The Planning and Zoning Law, among other things, establishes in each city or county a planning agency and requires each city or county to, by ordinance, assign the functions of the planning agency to a planning department, one or more planning commissions, administrative bodies or hearing officers, the legislative body itself, or any combination thereof, as it deems appropriate and necessary. The law requires, if a city or county does not make an assignment, as specified, the legislative body of the city or county to carry out all the functions of the planning agency. The law specifies the functions of a planning agency and the minimum membership of a planning commission to be at least 5 members who act in the public interest.

This bill would, notwithstanding any other law, authorize a city to delegate to, or authorize pursuant to a contract with, a nonprofit public benefit corporation the performance of ministerial planning functions, as defined, and require that the city retain all nonministerial planning functions. The bill would require a nonprofit public benefit corporation performing ministerial planning functions to comply with city laws and plans and state laws, including, but not limited to, laws relating to the requirements for open meetings and the disclosure of public records, as specified. The bill would require any planning function approved by a nonprofit public benefit corporation to be able to be appealed to the legislative body of the city, as specified. The bill would require a nonprofit public benefit corporation, beginning on or before July 1, 2016, and annually thereafter, to report to the legislative body of the city on the planning functions it has undertaken in the previous calendar year, and require the legislative body of the city to review and approve each report at a noticed public hearing. The bill would also state that this is an issue of statewide concern.

The Planning and Zoning Law, among other things, establishes in each city or county a planning agency and requires each city or county to, by ordinance, assign the functions of the planning agency to a planning department, one or more planning commissions, administrative bodies or hearing officers, the legislative body itself, or any combination thereof, as it deems appropriate and necessary. The law requires, if a city or county does not make an assignment, as specified, the legislative body of the city or county to carry out all the functions of the planning agency. The law specifies the functions of a planning agency and the minimum membership of a planning commission to be at least 5 members who act in the public interest.

This bill would, notwithstanding any other law, authorize a city to delegate to, or authorize pursuant to a contract with, a nonprofit public benefit corporation the performance of ministerial planning functions, as defined, and require that the city retain all nonministerial planning functions. The bill would require a nonprofit public benefit corporation performing ministerial planning functions to comply with city laws and plans and state laws, including, but not limited to, laws relating to the requirements for open meetings and the disclosure of public records, as specified. The bill would require a planning function taken any planning function approved by a nonprofit public benefit corporation to be able to be appealed to the legislative body of the city, as specified. The bill would require a nonprofit public benefit corporation, beginning on or before July 1, 2016, and annually thereafter, to report to the legislative body of the city on the planning functions it has undertaken in the previous calendar year, and require the legislative body of the city to review and approve each report at a noticed public hearing. The bill would also state that this is an issue of statewide concern.

The Planning and Zoning Law, among other things, establishes in each city or county a planning agency and requires each city or county to, by ordinance, assign the functions of the planning agency to a planning department, one or more planning commissions, administrative bodies or hearing officers, the legislative body itself, or any combination thereof, as it deems appropriate and necessary. The law requires, if a city or county does not make an assignment, as specified, the legislative body of the city or county to carry out all the functions of the planning agency. The law specifies the functions of a planning agency and the minimum membership of a planning commission to be at least 5 members who act in the public interest.

This bill would, notwithstanding any other law, authorize a city to delegate to, or authorize pursuant to a contract with, a nonprofit public benefit corporation the performance of ministerial planning functions, as defined, and require that the city retain all nonministerial planning functions. The bill would require a nonprofit public benefit corporation performing ministerial planning functions to comply with city laws and plans and state laws, including, but not limited to, laws relating to the requirements for open meetings and the disclosure of public records, as specified. The bill would require any a planning action function taken by a nonprofit public benefit corporation to be able to be appealed to the legislative body of the city. city, as specified. The bill would require a nonprofit public benefit corporation, beginning on or before July 1, 2016, and annually thereafter, to report to the legislative body of the city on the planning functions it has undertaken in the previous calendar year, and require the legislative body of the city to review and approve each report at a noticed public hearing. The bill would also state that this is an issue of statewide concern.

The Planning and Zoning Law, among other things, establishes in each city or county a planning agency and requires each city or county to, by ordinance, assign the functions of the planning agency to a planning department, one or more planning commissions, administrative bodies or hearing officers, the legislative body itself, or any combination thereof, as it deems appropriate and necessary. The law requires, if a city or county does not make an assignment, as specified, the legislative body of the city or county to carry out all the functions of the planning agency. The law specifies the functions of a planning agency and the minimum membership of a planning commission to be at least 5 members who act in the public interest.

This bill would, notwithstanding any other law, authorize 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, as defined, and require that the city retain all nonadministrative or nonministerial planning functions. The bill would require a nonprofit public benefit corporation performing administrative or ministerial planning functions and powers to comply with city laws and plans and state laws, including, but not limited to, laws relating to the requirements for open meetings and the disclosure of public records, as specified. The bill would require any planning action taken by a nonprofit public benefit corporation to be able to be appealed to the legislative body of the city. The bill would require a nonprofit public benefit corporation, beginning on or before July 1, 2016, and annually thereafter, to report to the legislative body of the city on the planning functions it has undertaken in the previous calendar year, and require the legislative body of the city to review and approve each report at a noticed public hearing. The bill would also state that this is an issue of statewide concern.

