BILL ANALYSIS Ó
AB 504
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
504 (Gonzalez)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | | (May 14, |SENATE: |26-14 | (September 9, |
| |53-27 |2015) | | |2015) |
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Original Committee Reference: L. GOV.
SUMMARY: Authorizes a city to delegate to or contract with a
nonprofit public benefit corporation for the performance of
ministerial planning functions, and requires a city to retain
all nonministerial planning functions.
The Senate amendments:
1)Limit the scope of this bill to ministerial planning
functions.
2)Specify that the planning function approved by a nonprofit
benefit corporation that is appealable to the legislative body
of the city shall meet both of the following:
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a) The planning function results in approval of a project
that is not exempt from the California Environmental
Quality Act (CEQA); and,
b) The planning function pertains to a project that
includes any of the following:
i) No less than 50 residential units;
ii) No less than 50 hotel rooms; or,
iii) No less than 25,000 square feet of commercial space.
3)Clarify that the appeals process in this bill is in addition
to any appeals authorized pursuant to CEQA law.
4)Define the following terms:
a) "Ministerial" to mean a plain and mandatory duty
involving the execution of a set task that is to be
performed without the exercise of discretion.
b) "Planning function" to include, but not be limited to,
enactment of a zoning regulation, amendments of a general
plan, specific plan, and all other planning documents,
issuance of a tentative map, development permit, planned
development permit, site development permit, coastal
development permit, and a variance or any other land use
permit, determination of consistency with a general plan,
specific plan, and all other applicable planning documents.
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5)State that nothing in this bill's provisions shall affect the
requirements of CEQA.
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 ministerial planning functions, and
requires cities to retain all nonministerial planning
functions. Should a nonprofit corporation undertake
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 certain types of planning functions 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, this bill's provisions would apply to all cities in
California, including charter cities, and also defines the
terms "ministerial" and "planning function."
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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.
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: a) The scope and oversight
of Civic San Diego; b) Conflicts of interest inherent and
internal to Civic San Diego; c) The entitlement to a community
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benefits plan; and, d) 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.
"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
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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
questioned the legality of the arrangement."
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
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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 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
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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,
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)Arguments in Support. Supporters argue that clarifying Civic
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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.
6)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:
0002265