BILL ANALYSIS Ó
AB 504
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 504
(Gonzalez) - As Amended March 26, 2015
SUBJECT: Local planning.
SUMMARY: Authorizes a city to delegate to or contract with a
nonprofit public benefit corporation for certain administrative
or ministerial planning functions, and requires a city to retain
all nonadministrative or nonministerial planning functions.
Specifically, this bill:
1)Allows a city to delegate to, or authorize pursuant to a
contract with, a nonprofit public benefit corporation, as
defined, the performance of administrative or ministerial
planning functions and powers.
2)Requires a city to retain all nonadministrative or
nonministerial planning functions.
3)Requires a nonprofit public benefit corporation performing
administrative or ministerial planning functions and powers to
comply with the city's charter, contracting rules, municipal
code, ordinances, and any other applicable parts of a general
plan, community plan, specific plan, or other plan, and all
applicable local and state laws, including, but not limited
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to, the California Public Records Act, and the Ralph M. Brown
Act.
4)Requires any planning action taken by a nonprofit public
benefit corporation to be appealable to the legislative body
of the city.
5)Requires, on or before July 1, 2016, and annually thereafter
for as long as the planning functions and powers continue to
be delegated or an authorizing contract is in effect pursuant
to 1), above, a nonprofit public benefit corporation to report
to the legislative body of the city on its planning functions
it has undertaken in the previous calendar year that includes,
but is not limited to, a detailed description of each planning
function and an explanation of how it is consistent with the
city's charter, municipal code, ordinances, and any applicable
parts of a general plan, community plan, specific plan or
other plan, and all applicable local and state laws.
6)Requires each report to be reviewed and approved by the
legislative body of the city at a noticed public hearing.
7)Defines a nonprofit public benefit corporation as a
corporation organized under the Nonprofit Public Benefit
Corporation Law.
8)States that the Legislature hereby finds and declares that
maintaining uniformity in the planning responsibilities of
cities within this state, including charter cities, has a
direct impact on the well-being of all residents of this
state, and that the Legislature finds and declares that
authorizing a city to delegate to, or authorize pursuant to a
contract with, a nonprofit public benefit corporation the
performance of administrative or ministerial planning
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functions and powers within the State of California is an
issue of statewide concern and not a municipal affair.
Declares that this act shall apply to every city in this
state, including a charter city and charter city and county.
EXISTING LAW:
1)Allows a city to make and enforce within its limits all local,
police, sanitary, and other ordinances and regulations not in
conflict with general laws.
2)Establishes the Nonprofit Corporation Law in the Corporations
Code, and allows a nonprofit public benefit corporation to be
formed under the law for any public or charitable purposes, as
specified.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill allows cities to delegate to, or
authorize pursuant to a contract with, a nonprofit public
benefit corporation (nonprofit corporation), as defined, for
the performance of administrative or ministerial planning
functions and powers, and requires cities to retain all
nonadministrative or nonministerial planning functions.
Should a nonprofit corporation undertake administrative or
ministerial planning functions, the bill requires the
nonprofit to comply with the city's charter, contracting
rules, municipal code, ordinances, and any other parts of a
general plan, community plan, specific plan, or other plan,
and all applicable local and state laws, including, but not
limited to, the California Public Records Act and the Ralph M.
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Brown Act. The bill requires any planning action taken by a
nonprofit corporation to be appealable to the legislative body
of the city, and requires the nonprofit corporation to report
annually to the city on the planning functions it has
undertaken in the previous calendar year, and how those
actions are consistent with the city's charter, municipal
code, ordinances, and other specified plans and laws. This
bill states that this subject of delegation of powers is an
issue of statewide concern, and not a municipal affair, and
thereby, the bill's provisions would apply to all cities in
California, including charter cities.
This bill is an author-sponsored measure.
2)Nonprofit Public Benefit Corporations and Background on Civic
San Diego. Existing law allows a nonprofit public benefit
corporation to be formed under the Nonprofit Corporation Law
contained in the Corporations Code, for any "public" or
"charitable" purposes.
The City of San Diego formed Centre City Development
Corporation (CCDC) in 1975 and the Southeastern Economic
Development Corporation (SEDC) in 1980, to provide economic
development services. The City, over time, delegated some
land use approval functions to both CCDC and SEDC, and in
2012, CCDC was renamed to Civic San Diego, and SEDC was merged
into Civic San Diego.