The Planning and Zoning Law, among other things, requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city and of any land outside its boundaries that relates to its planning, and provides for the adoption and administration of zoning laws, ordinances, rules, and regulations by counties and cities. establishes in each city or county a planning agency and requires each city or county to, by ordinance, assign the functions of the planning agency to a planning department, one or more planning commissions, administrative bodies or hearing officers, the legislative body itself, or any combination thereof, as it deems appropriate and necessary. The law requires, if a city or county does not make an assignment, as specified, the legislative body of the city or county to carry out all the functions of the planning agency. The law specifies the functions of a planning agency and the minimum membership of a planning commission to be at least 5 members who act in the public interest.

This bill would make a nonsubstantive change to these provisions. would, notwithstanding any other law, authorize 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 and require that the city retain all nonadministrative or nonministerial planning functions. The bill would require a nonprofit public benefit corporation performing administrative or ministerial planning functions and powers to comply with city laws and plans and state laws, including, but not limited to, laws relating to the requirements for open meetings and the disclosure of public records, as specified. The bill would require any planning action taken by a nonprofit public benefit corporation to be able to be appealed to the legislative body of the city. The bill would require a nonprofit public benefit corporation, beginning on or before July 1, 2016, and annually thereafter, to report to the legislative body of the city on the planning functions it has undertaken in the previous calendar year, and require the legislative body of the city to review and approve each report at a noticed public hearing. The bill would also state that this is an issue of statewide concern.

The Planning and Zoning Law, among other things, requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city and of any land outside its boundaries that relates to its planning, and provides for the adoption and administration of zoning laws, ordinances, rules, and regulations by counties and cities.

This bill would make a nonsubstantive change to these provisions.

GOVERNOR'S VETO

GV Bill Id:AB 504

Author:(Gonzalez)

As Enrolled Ver:September 14, 2015

2/3 vote

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.

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."

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 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 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 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 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 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.

GOVERNOR'S VETO MESSAGE:

This bill authorizes a city to contract with a nonprofit public benefit corporation to perform ministerial planning functions and requires the city to retain all other planning functions.

This legislation imposes statewide rules on local land use planning that are intended to address a dispute in one jurisdiction. These are issues that should be determined at the local level.

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958 FN: 0002470

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 504

Author:(Gonzalez)

As Amended Ver:September 4, 2015

Majority vote

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:

   1. The planning function results in approval of a project that is not exempt from the California Environmental Quality Act (CEQA); and,

   2. The planning function pertains to a project that includes any of the following:

      1. No less than 50 residential units;

      2. No less than 50 hotel rooms; or,

      3. 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:

   1. "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.

   2. "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.

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."

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 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 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 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 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 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

 THIRD READING  

Bill No: AB 504

Author: Gonzalez (D)

Amended: 9/4/15 in Senate

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 5-2, 7/15/15

AYES: Hertzberg, Beall, Hernandez, Lara, Pavley

NOES: Nguyen, Moorlach

ASSEMBLY FLOOR: 53-27, 5/14/15 - See last page for vote

SUBJECT: Local planning

SOURCE: Author

DIGEST: This bill allows cities to delegate ministerial planning functions to nonprofit organizations, subject to appeal to the city’s legislative body, and requires cities to retain other planning functions.

Senate Floor Amendments of 9/4/15 state that the appeal authorized by this bill is in addition to the appeals of decisions made by unelected bodies authorized under the California Environmental Quality Act (CEQA); remove references to CEQA from the definition of “planning function”; and state that nothing in this bill shall affect the requirements of CEQA.

ANALYSIS:

Existing law:

1. Allows a city, under the California Constitution, 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."

2. Requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. Cities’ and counties’ major land use decisions—including development permitting—must be consistent with their general plans. In this way, the general plan is a blueprint for future development. Local agencies may also adopt specific plans and community plans that provide for the systematic implementation of a general plan in a particular area.

3. Establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself.

4. 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.

5. Requires, pursuant to CEQA, local agencies to analyze and mitigate the impact of certain projects on the human environment.

6. Allows decisions regarding the applicability of CEQA to a project and the certification of environmental documents made by non-elected officials on behalf of a local agency to be appealed to the legislative body of the local agency.

This bill:

1. Allows all cities, including charter cities, to delegate ministerial planning functions, as defined, to a nonprofit public benefit corporation (nonprofit).

2. Requires cities to retain all other planning functions.

3. Defines “planning function” to include many specific actions that local governments take, such as amending general plans, issuing development or other land use permits, and issuing subdivision maps.

4. Defines “ministerial” as a plain and mandatory duty involving the execution of a set task that is to be performed without the exercise of discretion.

5. Requires a nonprofit that performs planning functions to comply with all applicable state and local laws, including the Public Records Act, the Brown Act, the city’s charter, local ordinances, and any contracting rules.

6. Requires the nonprofit to submit a report annually, beginning on July 1, 2016, that describes the planning functions it has undertaken in the previous year and how those functions are consistent with applicable state and local laws.

7. Requires the legislative body of the city to review and approve the report produced by the nonprofit at a noticed public hearing.

