BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 2188
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        ASSEMBLY THIRD READING
        AB 2188 (Muratsuchi)
        As Amended  May 8, 2014
        Majority vote 

         LOCAL GOVERNMENT    7-0         APPROPRIATIONS      14-0        
         
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        |Ayes:|Levine, Alejo, Bradford,  |Ayes:|Gatto, Bigelow,           |
        |     |Melendez, Mullin, Rendon, |     |Bocanegra, Bradford, Ian  |
        |     |Waldron                   |     |C. Calderon, Donnelly,    |
        |     |                          |     |Eggman, Gomez, Holden,    |
        |     |                          |     |Jones, Pan, Quirk,        |
        |     |                          |     |Ridley-Thomas, Weber      |
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        SUMMARY  :  Requires every city and county to create an expedited  
        permitting and inspection process for small, residential solar  
        energy systems, alters the definition of what is a reasonable  
        restriction on a solar energy system, and makes additional changes  
        to the Solar Rights Act of 1978.  Specifically,  this bill  :

        1)Requires, on or before September 30, 2015, every city, county, or  
          city and county to adopt an ordinance that creates an expedited,  
          streamlined permitting process for small residential rooftop solar  
          energy systems, consistent with the goals and intent of existing  
          law governing the implementation of statewide standards to achieve  
          timely and cost-effective installation of solar energy systems  
          (commonly referred to as the Solar Rights Act). 

        2)Requires each city, county, or city and county, in developing an  
          expedited permitting process, to adopt a checklist of all  
          requirements with which small rooftop solar energy systems shall  
          comply to be eligible for expedited review. 

        3)Requires an application that meets the requirements in the  
          checklist specified in 2) above, to be deemed approved upon  
          receipt of the completed application submittal. 

        4)Requires the checklist specified in 2) above, and required  
          permitting documentation to be published on a publically  
          accessible Internet Web site.

        5)Requires a city, county, or city and county to allow for  








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          electronic submittal of a permit application and associated  
          documentation, and to authorize the electronic signature on all  
          forms, applications, and other documentation in lieu of a wet  
          signature by an applicant. 

        6)Requires a city, county, or city and county, in developing the  
          ordinance specified in 1) above, to strive to conform with  
          standardized checklists based on existing statewide solar  
          permitting guidelines or best practices, including those developed  
          through the United States Department of Energy's SunShot  
          Initiative.

        7)Requires, for a small residential rooftop solar energy system  
          eligible for expedited review, only one inspection and requires  
          that one inspection to be scheduled within five business days of a  
          request, if the request is received during business hours.  If the  
          request is received after business hours, the inspection must be  
          scheduled within five business days of the beginning of the next  
          business day after receipt of the request.  If a city, county, or  
          city and county determines that it is unable to provide an  
          inspection within five business days of a request, the city,  
          county, or city and county may hold a public hearing and adopt an  
          ordinance or resolution providing for a different time period or  
          different means for scheduling inspections.  If the small  
          residential rooftop solar energy system fails inspection, a  
          subsequent inspection shall also conform to the requirements of  
          this provision.

        8)Prohibits a city, county, or city and county from conditioning  
          approval for any solar energy system permit on the approval of a  
          solar energy system by a nonprofit corporation or unincorporated  
          association created for the purpose of managing a common interest  
          development.

        9)Requires a finding, based on substantial evidence, before a city  
          or county may require application for a use permit for a solar  
          energy system, rather than the existing law requirement of a good  
          faith belief.

        10)Provides that existing law requiring a solar energy system to  
          meet applicable health and safety standards and requirements  
          imposed by state and local permitting authorities shall be  
          consistent with the Solar Rights Act.









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        11)Requires every solar energy system for heating water to be  
          certified by an accredited listing agency as defined by this bill,  
          rather than the Solar Rating Certification Corporation (SRCC) or  
          other nationally recognized certification agencies, and deletes  
          language requiring the certification to be for the entire solar  
          energy system and installation.

