BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1222 HEARING: 4/25/12
AUTHOR: Leno FISCAL: Yes
VERSION: 4/9/12 TAX LEVY: No
CONSULTANT: Phan
SOLAR ENERGY: PERMITS
Caps solar rooftop permit fees at $300, with exceptions,
and requires cities and counties to report on their solar
permitting standards.
Background and Existing Law
California has historically shown a strong support for
solar energy. In 1978, the Legislature enacted the Solar
Rights Act to make it easier for people to install solar
energy systems (AB 3250, Levine, 1978). To further promote
solar installations, AB 2437 (Wolk, 2004) declared, among
other things, that the implementation of statewide
standards for solar energy systems is not a municipal
affair but a matter of statewide concern.
A rooftop solar energy system is a system of panels
installed on a building's rooftop that converts sunlight
into electricity. Although exact procedures vary by
location, the approval procedure for a solar permit is
similar to the procedure for approving a building permit.
Typically, the solar installation company or customer
submits an electrical diagram and roof layout plan to the
city or county planning department. If the plan is
approved, the installer or customer pays a permit fee and
starts the installation project.
When a local agency charges fees for building permits,
those fees may not exceed the estimated reasonable cost of
providing the service for which the fee is charged. Fees
charged in excess of the estimated reasonable cost of
providing the services are taxes and must be approved by a
2/3 vote. Building permit fees generally pay for the cost
of the project plan examination and on-site inspection.
Currently, each local authority having jurisdiction over
SB 1222 - 4/9/12 -- Page 2
solar installations determines its fee structure for
rooftop permits. Fees vary widely by location, with the
City of Lawndale charging the highest fee at $1,471 for a
3kW system, while 31 cities have a $0 permit fee. The
average solar permit fee across all cities and counties is
$343.
Although the state has tried to encourage the installation
of solar energy systems, obstacles still exist. High
permit fees and cumbersome permit processes hinder solar
installations by increasing costs to consumers.
Proposed Law
Senate Bill 1222 prohibits a city, county, or city and
county, including any charter city, county, or city and
county, with a population of over 10,000 residents, from
charging permit fees for rooftop solar energy systems that
exceed the estimated reasonable cost of providing the
service for which the fee is charged, which shall not
exceed $300.
SB 1222 allows cities and counties to charge permit fees
for rooftop solar energy systems that exceed $300 if, as
part of a written report, they can provide a calculation
related to the administrative cost to issue the permit.
Cities and counties must submit a report to the State
Energy Resources Conservation and Development Commission,
no later than December 1, 2013, with all of the following
information:
1. Whether its jurisdiction has modernized its
building standards code and permitting procedures to
reduce costs for installing rooftop solar energy
systems based on state law and the California Building
Standards Commission's current guidelines.
2. Whether it has adopted fees that equal the
administrative cost related to the issuance of a
permit for rooftop solar energy system installation.
3. Whether it has an electronic permit submittal
process available to the public.
SB 1222 declares the Legislature's intent to prioritize
access to state and federal funds related to distributed
energy generation planning, permitting, training, or
SB 1222 - 4/9/12 -- Page 3
implementation for municipalities that have permit fees
that
1. Do not exceed $300, or
2. Can justify why their fees exceed $300.
SB 1222 also provides that if the Commission on State
Mandates determines that this act contains costs mandated
by the state, reimbursement to local agencies and school
districts for those costs shall be made pursuant to current
law.
State Revenue Impact
No estimate.
Comments
1.Purpose of the bill . According to a Sierra Club report,
there is no correlation between the cost of a solar
permit fee and the staff-hours a municipality must devote
to review plans. SB 1222 reduces a barrier to rooftop
solar energy installation by capping solar permit fees at
$300 and allowing a higher fee only if the municipality
can justify the higher administrative cost. This cap
will reduce the overall installation cost of solar energy
and increase installations in some areas. A more
standardized permit fee will also help solar companies
calculate their customers' total installation costs.
According to the author, more than 1 million additional
net energy metered residential rooftops could be deployed
in the state in the coming years, adding over $28 billion
to the state economy and support nearly 22,000 jobs.
More solar energy consumption will reduce consumption of
electricity from traditional, environmentally harmful
sources and reduce consumers' electricity bill. By
helping to increase solar installation, SB 1222 will help
California realize its ambitious solar energy goals.
2.Necessary ? The California Constitution and statutes
clearly prohibit local governments from charging a fee
that exceeds the reasonable cost of providing the service
for which the fee is charged. If local governments' fees
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for solar permits already comply with state law, then SB
1222's provisions merely clarify state law for rooftop
solar energy installations and will have little effect on
the cost of installing a solar energy system. If local
governments aren't limiting their fees for solar permits
to comply with state law, why would they comply with SB
1222? The practice of overcharging for permits may be a
regulatory problem, not a legislative problem. The
Committee may wish to consider amendments that will help
fee payers dispute fees they consider too high.