8. Allows, in addition to those appeals of decisions by non-elected officials authorized by CEQA, a planning function approved by the nonprofit to be appealed to the legislative body of the city if both the following occur:

   1. The planning function results in the approval of a project that is not exempt from CEQA, and

   2. The planning function pertains to a project that includes any of the following:

      1. 50 or more residential units,

      2. 50 or more hotel rooms, or

      3. 25,000 or more square feet of commercial space.

9. Declares that authorizing a city to delegate planning responsibilities to be an issue of statewide concern and states that it applies to all cities in the state, including charter cities.

10. States that nothing in this bill shall affect the requirements of CEQA.

Background

Delegation of Police Power. 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 courts have found that a city may contract with other entities, such as a nonprofit public benefit corporation, to carry out governmental functions. However, there are limits to this ability. In particular, a city cannot wholly contract away all authority over the exercise of its police power—it must retain ultimate control over the process. Since land use regulations involve the exercise of police power, these limits on contracting away police powers apply to a city’s land use regulatory authority.

Civic San Diego. To date, the City of San Diego is the only city in California that has delegated some land use regulatory authority to a nonprofit corporation. San Diego formed the Centre City Development Corporation (CCDC) in 1975 and the Southeastern Economic Development Corporation (SEDC) in 1980, to provide economic development services to the Centre City, Marina, and Gaslamp neighborhoods. The City, over time, delegated some land use approval functions to both CCDC and SEDC in those areas. This delegation included the ability to make some discretionary decisions, such as issuing some conditional use permits or site development permits.

In 2012, the City renamed CCDC to Civic San Diego (CivicSD) and merged SEDC into it. In recent years, CivicSD has been carrying out much of the winding down of the City of San Diego's former redevelopment agency and has recently expressed an interest in expanding its scope beyond its current role into the neighborhoods of Encanto and City Heights.

As a nonprofit, CivicSD is not a city department, and its employees are not city employees. However, the City of San Diego approves CivicSD’s budget, appoints the President and the Board of Directors, sets the terms of the agreement that governs its operations, and passes the ordinances that direct the decisions that CivicSD can make. In addition, the Attorney General has opined that nonprofit organizations that perform activities on behalf of a local government may also be subject to the same laws that apply the local government itself. These laws include the Ralph M. Brown Act (Brown Act), which requires that the meetings of local agencies’ legislative bodies be open and public. San Diego’s City Attorney concurs that this applies to CivicSD when it acts on behalf of the City.

Land Use Regulation in San Diego. San Diego’s municipal code determines the review process that projects must go through in order to be permitted. The code classifies land use permitting decisions into one of five “processes.” Approval of projects that strictly meet standards set out in the code (Process 1) are reviewed at the staff level, while decisions that require more discretion (such as general plan amendments) are considered by higher-level officials, such as the City Council (Process 5).

The specific actions that fall under Processes 1 through 5 are set by the City’s municipal code, and how a project is classified can vary in different parts of the City. As a result, CivicSD can approve some large projects, such as hotels, pursuant to Process 1—by issuing a “Centre City Development Permit” (CCDP)—because the projects meet the requirements set out in the municipal code sections that apply to the Centre City area. Those decisions cannot be appealed to the CivicSD board or to the City. The CivicSD board conducts “design review” of CCDP-permitted projects above a certain size. This review is limited to the project’s aesthetics and architectural details. Outside of CivicSD’s area, an identical project could be subject to a different process.

Some local organizations want to ensure that more projects within CivicSD’s jurisdiction are appealable to the City Council.

Comments

1. Purpose of this bill. AB 504 codifies case law in order to clarify the legal status of nonprofit entities that perform planning functions for cities in California. Under current law, these nonprofit entities can make decisions with significant effects on local communities and entire cities without the ability of citizens to appeal those decisions to their elected leaders. Of particular concern is CivicSD’s ability to permit large developments by issuing CCDPs administratively, without the ability to appeal the decision or review the environmental and community impacts of the project. This amounts to an improper delegation of local government’s police powers and minimal opportunity for public input. These concerns are magnified by potential plans to expand CivicSD’s jurisdiction to other parts of the city. By prohibiting nonprofit organizations that perform planning functions from making decisions that require discretion, AB 504 ensures that cities retain the required control over the land use permitting decisions that nonprofit entities make on their behalf and prevents legal challenges to the status of those entities. In addition, this bill ensures that decisions by CivicSD on large projects with significant city-wide impacts are appealable to the city council, enhancing the transparency of the permitting process and allowing citizens to provide input on major development decisions.

2. Unnecessary economic harm. CivicSD has been successfully promoting development of blighted areas in San Diego since 1975. On behalf of the City of San Diego, CivicSD has been involved in the creation of nearly 7,000 affordable housing units and brought in large amounts of private capital to boost the public’s investment in the area. With the end of redevelopment, CivicSD’s ability to leverage private funds and encourage development in the city’s urban communities is more important than ever. The City of San Diego already retains extensive control over CivicSD because it appoints key positions, oversees the budget, and sets the terms of the operating agreement. AB 504 adds unnecessary layers of bureaucracy that would jeopardize CivicSD’s ability to process permit applications. While some projects could withstand the additional time and cost of the additional appeals process, others will fail. This bill also severely limits the types of permits CivicSD can issue by prohibiting it from taking actions that require any discretion. As a result, CivicSD could not approve community gardens, live entertainment, or other community-building activities within its area. This bill will undo much of the progress made to date on attracting economic development to the parts of San Diego that need it most and will make it more difficult to meet the City’s goals for affordable housing.