        12)Provides, for the purposes of reasonable restrictions on solar  
          energy systems in covenants, conditions or restrictions (CC&Rs)  
          contained in specified instruments affecting the sale or transfer  
          of real property, that for solar domestic water heating systems or  
          solar swimming pool heating systems that comply with state and  
          federal law, "significantly" means an amount exceeding 10% of the  
          cost of the system, but in no case more than $1,000, or decreasing  
          the efficiency of the solar energy system by an amount exceeding  
          10%, as originally specified and proposed.

        13)Provides, for the purposes of reasonable restrictions on solar  
          energy systems in CC&Rs contained in specified instruments  
          affecting the sale or transfer of real property, that for  
          photovoltaic systems that comply with state and federal law,  
          "significantly" means an amount not to exceed $1,000 over the  
          system cost as originally specified and proposed, or a decrease in  
          system efficiency of an amount exceeding 10% as originally  
          specified and proposed.

        14)Reduces, from 60 days to 30 days, the period during which an  
          application required by CC&Rs for the installation or use of a  
          solar energy system shall be deemed approved, unless that delay is  
          the result of a reasonable request for additional information.

        15)Defines "accredited listing agency" to mean a standards or  
          testing organization that evaluates solar energy systems according  
          to specified, independent criteria and allows its mark to be used  
          on qualifying systems as a stamp of approval, such as the American  
          National Standards Institute or the American Association for  
          Laboratory Accreditation.

        16)Defines "electronic submittal" to mean the utilization of email,  
          the Internet, or facsimile.

        17)Defines "small residential solar energy system" to mean all of  
          the following:









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           a)   A solar energy system that is no larger than 10 kilowatts  
             alternating current nameplate rating or 30 kilowatts thermal;

           b)   A solar energy system that conforms to all applicable state  
             fire, structural, electrical, and other building codes as  
             adopted or amended by the city, county, or city and county and  
             specified provisions of existing law, as specified;

           c)   A solar energy system that is installed on a single or  
             duplex family dwelling; and,

           d)   A solar panel or module array that does not exceed the  
             maximum legal building height.

        18)Makes findings and declarations regarding the state's distributed  
          generation and solar energy policies, and makes updating and  
          conforming changes.

         EXISTING LAW  :

        1)Provides that the implementation of consistent statewide standards  
          to achieve the timely and cost-effective installation of solar  
          energy systems is not a municipal affair, as that term is used in  
          the California Constitution, but is instead a matter of statewide  
          concern. 

        2)Provides that it is the intent of the Legislature that local  
          agencies not adopt ordinances that create unreasonable barriers to  
          the installation of solar energy systems, including, but not  
          limited to, design review for aesthetic purposes, and not  
          unreasonably restrict the ability 
        of homeowners and agricultural and business concerns to install  
          solar energy systems. 

        3)Provides that it is the policy of the state to promote and  
          encourage the use of solar energy systems and to limit obstacles  
          to their use, and that it is the intent of the Legislature that  
          local agencies comply not only with specified provisions of law,  
          but also the legislative intent to encourage the installation of  
          solar energy systems by removing obstacles to, and minimizing  
          costs of, permitting for such systems.

        4)Requires a city or county to administratively approve applications  
          to install solar energy systems through the issuance of a building  








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          permit or similar nondiscretionary permit.

        5)Requires review of an application to install a solar energy system  
          to be limited to the building official's review of whether it  
          meets all health and safety requirements of local, state, and  
          federal law.

        6)Requires the requirements of local law to be limited to those  
          standards and regulations necessary to ensure that the solar  
          energy system will not have a specific, adverse impact upon the  
          public health or safety.

        7)Allows a city or county to require an applicant for the  
          installation of a solar energy system to apply for a use permit if  
          the building official of the city or county has a good faith  
          belief that the solar energy system could have a specific, adverse  
          impact upon the public health and safety.