Civic San Diego is a nonprofit public benefit corporation,
formed under the California nonprofit public benefit
corporation law, and is organized and operated exclusively for
charitable purposes. Civic San Diego has one single member
that has voting rights - the City of San Diego. Civic San
Diego is not a city department, and Civic San Diego employees
are not City employees. In recent years, Civic San Diego has
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been carrying out much of the winding down of the City of San
Diego's former redevelopment agency (RDA), under a consultant
agreement with the Successor Agency and Housing Successor
Agency, and has recently expressed an interest in expanding
its scope beyond its current role into the neighborhoods of
Encanto and City Heights.
On April 10, 2015, a petition was filed in the Superior Court
of California, County of San Diego by the San Diego County
Building & Construction Trades Council, AFL-CIO, and Murtaza
Baxamusa, Ph.D., a Director on the Civic San Diego Board of
Directors, against Civic San Diego and the City of San Diego
for declaratory relief concerning: (1) The scope and
oversight of Civic San Diego; (2) Conflicts of interest
inherent and internal to Civic San Diego; (3) The entitlement
to a community benefits plan; and, (4) The entitlement to a
formal appeals process for decisions made by Civic San Diego.
3)Author's Statement. According to the author, "Prior to the
dissolution of statewide redevelopment, California allowed
cities and counties the authority to establish redevelopment
agencies (RDAs) in order to eliminate blight through
development, reconstruction and rehabilitation of residential,
commercial, industrial and retail districts. These activities
were funded by local property taxes and subject to city or
county approval.
"After the dissolution of redevelopment, the organizations
that the City of San Diego used to administer its RDA program
merged to form a nonprofit organization that is now known as
Civic San Diego-which has land use authority in various San
Diego neighborhoods to perform planning, zoning and permitting
functions. Despite the dissolution of redevelopment, Civic San
Diego has continued to permit development but without the
benefit of local property tax financing.
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"In an effort to replace this lost funding, Civic San Diego
successfully applied for roughly $58 million in federal new
market tax credits, which are required to be used in
low-income communities. However, unlike redevelopment funds,
allocating these tax credits does not require approval by the
city council, nor does AB 504 seek to require city council
approval of the purpose.
"Moreover, Civic San Diego has pursued plans to expand their
permitting and planning authority to include the City of San
Diego neighborhoods of City Heights and Encanto. Using new
market tax credits and bank loans, Civic San Diego has begun
putting together a $100 million investment fund to finance
development projects that it could potentially have the
ability to permit and approve without oversight by the city
council, which voters elected to make decisions regarding the
planning, zoning and permitting of development in their
neighborhoods.
"California's decision to end redevelopment eliminated
requirements regarding community reinvestment work done by
groups like Civic San Diego. As it stands now, if residents do
not agree with what Civic San Diego has planned for their
community, they can only go to the board of directors of this
nonprofit organization-which is not accountable to the city
council that was elected to be stewards of the city's
development.
"Civic San Diego's potential authority to dramatically
engineer the future of neighborhoods with little supervision
or accountability presents a serious conflict of interest.
Furthermore, the City of San Diego's arrangement with Civic
San Diego is comparatively new, unique in the State of
California, and has not been sufficiently examined. Local
leaders and good government advocates have even openly
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questioned the legality of the arrangement.
"AB 504 will address this conflict of interest and clarify
state law for future local government arrangements by
requiring any zoning, planning and permitting activity by a
private individual or nonprofit organization made on behalf of
a local government to earn final approval by the local
government's governing board before implementation."
4)Delegation of Land Use Powers and Legislative Counsel Opinion.
The California Constitution allows a city to "make and enforce
within its limits, all local, police, sanitary, and other
ordinances and regulations not in conflict with general laws,
known as the police power of cities." It is from this
fundamental power that local governments derive their
authority to regulate land through planning, zoning, and
building ordinances, thereby protecting public health, safety
and welfare.
The California Supreme Court has stated:
Under the police power granted by the Constitution,
counties and cities have plenary
authority to govern, subject only to the limitation that they
exercise this power within
their territorial limits and subordinate to state law. Apart
from this limitation, the "police
power [of a county or city] under this provision?is as broad
as the police power
exercisable by the Legislature itself. Candid Enters., Inc.
v. Grossmont Union High
School Dist., 39 Cal. 3d 878, 885 (1985).
