BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert Hertzberg, Chair
2015 - 2016 Regular
------------------------------------------------------------------
|Bill No: |AB 1191 |Hearing |7/1/15 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |Nazarian |Tax Levy: |No |
|----------+---------------------------------+-----------+---------|
|Version: |6/24/15 |Fiscal: |No |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Weinberger |
|: | |
-----------------------------------------------------------------
QUIMBY ACT FEES
Allows the City of Los Angeles to spend proceeds from accrued
interest on fee revenues collected pursuant to the Quimby Act
for specified purposes.
Background and Existing Law
Because land development in California is a privilege and not a
property right, counties and cities can use their general police
powers to impose conditions when approving development projects.
The Mitigation Fee Act (AB 1600, Cortese, 1987) sets out four
criteria that local officials must meet when charging developer
impact fees:
Identify the fee's purpose.
Identify the fee's use.
Determine a reasonable relationship between the use of
the fee and the type of development project.
Determine a reasonable relationship between the need for
public facilities and the type of development project.
The Subdivision Map Act controls how counties and cities review
and approve property owners' requests to convert larger parcels
into smaller lots. Local officials commonly attach scores of
AB 1191 (Nazarian) 6/24/15 Page 2
of ?
conditions when they approve tentative subdivision maps.
Mainstream legal thinking holds that counties and cities have
three sources of authority to impose conditions on proposed
subdivisions:
Conditions to make the subdivision consistent with the
local general plan.
Conditions to mitigate a subdivision's environmental
impacts.
Conditions that the Map Act specifically authorizes.
The Quimby Act is the part of the Subdivision Map Act that
allows counties and cities to require subdividers to dedicate
land, or pay in-lieu fees for parks as a condition of approving
a new subdivision. To impose Quimby Act fees, the county or
city must have a general plan or a specific plan that contains
policies and standards for park facilities. Quimby Act fees
must "bear a reasonable relationship" to the proposed
subdivision. Counties and cities can use the Quimby Act fees
only for developing new parks or rehabilitating parks that serve
that subdivision. However, as an exception, the Quimby Act
allows fees to be used for the purpose of developing new or
rehabilitating existing park, or recreational facilities in a
neighborhood other than the neighborhood in which the
subdivision for which fees were paid if specified requirements
are met (AB 1359, Hernández, Chapter 412, Statutes of 2013).
Fees collected by local governments pursuant to the Quimby Act
must be committed within five years after the payment of the
fees, or the issuance of building permits on one-half of the
lots created by the subdivision, whichever occurs later. If the
fees are not committed, they, without any deductions, must be
distributed and paid to the then record owners of the
subdivision in the same proportion that the size of their lot
bears to the total area of all lots within the subdivision.
For many years, the City of Los Angeles accounted for interest
income generated by Quimby Act fees in a manner that now
prevents the City from connecting specific amounts of interest
income with fees paid for any particular subdivision at any
particular time. Because the language in the Quimby Act does
not specifically address the use of interest income generated
from fees, city officials worry that their authority to spend
AB 1191 (Nazarian) 6/24/15 Page 3
of ?
that interest income for park projects is, at best, ambiguous.
They want the Legislature to clarify the statutory authority to
spend interest income from Quimby Act fees and allow the City of
Los Angeles to spend interest proceeds accrued until January 1,
2016 for specified park projects.
Proposed Law
Assembly Bill 1191 allows a city with a population of at least 3
million to commit interest accrued on or before January 1, 2016,
on fees charged pursuant to the Quimby Act, without regard to
the date the fee was collected or the date of issuance of
building permits on one-half of the lots created by the
subdivision, outside the subdivision for which the fees were
collected if the city:
Holds a public hearing before committing the interest,
and
Uses the interest to develop new, or rehabilitate
existing, neighborhood or community parks or recreational
facilities within the city.
AB 1191 directs that the authority for a city to commit interest
on Quimby Act fees subject to the conditions described above
will remain in effect only until January 1, 2021, on which date
that authority will be automatically repealed.
AB 1191 specifies that, with regard to the expenditure of Quimby
Act fees, the term "fee" includes any interest income generated
from a fee charged and collected pursuant to the Quimby Act.
The bill states that its provisions do not constitute a change
in, but are declaratory of, existing law and that any locally
adopted ordinance or regulation that is consistent with the
bill's provisions is valid.
State Revenue Impact
No estimate.
Comments
AB 1191 (Nazarian) 6/24/15 Page 4
of ?
1. Purpose of the bill . According to the City of Los Angeles,
ambiguities in state law prevent the city from committing more
than $17 million in interest proceeds from Quimby Act fees for
park projects. These interest proceeds which are currently in
legal "limbo" were deposited in a way that prevents city
officials from being able to account for which specific
subdivisions generated the interest or how long specific amounts
of interest have been held by the city. As a result, there is
no clear authority in current law under which the city could
either return funds to property owners in specific subdivisions,
or spend the funds on park projects that directly benefit
specific subdivisions associated with the interest proceeds. AB
1191 seeks to prevent interest on Quimby Act fees from being
handled separately from the principal amount of the fees by
clarifying, that the Quimby Act's restriction on the use of fee
revenues also apply to the interest earned on Quimby Act fees.
AB 1191 also grants the City of Los Angeles the authority to
spend the interest proceeds that it accrues through the end of
2015 in a manner that is broadly consistent with the purposes of
the Quimby Act, but which is not specifically bound by the Act's
time limit on fee expenditures or on the Act's requirements
relative to specific subdivisions. In doing so, AB 1191 will
benefit the public by ensuring that the City of Los Angeles can
use more than $17 million in Quimby Act interest proceeds for
their intended park development and rehabilitation purposes.
2. Moral hazard ? AB 1191 grants Los Angles officials
additional flexibility in how they spend Quimby Act fee interest
that has accrued over a number of years. This could be seen as
rewarding the city for handling interest income in a manner that
didn't require interest proceeds to remain strictly attached to
the principal amount of fee income from which the interest was
generated. As a result, AB 1191 may have the unintended
consequence of suggesting that strict accounting for Quimby Act
fees is unnecessary, because the Legislature will grant local
governments a reprieve in response to similar problems with
intermingled interest proceeds in the future. To foreclose this
possibility, the Committee may wish to consider amending AB 1191
to clarify that interest proceeds that accrue after January 1,
2016 which cannot be attributed to a specific subdivision must
be allocated among all persons who paid a Quimby Act fee within
a city or county in the preceding fiscal year.
AB 1191 (Nazarian) 6/24/15 Page 5
of ?
3. Only L.A ? AB 1191 is narrowly drafted to apply only to
cities with more than 3 million residents, a category which
encompasses only the City of Los Angeles. It is unknown whether
other cities have taken similar approaches to accounting for
their Quimby Act fees and whether they also have interest
proceeds that can neither be spent nor refunded under current
law. The authority to spend Quimby Act fees that AB 1191 grants
to L.A. may need to be extended to other jurisdictions that
currently face a dilemma similar to the one that confronts L.A.
4. Let's be clear . AB 1191 states that the bill's provisions
are declaratory of existing law. However, this statement is
meant to apply only to the clarification that the Quimby Act's
requirements apply equally to the principal and interest on fees
collected by local governments. The bill's short-term authority
for the City of Los Angeles to spend interest proceeds in a
specified manner is clearly not declaratory of existing law.
The Committee may wish to consider amending AB 1191 to more
clearly identify which of AB 1191's provisions are meant to be
declaratory of existing law.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 74-0
Support and
Opposition (6/25/15)
Support : City of Los Angeles.
Opposition : Unknown.
-- END --