        8)Prohibits a city or county from denying an application for a use  
          permit to install a solar energy system unless it makes written  
          findings based upon substantial evidence in the record that the  
          proposed installation would have a specific, adverse impact upon  
          the public health or safety, and there is no feasible method to  
          satisfactorily mitigate or avoid the specific, adverse impact.   
          The findings must include the basis for the rejection of potential  
          feasible alternatives of preventing the adverse impact.

        9)Allows the decision of the building official regarding building or  
          use permits for solar energy systems to be appealed to the  
          planning commission of the city or county.

        10)Requires any conditions imposed on an application to install a  
          solar energy system to be designed to mitigate the specific,  
          adverse impact upon the public health and safety at the lowest  
          cost possible.

        11)Requires a solar energy system to meet applicable health and  
          safety standards and requirements imposed by state and local  
          permitting authorities.

        12)Requires a solar energy system for heating water to be certified  
          by the SRCC or other nationally recognized certification agency,  
          as specified, and requires the certification to be for the entire  
          solar energy system and installation.








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        13)Declares that any covenant, restriction, or condition contained  
          in any deed, contract, security instrument, or other instrument  
          affecting the transfer or sale of, or any interest in, real  
          property, and any provision of a governing document, as specified,  
          that effectively prohibits or restricts the installation or use of  
          a solar energy system is void and unenforceable.

        14)Provides that the provisions of 13) above, do not apply to  
          provisions that impose reasonable restrictions on solar energy  
          systems.  However, it is the policy of the state to promote and  
          encourage the use of solar energy systems and to remove obstacles  
          thereto.  Accordingly, reasonable restrictions on a solar energy  
          system are those restrictions that do not significantly increase  
          the cost of the system or significantly decrease its efficiency or  
          specified performance, or that allow for an alternative system of  
          comparable cost, efficiency, and energy conservation benefits.

        15)Provides that, for solar domestic water heating systems or solar  
          swimming pool heating systems that comply with state and federal  
          law, "significantly" means an amount exceeding 20% of the cost of  
          the system or decreasing the efficiency of the solar energy system  
          by an amount exceeding 20%, as originally specified and proposed.

        16)Provides that, for photovoltaic systems that comply with state  
          and federal law, "significantly" means an amount not to exceed  
          $2,000 over the system cost as originally specified and proposed,  
          or a decrease in system efficiency of an amount exceeding 20%, as  
          originally specified and proposed.

        17)Requires, whenever approval is required by CC&Rs for the  
          installation or use of a solar energy system, the application for  
          approval shall be processed and approved by the appropriate  
          approving entity in the same manner as an application for approval  
          of an architectural modification to the property, and shall not be  
          willfully avoided or delayed.  If an application is not denied in  
          writing within 60 days from the date of receipt of the  
          application, the application shall be deemed approved, unless that  
          delay is the result of a reasonable request for additional  
          information.
         
        FISCAL EFFECT  :  According to the Assembly Appropriations Committee:

        1)Negligible fiscal impact to the state.








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        2)Non-reimbursable costs to cities and counties to streamline their  
          permitting processes and perform inspections in a shortened time  
          frame, likely fully offset by fees cities and counties are  
          authorized to charge for these activities.
         
        COMMENTS  :

        1)Purpose of this bill.  This bill requires every city and county to  
          create an expedited permitting and inspection process for small,  
          residential solar energy systems, alters the definition of what is  
          a reasonable restriction on a solar energy system, and makes  
          additional changes to the Solar Rights Act.  The major provisions  
          of this bill:

           a)   Require ministerial approval of permit applications for  
             small, residential rooftop solar energy systems if they meet a  
             checklist of system requirements that is developed by each  
             local agency;

           b)   Require a five-day turnaround on inspections for these  
             systems, with a limit of only one inspection; 

           c)   Require a finding, based on substantial evidence, before a  
             city or county may require a use permit for a solar energy  
             system, rather than the existing law requirement of a good  
             faith belief; and,

           d)   Reduce the threshold under which restrictions on solar  
             energy systems are considered reasonable under CC&Rs, and  
             reduce, from 60 days to 30 days, the period during which an  
             application required by CC&Rs for the installation or use of a  
             solar energy system shall be deemed approved, unless that delay  
             is the result of a reasonable request for additional  
             information.

