt above 15 kW. A local agency could exceed these limits if it provides substantial evidence of the administrative cost to issue the permit as part of a written finding and an adopted resolution or ordinance. The written finding must include the following: A determination that the local agency has adopted ordinances, fees, and processes to streamline solar energy system permit submittals and approvals. A calculation of the administrative cost of issuing a solar rooftop permit. A description of how a higher fee would result in a streamlined approval process. SB 1222 also includes a codified provision stating legislative intent that a local agency that complies with the bill's requirements would receive priority access to state funds for purposes of distributed energy generation planning, permitting, training, or implementation. The bill's provisions would sunset on January 1, 2018. Staff Comments: SB 1222 would impose new limits on the fees that a local agency may charge for permitting a rooftop solar energy system. While many cities and counties have established fees below these limits, the bill would require a local agency to make a specified written finding and adopt a resolution or ordinance in order to charge a higher fee. The finding must include a determination that the city or county has adopted processes that streamline solar permit submittals and approvals. This requirement would preclude a local entity from charging a higher permit fee, even if the amount is less than the reasonable cost of providing the permit, if it has not adopted a streamlined permitting process for solar energy systems. Staff notes that a number of local agencies have established artificially low permit fees for rooftop solar energy systems as an incentive to encourage the adoption of renewable energy technologies. The fee limit established by the bill is also higher than the current statewide average for all cities and counties, and the bill provides for higher fee limits for larger SB 1222 (Leno) Page 2 commercial installations. Nevertheless, the limits established by the bill would preclude any local entity that currently has lower fees from raising them beyond those limits, unless it complies with the additional administrative process and establishes a streamlined permitting program. In this respect, the bill imposes a state-mandated local program for which a city or county would be eligible for reimbursement for those costs to comply with these additional administrative burdens. The potential reimbursable costs are unknown at this time, but if 10 percent of local agencies incurred costs of $5,000 each to comply with these additional administrative requirements, total reimbursable costs would exceed $250,000.