A city must act within all applicable statutory
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provisions so there will be no conflict with general laws. A
city's actions must also meet constitutional principles of due
process; they must be reasonable and nondiscriminatory, and
not arbitrary or capricious.
A city also has the authority to enter into contracts
that enable it to carry out its necessary functions. A city's
authority to enter into such contracts is not absolute, and it
is well settled that "a local government may not contract away
its right to exercise its police power in the future, and land
use regulations involve the exercise of police power."
Alameda County Land Use Assn. v. City of Hayward (1995) 38
Cal.App.4th 1716, 1724.
According to a Legislative Counsel opinion dated April 17,
2015, at the request of the author of this bill to examine
"whether a city may contract away its land use authority to a
nonprofit public benefit corporation and whether the
Legislature may authorize a city to contract away its land use
authority to a nonprofit public benefit corporation,"
Legislative Counsel drew the following conclusion (for
brevity, the citations are removed):
We have determined that a city may not, and the
Legislature may not authorize a city to,
contract away to a nonprofit entity its police powers, which
includes land use authority.
However, it is well established that a "governmental entity
does not contract away its
police power unless the contract amounts to the 'surrender' or
'abnegation' of a proper
governmental function." Whether a contract amounts to a
surrender or abnegation of a
local government's police power will depend upon the facts of
the contract. With respect to
contracts with private parties, "the fact that a third party,
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whether private or
governmental, performs some role in applications and
implementation of the established
legislative scheme does not render the legislation invalid as
an unlawful delegation."
"The general rule is that while a public body may not delegate
its power of control over
public affairs to a private group, it may delegate the
performance of administrative
functions to such groups if it retains ultimate control over
administration so that it may
safeguard the public interest." Ultimately, "[p]owers which
require the exercise of
judgment and discretion?.must necessarily remain with the
public agency and cannot be
delegated." Thus, the issue in each case of delegation is
whether ultimate control over
matters involving the exercise of judgment and discretion has
been retained by the public
entity. If the performance of the function being delegated
does not constitute the exercise of
police powers because the city retains ultimate control of
matters involving exercise
of judgment and discretion, then a city may, and the
Legislature may authorize a city to,
delegate such a function.
For the foregoing reasons, it is our opinion that a city
may not contract away its land use authority to a nonprofit
corporation, and the Legislature may not authorize a city to
contract away its land use authority to a nonprofit
corporation. However, it is also our opinion that a city may,
and the Legislature may authorize a city to, by contract,
delegate to a nonprofit corporation the performance of certain
functions so long as that delegation does not constitute a
surrender or abnegation of the city's police power.
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5)Policy Considerations. The Committee may wish to consider the
following:
a) Terminology. The terms used in the bill -
"administrative" and "ministerial" planning functions and
powers could be open to interpretation at the local level.
Given the case law on this issue of delegation of
legislative land use functions, the Committee may wish to
consider whether these terms are consistent with court
actions and plainly understood.
b) Necessary? Given the lawsuit filed on April 10, 2015,
the Committee may wish to consider whether legislation is
necessary, or whether this issue is best left to the Courts
to decide.
6)Arguments in Support. Supporters argue that clarifying Civic
San Diego's legal standing will remove uncertainty and help
reduce the possibility of expensive and disruptive lawsuits,
and that the current arrangement does not provide the public
transparency and accountability necessary to incorporate
public opinion and community needs.
7)Arguments in Opposition. Opponents argue that the bill could
slow development to a crawl, putting at risk millions in
development and thousands of good paying jobs.
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REGISTERED SUPPORT / OPPOSITION:
Support
Center on Policy Initiatives
City Heights Community Development Corporation
International Brotherhood of Electrical Workers, Local Union 569
Plumbers & Steamfitters Local Union #230
San Diego County Building and Construction Trades Council
State Building and Construction Trades Council
UNITE HERE Local 30
United Taxi Workers of San Diego
United Union of Roofers, Waterproofers & Allied Workers Local 45
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Opposition
Associated Builders and Contractors - San Diego Chapter
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958