BILL ANALYSIS Ó
AB 504
Page 1
ASSEMBLY THIRD READING
AB
504 (Gonzalez)
As Amended March 26, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Local |6-3 |Gonzalez, Alejo, |Maienschein, Linder, |
|Government | |Chiu, Cooley, |Waldron |
| | |Gordon, Holden | |
| | | | |
| | | | |
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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.
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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 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.
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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 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
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or nonministerial planning functions. Should a nonprofit
corporation undertake administrative or ministerial planning
functions, this 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. Brown Act. This 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 author-sponsored.
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 of San Diego, 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.
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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 of San
Diego employees. In recent years, Civic San Diego has 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
and 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
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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.
"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
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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 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).
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"A city must act within all applicable statutory 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
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depend upon the facts of the contract. With respect to
contracts with private parties, "the fact that a third
party, 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.
5)Policy Considerations. The Legislature may wish to consider the
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following:
a) Terminology. The terms used in this 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 Legislature 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
Legislature 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 this bill could
slow development to a crawl, putting at risk millions in
development and thousands of good paying jobs.
Analysis Prepared by:
Debbie Michel / L. GOV. / (916) 319-3958 FN:
0000327
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