          This bill also contains a number of conforming and updating  
          changes.  The provisions of this bill would apply to all cities  
          and counties in California, including charter cities.  This bill  
          is author-sponsored.

        2)Author's statement.  According to the author, "Currently,  
          California's solar permitting structure is a patch work of various  
          regulations and requirements that vary from city to city and  








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          county to county.  This results in a lack of certainty and hinders  
          the ability of companies to scale and reduce costs.  Requirements  
          in one city can differ drastically from a neighboring city even  
          though the same solar system is being installed on a similar home.  
           

          "Several jurisdictions, such as the Cities of Los Angeles, San  
          Jose, Richmond, Oakland, and San Diego County have already  
          developed streamlined permitting requirements for small  
          residential projects that meet certain criteria.  These local  
          governments have demonstrated that we can reduce permitting  
          timeframes while maintaining important safety protections.  

          "By improving the efficiency of solar permitting statewide, AB  
          2188 will help lower the cost of solar installations and further  
          expand the accessibility of solar to more California homeowners  
          who want to control their electricity bills and generate their own  
          clean energy.   In addition, making solar more affordable will  
          help the state reach its renewable energy and greenhouse gas  
          reduction goals, and create more jobs while maintaining the safety  
          of solar systems."

        3)Background.  The California Legislature enacted the Solar Rights  
          Act in 1978 to protect a homeowner's right to install a solar  
          energy system by limiting a homeowner association's ability to  
          object to such installations through its CC&Rs.  The Solar Rights  
          Act allows CC&Rs to include provisions that impose reasonable  
          restrictions on solar energy systems.  Reasonable restrictions  
          include those that:  do not significantly increase the cost of the  
          solar system; do not significantly decrease the system's  
          efficiency or specified performance; and, allow for an alternative  
          system of comparable cost, efficiency and benefits.  "Significant"  
          is further defined as those restrictions that increase the  
          system's cost by more than 20% or decrease the system's efficiency  
          by more than 20%.

          AB 2473 (Wolk), Chapter 789, Statutes of 2004, updated the Solar  
          Rights Act by specifying standards for what constitutes  
          "significant" increases in solar energy system costs or decreases  
          in those systems' efficiency.  The bill also declared that solar  
          energy system installation is a matter of statewide concern, and  
          made a local government's grant of permission to install a solar  
          energy system ministerial rather than discretionary unless the  
          permitting agency has good cause to believe doing so would create  








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          an adverse impact on public health or safety, in which case an  
          application for a discretionary permit may be required.  The local  
          government cannot refuse to approve that application unless it  
          makes detailed written findings based on substantial evidence that  
          granting the permit will create specific adverse impacts on public  
          health or safety.  If conditions are placed on an approval to  
          mitigate public health or safety impacts, the required mitigation  
          must be designed to accomplish its goal at the lowest possible  
          cost.

        4)Solar Energy Initiative.  In 2005, the California Public Utilities  
          Commission through regulations established subsidy programs for  
          the installation of solar photovoltaic systems administered by the  
          California Energy Commission.  These programs, known collectively  
          as the California Solar Initiative (CSI), provide $3.2 billion in  
          subsidies through rebates for the installation of photovoltaic  
          projects.  In 2006, the Legislature passed SB 1 (Murray), Chapter  
          132, Statutes of 2006, the Governor's Million Solar Homes Program,  
          which established the goal of installing 3,000 megawatts of solar  
          generation capacity, establishing a self-sufficient solar  
          industry, and placing photovoltaic systems on 50% of new homes in  
          13 years.

