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Home My WebLink AboutAB2604 Developer FeesREQUEST: DATE: CITY OF PALM DESERT COMMUNITY SERVICES DEPARTMENT STAFF REPORT CONSIDERATION OF LEGISLATIVE REVIEW COMMITTEE ACTION ON AB 2604 (TORRICO) AT ITS MEETING OF MARCH 25, 2008 April 10, 2008 CONTENTS: AB 2604 Language RECOMMENDATION: By Minute Motion, concur with the action taken by the Legislative Review Committee at its meeting of March 25, 2008, and direct staff to prepare a letter of opposition for the Mayor's signature with regard to AB 2604 (Torrico) relative to developer fees. BACKGROUND: Existing law allows local agencies that impose fees on residential developments for the construction of public improvements of facilities to assess those fees when building permits are issued. If passed, AB 2604 would create an exception to the collection of fees by prohibiting local agencies from requiring the payment of those fees or charges for residential units until the date the Certificate of Occupancy is issued or the close of escrow. The language of this bill would prohibit local agencies from assessing fees for the building of needed infrastructure at the time of the issuance of a building permit, which has the potential of returning the financial onus for these improvements to the City. Therefore, the Legislative Review Committee recommends that the City Council oppose AB 2604 and direct staff to prepare a letter stating that position to appropriate LegiRIakors for the Mayor's signature. /'�C c' PATRICIA SCULLY, CFEE SENIOR MANAGEMENT ANALYST —' SHEILA R. GILIIGA ACM/COMMUNITY SERVIdE PAUL GIBSON DIRECTOR OF FINANCE/ CITY TREASURER c w a -- 4) H VI WH U,U# A '-- CARLOS L. •' TEGA z 61- 3-- i CITY MAN A 4 ER Hn — U �- H H �a C.) QC ,4,z al O 43AC.w0m 7••z vo 0››zU- E+HH C >414 HtnvlWE-4H-H-H 0' HpPi E414Wtotoc4•rt U '4 4 > 0 Clerk's Office AB 2604 Assembly Bill - INTRODUCED Page 1 of 3 BILL NUMBER: AB 2604 IN:'RODUCED BILL 'TEXT INTRODUCED BY Assembly Member Torrico 1 'EBRUARY 22, 2008 An act to amend Section 66007 of the Government Code, relating to land use. LEGISLATIVE COUNSEL'S DIGEST AB 2604, as introduced, Torrico. Developer fees. Existing law prohibits a local agency that imposes any fees or charges on a residential development for the construction of public improvements or facilities from requiring the payment of those fees or charges until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first, with specified exceptions. If the fee or charge is not fully paid prior to issuance of a building permit, existing law authorizes the local agency issuing the building permit to require the property owner, as a condition of issuance of the building permit, to execute a contract to pay the fee or charge within the specified time. This bill would create, until January 1, 2014, another exception by prohibiting a local agency that imposes any fee or charge on a residential development for the construction of public facilities, as defined, from requiring the payment of those fees or charges for residentiaL units until the date the certificate of occupancy is issued, or Lhe close of escrow in jurisdictions that already have adopted a policy to defer collection until that time, whichever occurs later. Vote: majority. Appropriation: no. Fiscal committee: no. State -mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 66007 of the Government. Code is amended to read: 66007. (a) Except as otherwise provided in subdivisions (b) and (g) , any iota: agency that imposes any fees or charges or. a residential development for the construction of public improvements or facilities shall not require the payment of those fees or charges, notwithstanding any other provision of law, until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first. However, utility service fees may be collected at the time an application for utility service is received. If the residential development contains more than one dwelling, the local agency may determine whether the fees or charges shall be paid on a pro rata basis for each dwelling when it receives its final inspection or certificate of occupancy, whichever occurs first; on a pro rata basis when a certain percentage of the dwellings have received their final inspection or certificate of occupancy, whichever occurs first; or on a lump -sum basis when the first dwelling in the development receives its final inspection or certificate of occupancy, whichever http://in fo.sen.ca.gov/pub/07-08/bi 11/asm/ab_2601-2650/ab_2604_bi11_20080222_introduc... 