BILL ANALYSIS Ó
SB 1222
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1222 (Leno) - As Amended: June 19, 2012
Policy Committee: Local
GovernmentVote:7-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill places limitations and restrictions on the permit fees
charged by a city or county for residential and commercial
rooftop solar energy systems. Specifically, this bill:
1)Prohibits a city or county, including charter cities, from
charging a residential or commercial permit fee for a
residential or commercial rooftop solar energy system that
produces direct current electricity that exceeds the estimated
reasonable cost of providing the service for which the fee is
charged.
2)Establishes a maximum level of the permit fee, plus an
addition for each kilowatt (kW) above a specified level.
Allows a city or county to charge a permit fee for a rooftop
solar energy system that exceeds the applicable fee, if, as
part of a written finding and an adopted resolution or
ordinance, the city or county provides substantial evidence of
the reasonable cost to issue the permit. Specifies the
written finding.
3)States the intent of the Legislature to provide a city or
county that meets the obligations of the bill's provisions to
receive priority access to state funds for the purposes of
distributed energy generation planning, permitting, training,
or implementation.
4)Sunsets the bill's provisions as of January 1, 2018.
5)Provides that reimbursement shall be made to local agencies if
the Commission on State Mandates determines that this act
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contains costs mandated by the state.
FISCAL EFFECT
Negligible fiscal impact.
Legislative Counsel has keyed SB 1222 a reimbursable mandate.
However, this bill does not appear to be a reimbursable mandate
because any mandated costs can be reimbursed with fees charged
by local governments. The mandated costs include any
administrative costs the local government incurs that cannot be
reimbursed because the costs are higher than the permit fees
specified in the bill. SB 1222 specifically states the costs of
adopting an ordinance to charge fees higher than the bill's
maximum can be recouped through permit costs.
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COMMENTS
1)Purpose . According to the author, the solar industry
continues to drive investment, jobs and savings in California.
However, the author notes even with the decrease in equipment
prices, inconsistency in permit fees continues to be a barrier
to greater solar rooftop installation. The author explains
that currently, each local authority with jurisdiction over
solar installations determines its fee structure for rooftop
permits. Permit fees range from less than $100 to more than
$5,000. The author states some local jurisdictions employ a
flat-fee and others base their fees on the value of the solar
project.
The author argues with a standardized and streamlined process,
permitting fees and the cost of compliance for installers
would be lower, triggering an increase in local investments,
resulting in higher revenue from sales taxes, employment taxes
and increased consumer spending as a result of electricity
bill savings. The author also contends that property values
would increase; resulting in greater property tax revenues
upon property sale and lower energy costs for businesses,
which would result in extra capital that could be used to hire
more employees and reduce the costs of goods and services.
The author concludes that with residential permitting reform
the economic impact and job numbers will be boosted by $5
billion dollars and almost 4,000 jobs.
2)Support arguments : Sierra Club argues there are major
disparities in the fees charged by local governments, as
evidenced by multiple studies the Sierra Club has undertaken
since 2005. The Sierra Club believes there is a need for the
Legislature to address this inconsistency in permit fees in
order to achieve price parity with grid electricity.
3)Opposition . A joint coalition of the League of California
Cities (League), the Regional Council of Rural Counties
(RCRC), the California Chapter of the American Planning
Association (APA CA), the California State Association of
Counties (CSAC), the Urban Counties Caucus (UCC), the
California Municipal Utilities Association (CMUA), and the
California Building Officials (CALBO), oppose SB 1222. They
point out the existing Mitigation Fee Act prohibits a local
government from imposing a fee that exceeds the estimated
reasonable cost of providing the service for which the fee is
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charged. Existing law already requires a local government fee
that would exceed the reasonable cost to be submitted to the
voters.
The opponents do not believe it is the role of the state to
undermine local decisions by setting the level of the fee in
statute without regard to individual city or county costs.
They also note they understand the $400 cap is based on a 2011
Sierra Club study, which cites a reasonable range for permits
fees of $205 to $485. They question why the proposed cap
should be less than the high end of the Sierra Club's study
range. They object to the process for charging higher permit
fees because it is not well defined and does not provide the
direction local governments need to comply with the
requirement to streamline the submittal and approval of
permits for solar energy.
4)Constitutional requirements. Proposition 26 (2010) amended
Article XIIIC to broaden the definition of what constitutes a
tax to include many payments previously considered fees or
charges. Language in Proposition 26 lists seven exceptions to
what constitutes a local tax. These exceptions are widely
believed to include building permit fees, provided the fees do
not exceed the reasonable costs to local government of issuing
the permit and any follow up enforcement. Proposition 26 also
states it is the local government that bears the burden of
proving by a preponderance of the evidence that a levy, charge
or other exaction is not a tax, that the amount charged is not
more than necessary to cover the reasonable costs of
governmental activity, and that the manner in which those
costs are allocated bear a fair or reasonable relationship to
the burdens on, or benefits received from the governmental
activity.
5)Relevant legislation . AB 1801 (Campos) limits the total
amount of fees charged by a city or county for an applicant to
install a solar energy system to the actual costs borne by the
local agency in providing the service for which the fee is
charged, prohibits a city or county from calculating a fee for
a solar energy system by utilizing specified methods including
the valuation method, and requires a city or county to
identify the individual fees assessed on the invoice provided
to the applicant. AB 1801 was not heard in this committee
because it did not have a fiscal impact. AB 1801 is currently
pending on the Senate Floor.
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081