        5)Arguments in support.  The California Solar Energy Industries  
          Association, in support states, "Permitting at the local level in  
          California is a patchwork quilt of rules, requirements and  
          timelines that differ within as well as between, the hundreds of  
          jurisdictions in the state. Although the solar industry has  
          greatly standardized the equipment of rooftop solar systems -  
          meaning a residential system installed in Sacramento is basically  
          identical to the system installed in Palm Springs - the rules and  
          procedures can vary wildly from one city to another.  As a result,  
          solar companies have to employ cadres of staff whose job is solely  
          to keep up with the various rules and regulations needed to  
          essentially permit the same solar system.

          "According to a recent Lawrence Berkeley Labs (LBL) study, the  
          time delays and procedural variations associated with the issuance  
          of building permits keeps the installed price of solar higher than  
          it should be.  These higher prices frustrate the ability of  
          installers to achieve economies of scale and prevents solar from  
          becoming more affordable.  Specifically, LBL reports that  
          streamlined permitting practices at the city level can reduce the  
          cost of residential solar systems by $1,350-$3,850 for the average  








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          5 kilowatt system.

          "Further adding to the cost of solar power, permitting and  
          inspection timelines can be long. While it can take just one day  
          to install a small residential solar system, it can take up to two  
          months in some situations to just get through the initial  
          permitting process, not to mention to get inspected.  Again, LBL's  
          research suggests that the best permitting practices can shorten  
          development times by 24 days.

          "The time delays associated with permitting create a unique cost  
          burden on the industry.  This is because unlike many other  
          permitted projects (HVAC [heating, ventilation, and air  
          conditioning], new roof, etc.), solar systems cannot be  
          interconnected to the grid until a permit is issued by the local  
          jurisdiction.  The solar installer won't even contact the local  
          utility company until the permit has been issued. Unlike a new  
          roof or an HVAC system that can be used and useful while waiting  
          for a permit, the solar system just sits there on the customer's  
          roof, unable to generate a single electron.

          "Last but not least, the barriers in some local jurisdictions can  
          also create a market barrier for consumers interested in going  
          solar.  There are some jurisdictions that make it so difficult to  
          get a permit that solar contractors simply refuse to do business  
          there."

        6)Arguments in opposition.  The League of California Cities, in  
          opposition writes, "While we remain supportive of expanding access  
          to renewable energy resources, including residential solar, we do  
          not believe that the rigid solar permit and inspection process as  
          mandated in AB 2188 is the right approach.  Requiring every local  
          jurisdiction to uniformly issue solar permits and inspect solar  
          installations within five days of the request would be very  
                                                     problematic and costly for many local governments still recovering  
          from the historic economic downturn.  A local jurisdiction's  
          ability to process a permit application and complete an inspection  
          in an expedited manner is largely driven by available funding and  
          trained staff.  Furthermore, many municipalities still impose  
          mandatory furloughs on Fridays, which limit their ability to  
          provide services under a specified timeline.

          "It should also be noted that AB 2188 could pose a threat to  
          public safety.  Amendments taken in the Assembly Local Government  








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          Committee on April 30, 2014, completely eliminate the review  
          process for solar permits and instead require local jurisdictions  
          to issue the permit in a ministerial manner upon receipt of a  
          completed application.  Eliminating the permit review process  
          would prohibit cities from involving their fire department or  
          utility department in the permit approval process, thus removing a  
          jurisdiction's ability to verify that no fire hazards are present  
          and the installation complies with all applicable fire codes.

          "Building permits and inspections are required by state law,  
          regulations, and local ordinances to help ensure public safety.   
          By enforcing these laws, local governments essentially act as a  
          consumer protection agency.  AB 2188 could jeopardize this proven  
          process by forcing cities and counties to potentially overlook  
          shortcomings in solar permit applications or installations in  
          order to comply with the bill's highly restrictive approval  
          timeline.  Additionally, AB 2188 would require cities to provide  
          those seeking solar permits a higher level of service presently  
          unavailable to all other permit seekers, creating an unequal  
          permit playing field."
         

        Analysis Prepared by  :    Angela Mapp / L. GOV. / (916) 319-3958 

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