3/28/2008 AB 2604 Assembly Bill - INTRODUCED Page 2 of 3 occurs first. (b) (1) Notwithstanding subdivision (a), the local agency may require the payment of those fees or charges at an earlier time if determines that the fees or charges will be improvements or facilities for which an account and funds appropriated and for which the local proposed construction schedule or plan prior to issuance of the certificate of occupancy or (B) are to reimburse the local agency for (A) the local agency collected for public has been established agency has adopted a final inspection or Lhe fees or charges expenditures previously made. "Appropriated," as used in this subdivision, means authorization by the governing body of the local is collected to make expenditures and incur purposes. does not apply to units reserved for agency for which the fee obligations for specific (2) (A) Paragraph (1) occupancy by lower income households included in a residential development proposed by a nonprofit housing developer in which at least 49 percent of the total units are reserved for occupancy by lower income households, as defined in Section 50079.3 of the Health and Safety Code, at an affordable rent, as defined in Section 50053 of the Health and Safety Code. in addition to the contract that may be required under subdivision (c), a city, county, or city and county may require the posting of a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this paragraph. Fees and cnarges exempted from paragraph (1) under this paragraph shall become immediately due and payable when the residential development no longer meets the requirements of this paragraph. (B) The exception provided in subparagraph (A) does not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 1762C) of Part 10.5 of Division 1 of Title 1 of the Education Code. (c) (1) If any fee or charge specified in subdivision (a) is not fully paid prior to issuance of a building permit for construction of any portion of the residential development encumbered thereby, the local agency issuing the building permit may require the property owner, or lessee if the lessee's interest appears of record, as a condition of issuance of the building permit, to execute a contract to pay the fee or charge, or applicable portion thereof, within the time specified in subdivision (a). If the fee or charge is prorated pursuant to subdivision (a), the obligation under the contract shall be similarly prorated. (2) The obligation to pay the fee or charge shall inure to the benefit of, and be enforceable by, the local agency that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fee or charge, which shall be enforceable against successors in interest to the property owner or lessee at the rime of issuance of the building permit. The contract shall be recorded in the grantor -grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local agency shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated pursuant to subdivision. (a). (3) The contract may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the http://info. sen.ca. gov/pub/07-08/bill/asm/ab_2601-2650/ab_2604_bi l l_20080222_introduc... 3/28/2008 AB 2604 Assembly Bill - INTRODUCED Page 3 of 3 sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local agency imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller. (d) This section applies only to fees collected by a .local agency to fund the construction of public improvements or facilities. It does not apply to fees collected to cover the cost of code enforcement or inspection services, or to other fees collected to pay for the cost of enforcement of local ordinances or state law. (e) "Final inspection" or "certificate of occupancy," as used .in this section, have the same meaning as described in. Sections 305 and 307 of the Uniform Building Code, International Conference of Building Officials, 1985 edition. (f) Methods of complying with the requirement in subdivision (b) that a proposed construction schedule or plan be adopted, include, but are not limited to, (1) the adoption of the capital improvement plan described in Section 66002, or (2) the submittal of a five-year plan for construction ar'.d rehabilitation of school facilities pursuant to subdivision (c) of Section 17017.5 of the Education Code. (g) Notwithstanding any other provision of law, until January 1, 2014, any local agency that imposes any fees or charges on a residential development for Lhe construction of public facilities, as defined in Section 66000, shall not require the payment of those foes or charges for residential units until Lhe date the certificate of occupancy is issued, or the close of escrow in jurisdictions that already have adopted a policy to defer collection until that time, whichever occurs .later. http://info.sen.ca.gov/pub/07-08/bill/asm/ab_2601-2650/ab_2604_bill_20080222_introduc... 3/28/2008