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 








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          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 








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          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.