3. Lawyer up. On April 10, 2015, the San Diego County Building & Construction Trades Council, AFL-CIO, and Murtaza Baxamusa, Ph.D., a Director on the CivicSD Board of Directors filed a petition in the Superior Court of California, County of San Diego against CivicSD and the City of San Diego. The lawsuit asks the court to rule on a number of topics related to the provisions of this bill, including (a) whether the City improperly delegated authority to CivicSD without appropriate oversight, and (b) whether decisions made by Civic San Diego must be allowed to be appealed to the City Council.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 9/4/15)

California Labor Federation

California Professional Firefighters

California State Association of Electrical Workers

California State Pipe Trades Council

Center on Policy Initiatives

City Heights Community Development Corporation

City of San Diego Council President Pro Tem Marti Emerald

Environmental Health Coalition

Honorable Juan Vargas, Member of Congress

Interfaith Center for Worker Justice of San Diego County

International Brotherhood of Electrical Workers Local #569

Plumbers and Steamfitters Local Union #230

Roofers, Waterproofers Local Union # 45

San Diego and Imperial Counties Labor Council

San Diego County Building and Construction Trades Council

State Building and Trades Council

Todd Gloria, City of San Diego City Council, District Three

UNITE HERE Local #30

United Food & Commercial Workers Union Local 135

United Taxi Workers of San Diego

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 9/4/15)

Alliance for Habitat Conservation

Associated Builders and Contractors, San Diego

AVRP Studios, Inc.

California Restaurant Association

Building Industry Association of San Diego County

Chelsea Investment Corporation

City of Hope International

City of San Diego

Civic Link Strategies

Cortez Hill Active Residents Group

Downtown Community Planning Council

Downtown San Diego Partnership

East Village Association

East Village Residence Group

Encanto Neighborhood Community Planning Group

Muhammad Mosque #8, San Diego

National Black Contractors Association

San Diego County Taxpayers Association

San Diego Downtown Residents Group

San Diego Regional Chamber of Commerce

St. Stephen’s Cathedral Church of God in Christ

United Missionary Baptist Church
Wakeland Housing and Development Corporation

ASSEMBLY FLOOR: 53-27, 5/14/15

AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

Prepared by: Anton Favorini-Csorba / GOV. & F. / (916) 651-4119

9/8/15 14:38:33

**** END ****

 THIRD READING  

Bill No: AB 504

Author: Gonzalez (D)

Amended: 8/18/15 in Senate

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 5-2, 7/15/15

AYES: Hertzberg, Beall, Hernandez, Lara, Pavley

NOES: Nguyen, Moorlach

ASSEMBLY FLOOR: 53-27, 5/14/15 - See last page for vote

SUBJECT: Local planning

SOURCE: Author

DIGEST: This bill allows cities to delegate ministerial planning functions to nonprofit organizations, subject to appeal to the city’s legislative body, and requires cities to retain other planning functions.

ANALYSIS:

Existing law:

1. Allows a city, under the California Constitution, 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."

2. Requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. Cities’ and counties’ major land use decisions—including development permitting—must be consistent with their general plans. In this way, the general plan is a blueprint for future development. Local agencies may also adopt specific plans and community plans that provide for the systematic implementation of a general plan in a particular area.

3. Establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself.

4. 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.

This bill:

1. Allows all cities, including charter cities, to delegate ministerial planning functions, as defined, to a nonprofit public benefit corporation (nonprofit).

2. Requires cities to retain all other planning functions.

3. Defines “planning function” to include many specific actions that local governments take, such as amending general plans, issuing development or other land use permits, and making determinations under the California Environmental Quality Act.

4. Defines “ministerial” as a plain and mandatory duty involving the execution of a set task that is to be performed without the exercise of discretion.

5. Requires a nonprofit that performs planning functions to comply with all applicable state and local laws, including the Public Records Act, the Brown Act, the city’s charter, local ordinances, and any contracting rules.

6. Requires the nonprofit to submit a report annually, beginning on July 1, 2016, that describes the planning functions it has undertaken in the previous year and how those functions are consistent with applicable state and local laws.

7. Requires the legislative body of the city to review and approve the report produced by the nonprofit at a noticed public hearing.

8. Allows a planning function approved by the nonprofit to be appealed to the legislative body of the city if both the following occur:

   1. The planning function results in the approval of a project that is not exempt from the California Environmental Quality Act, and

   2. The planning function pertains to a project that includes any of the following:

      1. 50 or more residential units,

      2. 50 or more hotel rooms, or

      3. 25,000 or more square feet of commercial space.

9. Declares that authorizing a city to delegate planning responsibilities to be an issue of statewide concern and states that it applies to all cities in the state, including charter cities.

Background

Delegation of Police Power. 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 courts have found that a city may contract with other entities, such as a nonprofit public benefit corporation, to carry out governmental functions. However, there are limits to this ability. In particular, a city cannot wholly contract away all authority over the exercise of its police power—it must retain ultimate control over the process. Since land use regulations involve the exercise of police power, these limits on contracting away police powers apply to a city’s land use regulatory authority.