3.Residential versus commercial installations . SB 1222
does not differentiate between residential and commercial
installations. Typically, residential installations are
easier and quicker while commercial installations, being
bigger and more complex, are more labor intensive to
approve. According to Solar City, $300 is a reasonable
permit fee for a 3 kW residential system. For commercial
projects, the company has paid a fee of $17,000 for a
3,300 kW project, $13,000 for a 1,000 kW project, and
$284 for a 166 kW project. A flat rate of $300 for both
residential and commercial installation ignores the fact
that permitting approval for residential and commercial
solar installations may not require the same labor. The
Committee may wish to amend SB 1222 to require different
caps for different systems. Colorado, for example,
recently passed legislation that capped fees for a
residential solar installation at $500 and for a
commercial system at $1000. Alternatively, the bill could
impose a flat rate for residential systems (under 5 kW)
and a per kilowatt rate for commercial systems.
4.Not a real cap . SB 1222 allows cities and counties to
charge a fee that exceeds $300 if they prove the higher
fee covers administrative costs. Without defining what
"administrative costs" include, cities and counties could
claim many external costs to justify charging a fee
higher than $300. Putting a cap on solar permit fee may
also cause cities or counties charging below $300 to
raise their permit fee to meet this new norm, causing
consumers in areas that charge a low fee to pay a higher
fee than they would have had to. The Committee may wish
to amend this bill to include a clearer definition of
"administrative costs."
5.Short notice . SB 1222 requires cities and counties to
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submit a report to the State Energy Resources
Conservation and Development Commission by December 1,
2013. If this bill goes into effect on January 1, 2013,
cities and counties will have less than a year to update
their building codes and submit the report. This may be
too short a period of time for cities and counties,
leaving them vulnerable to litigation for either not
updating their codes or not meeting the reporting
deadline. The Committee may wish to consider amending SB
1222 to extend the reporting deadline.
6.Reporting . The reports that SB 1222 requires serves only
to let municipalities justify their administrative cost.
Rather than imposing this new reporting requirement, the
Committee may wish to amend SB 1222 to, instead, require
cities or counties that wish to charge more than $300 to
justify their fee by issuing a written finding and adopt
a resolution or ordinance. This would place the burden of
proof for administrative costs on cities and counties,
and allow the public to have input on the amount of the
fee.
7.State mandate . This bill requires that a city or county
submit a report to the State Energy Resources
Conservation and Development Commission about updating
its building code and permitting process, which is a
state mandate, and allows cities and counties to be
reimbursed for state mandated costs pursuant to current
law. The Commission of State Mandates will likely be
inundated with claims for reimbursement stemming from
this bill. The Committee may wish to amend this bill to
allow cities and counties to include the cost of this
report in their list of administrative costs in order to
reduce reimbursement costs from the State General Fund.
8.Special treatment . The solar industry has already
received numerous subsidies and special programs from the
state government. SB 1222 is another effort to help the
solar industry. Some critics argue the benefits have not
outweighed the costs to the state, especially since solar
energy has not reached price parity with grid
electricity. The Committee may wish to consider whether
solar rooftop installation permits merit a different
treatment than other building permits such as those for
wind, solar thermal, or solar ground installations.
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9.Technical amendments . To clarify SB 1222's provisions,
the Committee may wish to consider making the following
technical amendments to the bill:
Page 3, lines 13-14, strike out "A city, county, or
city and county, including any charter city, county,
or city and county ". Charter counties' fees are
governed by the general laws of California, so it is
unnecessary to distinguish between charter and general
law counties.
Page 3, line 28, strikeout " modernized " and insert
"updated".
Page 3, line 28, strikeout " their " and insert
"its".
Page 4, line 1, strikeout "priority access to state
and federal funds for the purposes of," because the
state has no control over federal funds.
This bill should clarify whether the qualification
from subdivision (a) of city, county, or city and
county above 10,000 residents also applies to
subdivisions (b), (c), and (d).
Support and Opposition (4/19/12)
Support : School Energy Coalition; Sunrun; Mainstream
energy Corp.; REC Solar, Inc.; AEE Solar, Inc.; Distributed
Energy Consumer Advocates; Sungevity; Suntech.
Opposition : League of California Cities; California State
Association of Counties; Regional Council of Rural
Counties; Urban Counties Caucus; American Planning
Association, California Chapter.