Civic San Diego. To date, the City of San Diego is the only city in California that has delegated some land use regulatory authority to a nonprofit corporation. San Diego formed the Centre City Development Corporation (CCDC) in 1975 and the Southeastern Economic Development Corporation (SEDC) in 1980, to provide economic development services to the Centre City, Marina, and Gaslamp neighborhoods. The City, over time, delegated some land use approval functions to both CCDC and SEDC in those areas. This delegation included the ability to make some discretionary decisions, such as issuing some conditional use permits or site development permits.

In 2012, the City renamed CCDC to Civic San Diego (CivicSD) and merged SEDC into it. In recent years, CivicSD has been carrying out much of the winding down of the City of San Diego's former redevelopment agency and has recently expressed an interest in expanding its scope beyond its current role into the neighborhoods of Encanto and City Heights.

As a nonprofit, CivicSD is not a city department, and its employees are not city employees. However, the City of San Diego approves CivicSD’s budget, appoints the President and the Board of Directors, sets the terms of the agreement that governs its operations, and passes the ordinances that direct the decisions that CivicSD can make. In addition, the Attorney General has opined that nonprofit organizations that perform activities on behalf of a local government may also be subject to the same laws that apply the local government itself. These laws include the Ralph M. Brown Act (Brown Act), which requires that the meetings of local agencies’ legislative bodies be open and public. San Diego’s City Attorney concurs that this applies to CivicSD when it acts on behalf of the City.

Land Use Regulation in San Diego. San Diego’s municipal code determines the review process that projects must go through in order to be permitted. The code classifies land use permitting decisions into one of five “processes.” Approval of projects that strictly meet standards set out in the code (Process 1) are reviewed at the staff level, while decisions that require more discretion (such as general plan amendments) are considered by higher-level officials, such as the City Council (Process 5).

The specific actions that fall under Processes 1 through 5 are set by the City’s municipal code, and how a project is classified can vary in different parts of the City. As a result, CivicSD can approve some large projects, such as hotels, pursuant to Process 1—by issuing a “Centre City Development Permit” (CCDP)—because the projects meet the requirements set out in the municipal code sections that apply to the Centre City area. Those decisions cannot be appealed to the CivicSD board or to the City. The CivicSD board conducts “design review” of CCDP-permitted projects above a certain size. This review is limited to the project’s aesthetics and architectural details. Outside of CivicSD’s area, an identical project could be subject to a different process.

Some local organizations want to ensure that more projects within CivicSD’s jurisdiction are appealable to the City Council.

Comments

1. Purpose of the bill. AB 504 codifies case law in order to clarify the legal status of nonprofit entities that perform planning functions for cities in California. Under current law, these nonprofit entities can make decisions with significant effects on local communities and entire cities without the ability of citizens to appeal those decisions to their elected leaders. Of particular concern is CivicSD’s ability to permit large developments by issuing CCDPs administratively, without the ability to appeal the decision or review the environmental and community impacts of the project. This amounts to an improper delegation of local government’s police powers and minimal opportunity for public input. These concerns are magnified by potential plans to expand CivicSD’s jurisdiction to other parts of the city. By prohibiting nonprofit organizations that perform planning functions from making decisions that require discretion, AB 504 ensures that cities retain the required control over the land use permitting decisions that nonprofit entities make on their behalf and prevents legal challenges to the status of those entities. In addition, this bill ensures that decisions by CivicSD on large projects with significant city-wide impacts are appealable to the city council, enhancing the transparency of the permitting process and allowing citizens to provide input on major development decisions.

2. Unnecessary economic harm. CivicSD has been successfully promoting development of blighted areas in San Diego since 1975. On behalf of the City of San Diego, CivicSD has been involved in the creation of nearly 7,000 affordable housing units and brought in large amounts of private capital to boost the public’s investment in the area. With the end of redevelopment, CivicSD’s ability to leverage private funds and encourage development in the city’s urban communities is more important than ever. The City of San Diego already retains extensive control over CivicSD because it appoints key positions, oversees the budget, and sets the terms of the operating agreement. AB 504 adds unnecessary layers of bureaucracy that would jeopardize CivicSD’s ability to process permit applications. While some projects could withstand the additional time and cost of the additional appeals process, others will fail. This bill also severely limits the types of permits CivicSD can issue by prohibiting it from taking actions that require any discretion. As a result, CivicSD could not approve community gardens, live entertainment, or other community-building activities within its area. This bill will undo much of the progress made to date on attracting economic development to the parts of San Diego that need it most and will make it more difficult to meet the City’s goals for affordable housing.

3. Lawyer up. On April 10, 2015, the San Diego County Building & Construction Trades Council, AFL-CIO, and Murtaza Baxamusa, Ph.D., a Director on the CivicSD Board of Directors filed a petition in the Superior Court of California, County of San Diego against CivicSD and the City of San Diego. The lawsuit asks the court to rule on a number of topics related to the provisions of this bill, including (a) whether the City improperly delegated authority to CivicSD without appropriate oversight, and (b) whether decisions made by Civic San Diego must be allowed to be appealed to the City Council.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/18/15)

California Labor Federation

California Professional Firefighters

California State Association of Electrical Workers

California State Pipe Trades Council

Center on Policy Initiatives

City Heights Community Development Corporation

City of San Diego Council President Pro Tem Marti Emerald

Environmental Health Coalition

International Brotherhood of Electrical Workers Local #569

Hon. Juan Vargas, Member of Congress

Plumbers and Steamfitters Local Union #230

Roofers, Waterproofers Local Union # 45

San Diego and Imperial Counties Labor Council

San Diego County Building and Construction Trades Council

State Building and Trades Council

Todd Gloria, City of San Diego City Council, District Three

UNITE HERE Local #30

United Food & Commercial Workers Union Local 135

United Taxi Workers of San Diego

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 8/18/15)

Alliance for Habitat Conservation

Associated Builders and Contractors, San Diego

AVRP Studios, Inc.

California Restaurant Association

Building Industry Association of San Diego County

Chelsea Investment Corporation

City of Hope International

City of San Diego

Civic Link Strategies

Cortez Hill Active Residents Group

Downtown Community Planning Council

Downtown San Diego Partnership

East Village Association

East Village Residence Group

Encanto Neighborhood Community Planning Group

Muhammad Mosque #8, San Diego

National Black Contractors Association

San Diego County Taxpayers Association

San Diego Downtown Residents Group

San Diego Regional Chamber of Commerce

St. Stephen’s Cathedral Church of God in Christ

United Missionary Baptist Church
Wakeland Housing and Development Corporation

ASSEMBLY FLOOR: 53-27, 5/14/15

AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

Prepared by: Anton Favorini-Csorba / GOV. & F. / (916) 651-4119

8/19/15 20:23:26

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

LOCAL PLANNING

Allows cities to delegate ministerial planning functions to nonprofit organizations, subject to appeal to the city’s legislative body, and requires cities to retain other planning functions.

Background and Existing Law

Delegation of Police Power. 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 Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. Cities’ and counties’ major land use decisions—including development permitting—must be consistent with their general plans. In this way, the general plan is a blueprint for future development. Local agencies may also adopt specific plans and community plans that provide for the systematic implementation of a general plan in a particular area. The Planning and Zoning Law also establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself.

The courts have found that a city may contract with other entities, such as a nonprofit public benefit corporation, to carry out governmental functions. However, there are limits to this ability. In particular, a city cannot wholly contract away all authority over the exercise of its police power—it must retain ultimate control over the process. Since land use regulations involve the exercise of police power, these limits on contracting away police powers apply to a city’s land use regulatory authority.

Civic San Diego. To date, the City of San Diego is the only city in California that has delegated some land use regulatory authority to a nonprofit corporation. San Diego formed the Centre City Development Corporation (CCDC) in 1975 and the Southeastern Economic Development Corporation (SEDC) in 1980, to provide economic development services to the Centre City, Marina, and Gaslamp neighborhoods. The City, over time, delegated some land use approval functions to both CCDC and SEDC in those areas. This delegation included the ability to make some discretionary decisions, such as issuing some conditional use permits or site development permits.

In 2012, the City renamed CCDC to Civic San Diego (CivicSD) and merged SEDC into it. In recent years, CivicSD has been carrying out much of the winding down of the City of San Diego's former redevelopment agency and has recently expressed an interest in expanding its scope beyond its current role into the neighborhoods of Encanto and City Heights.

As a nonprofit, CivicSD is not a city department, and its employees are not city employees. However, the City of San Diego approves CivicSD’s budget, appoints the President and the Board of Directors, sets the terms of the agreement that governs its operations, and passes the ordinances that direct the decisions that CivicSD can make. In addition, the Attorney General has opined that nonprofit organizations that perform activities on behalf of a local government may also be subject to the same laws that apply the local government itself. These laws include the Ralph M. Brown Act (Brown Act), which requires that the meetings of local agencies’ legislative bodies be open and public. San Diego’s City Attorney concurs that this applies to CivicSD when it acts on behalf of the City.

Land Use Regulation in San Diego. San Diego’s municipal code determines the review process that projects must go through in order to be permitted. The code classifies land use permitting decisions into one of five “processes.” Approval of projects that strictly meet standards set out in the code (Process 1) are reviewed at the staff level, while decisions that require more discretion (such as general plan amendments) are considered by higher-level officials, such as the City Council (Process 5). All decisions, except Process 1 decisions, are appealable. Within CivicSD’s jurisdiction, the CivicSD President or Board of Directors usually grants approval instead of the City’s staff or Planning Commission, although more significant actions may be appealed to the City as described in the figure below.

The specific actions that fall under Processes 1 through 5 are set by the City’s municipal code, and how a project is classified can vary in different parts of the City. As a result, CivicSD can approve some large projects, such as hotels, pursuant to Process 1—by issuing a “Centre City Development Permit” (CCDP)—because the projects meet the requirements set out in the municipal code sections that apply to the Centre City area. Those decisions cannot be appealed to the CivicSD board or to the City. The CivicSD board conducts “design review” of CCDP-permitted projects above a certain size. This review is limited to the project’s aesthetics and architectural details. Outside of CivicSD’s area, an identical project could be subject to a different process.

Some local organizations want to ensure that all projects within CivicSD’s jurisdiction are appealable to the City Council.

Proposed Law

Assembly Bill 504 allows all cities, including charter cities, to delegate ministerial planning functions to nonprofit public benefit corporations. However, cities must retain all other planning functions. The bill provides lists specific actions that are considered “planning functions,” such as amending general plans, issuing development or other land use permits, and making determinations under the California Environmental Quality Act. It also defines “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.

AB 504 requires a nonprofit that performs planning functions to comply with all applicable state and local laws, including the Public Records Act, the Brown Act, the city’s charter, local ordinances, and any contracting rules. It also requires the nonprofit to submit a report annually, beginning on July 1, 2016, that describes the planning functions it has undertaken in the previous year and how those functions are consistent with applicable state and local laws. The legislative body of the city must review and approve the report at a noticed public hearing.

AB 504 allows the planning actions taken by a nonprofit to be appealed to the legislative body of the city.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. AB 504 codifies case law in order to clarify the legal status of nonprofit entities that perform planning functions for cities in California. Under current law, these nonprofit entities can make decisions with significant effects on local communities and entire cities without the ability of citizens to appeal those decisions to their elected leaders. Of particular concern is CivicSD’s ability to permit large developments by issuing Centre City Development Permits administratively, without the ability to appeal the decision or review the environmental and community impacts of the project. This amounts to an improper delegation of local government’s police powers and minimal opportunity for public input. These concerns are magnified by potential plans to expand CivicSD’s jurisdiction to other parts of the city. By prohibiting nonprofit organizations that perform planning functions from making decisions that require discretion, AB 504 ensures that cities retain the required control over the land use permitting decisions that nonprofit entities make on their behalf and prevents legal challenges to the status of those entities. At the same time, the bill enhances the transparency of the permitting process and allows citizens to provide input on major development decisions that would otherwise proceed without any opportunity for the interests of the community to be heard.

2. Unnecessary economic harm. CivicSD has been successfully promoting development of blighted areas in San Diego since 1975. On behalf of the City of San Diego, CivicSD has been involved in the creation of nearly 7,000 affordable housing units and brought in large amounts of private capital to boost the public’s investment in the area. With the end of redevelopment, CivicSD’s ability to leverage private funds and encourage development in the city’s urban communities is more important than ever. The City of San Diego already retains extensive control over CivicSD because it appoints key positions, oversees the budget, and sets the terms of the operating agreement. AB 504 adds unnecessary layers of bureaucracy that would jeopardize CivicSD’s ability to process permit applications. While some projects could withstand the additional time and cost of the additional appeals process, others will fail. The bill also severely limits the types of permits CivicSD can issue by prohibiting it from taking actions that require any discretion. As a result, CivicSD could not approve community gardens, live entertainment, or other community-building activities within its area. This bill would undo much of the progress made to date on attracting economic development to the parts of San Diego that need it most and would make it more difficult to meet the City’s goals for affordable housing.

3. A middle ground. AB 504 would allow appeals of even the smallest projects within CivicSD’s area. While some of those projects may require additional scrutiny, others may not. In order to limit the scope of appeals to those projects that truly warrant a closer look, the Committee may wish to consider amending AB 504 to change the appeals process to ensure that the City Council reviews only those developments that are of broader concern to the San Diego community at large.

4. Statewide implications. While CivicSD is currently the only nonprofit organization in the state that performs this type of land use permitting on behalf of a city or county, other local agencies might decide to use this model in the future. AB 504 creates statewide rules that would apply to other jurisdictions based on a single case. Since AB 504 addresses issues that relate specifically to CivicSD (such as the ability to permit certain large projects without an appeals process), it is unclear whether this is the best set of rules to apply statewide.

5. Lawyer up. On April 10, 2015, the San Diego County Building & Construction Trades Council, AFL-CIO, and Murtaza Baxamusa, Ph.D., a Director on the CivicSD Board of Directors filed a petition in the Superior Court of California, County of San Diego against CivicSD and the City of San Diego. The lawsuit asks the court to rule on a number of topics related to the provisions of this bill, including whether (1) the City improperly delegated authority to CivicSD without appropriate oversight, and (2) decisions made by Civic San Diego must be allowed to be appealed to the City Council. Accordingly, the Committee may wish to consider whether legislation is necessary, or whether this issue is best left to the Courts to decide.

6. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn’t define “municipal affairs,” the courts determine whether a topic is a municipal affair or whether it’s an issue of statewide concern. AB 504 says that it applies to all cities, including charter cities. To support this assertion, the bill includes a legislative finding and declaration that authorizing a city to delegate authority to perform planning functions is a matter of statewide concern because maintaining uniformity in the planning responsibilities of cities has a direct impact on the well-being of all residents of the state. Ultimately, the courts may decide whether AB 504 applies to charter cities.

7. Technical amendment. AB 504 refers to “planning function” in all but one case, where it refers to “planning action taken by a nonprofit.” In order to ensure that the terminology is consistent throughout the bill, the Committee may wish to consider a technical amendment to change “action” to “function.”

Assembly Actions

Assembly Local Government Committee: 6-3

Assembly Floor: 53-27

Support and Opposition

(7/9/15)

Support: California State Association of Electrical Workers; California State Pipe Trades Council; Center on Policy Initiatives; City Heights Community Development Corporation; City of San Diego Council President Pro Tem; Environmental Health Coalition; International Brotherhood of Electrical Workers Local #569; Marti Emerald, State Building and Trades Council; Roofers, Waterproofers Local Union # 45; Plumbers and Steamfitters Local Union #230; San Diego and Imperial Counties Labor Council; San Diego County Building and Construction Trades Council; UNITE HERE Local #30; United Food & Commercial Workers Union Local 135; United Taxi Workers of San Diego; Western States Council of Sheet Metal Workers.

Opposition: Alliance for Habitat Conservation; Associated Builders and Contractors, San Diego; AVRP Studios, Inc.; California Restaurant Association; Building Industry Association of San Diego County; Chelsea Investment Corporation; The City of Hope International; City of San Diego; Civic Link Strategies; Cortez Hill Active Residents Group; Downtown Community Planning Council; Downtown San Diego Partnership; East Village Association; East Village Residence Group; Encanto Neighborhood Community Planning Group; Muhammad Mosque #8, San Diego; National Black Contractors Association; San Diego County Taxpayers Association; San Diego Downtown Residents Group; San Diego Regional Chamber of Commerce; St. Stephen’s Cathedral Church of God in Christ; United Missionary Baptist Church; Wakeland Housing and Development Corporation.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

LOCAL PLANNING

Allows cities to delegate ministerial planning functions to nonprofit organizations, subject to appeal to the city’s legislative body, and requires cities to retain other planning functions.

Background and Existing Law

Delegation of Police Power. 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 Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. Cities’ and counties’ major land use decisions—including development permitting—must be consistent with their general plans. In this way, the general plan is a blueprint for future development. Local agencies may also adopt specific plans and community plans that provide for the systematic implementation of a general plan in a particular area. The Planning and Zoning Law also establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself.

The courts have found that a city may contract with other entities, such as a nonprofit public benefit corporation, to carry out governmental functions. However, there are limits to this ability. In particular, a city cannot wholly contract away all authority over the exercise of its police power—it must retain ultimate control over the process. Since land use regulations involve the exercise of police power, these limits on contracting away police powers apply to a city’s land use regulatory authority.

Civic San Diego. To date, the City of San Diego is the only city in California that has delegated some land use regulatory authority to a nonprofit corporation. San Diego formed the Centre City Development Corporation (CCDC) in 1975 and the Southeastern Economic Development Corporation (SEDC) in 1980, to provide economic development services to the Centre City, Marina, and Gaslamp neighborhoods. The City, over time, delegated some land use approval functions to both CCDC and SEDC in those areas. This delegation included the ability to make some discretionary decisions, such as issuing some conditional use permits or site development permits.

In 2012, the City renamed CCDC to Civic San Diego (CivicSD) and merged SEDC into it. In recent years, CivicSD has been carrying out much of the winding down of the City of San Diego's former redevelopment agency and has recently expressed an interest in expanding its scope beyond its current role into the neighborhoods of Encanto and City Heights.

As a nonprofit, CivicSD is not a city department, and its employees are not city employees. However, the City of San Diego approves CivicSD’s budget, appoints the President and the Board of Directors, sets the terms of the agreement that governs its operations, and passes the ordinances that direct the decisions that CivicSD can make. In addition, the Attorney General has opined that nonprofit organizations that perform activities on behalf of a local government may also be subject to the same laws that apply the local government itself. These laws include the Ralph M. Brown Act (Brown Act), which requires that the meetings of local agencies’ legislative bodies be open and public. San Diego’s City Attorney concurs that this applies to CivicSD when it acts on behalf of the City.

Land Use Regulation in San Diego. San Diego’s municipal code determines the review process that projects must go through in order to be permitted. The code classifies land use permitting decisions into one of five “processes.” Approval of projects that strictly meet standards set out in the code (Process 1) are reviewed at the staff level, while decisions that require more discretion (such as general plan amendments) are considered by higher-level officials, such as the City Council (Process 5). All decisions, except Process 1 decisions, are appealable. Within CivicSD’s jurisdiction, the CivicSD President or Board of Directors usually grants approval instead of the City’s staff or Planning Commission, although more significant actions may be appealed to the City as described in the figure below.

The specific actions that fall under Processes 1 through 5 are set by the City’s municipal code, and how a project is classified can vary in different parts of the City. As a result, CivicSD can approve some large projects, such as hotels, pursuant to Process 1—by issuing a “Centre City Development Permit” (CCDP)—because the projects meet the requirements set out in the municipal code sections that apply to the Centre City area. Those decisions cannot be appealed to the CivicSD board or to the City. The CivicSD board conducts “design review” of CCDP-permitted projects above a certain size. This review is limited to the project’s aesthetics and architectural details. Outside of CivicSD’s area, an identical project could be subject to a different process.

Some local organizations want to ensure that all projects within CivicSD’s jurisdiction are appealable to the City Council.

Proposed Law

Assembly Bill 504 allows all cities, including charter cities, to delegate ministerial planning functions to nonprofit public benefit corporations. However, cities must retain all other planning functions. The bill provides lists specific actions that are considered “planning functions,” such as amending general plans, issuing development or other land use permits, and making determinations under the California Environmental Quality Act. It also defines “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.

AB 504 requires a nonprofit that performs planning functions to comply with all applicable state and local laws, including the Public Records Act, the Brown Act, the city’s charter, local ordinances, and any contracting rules. It also requires the nonprofit to submit a report annually, beginning on July 1, 2016, that describes the planning functions it has undertaken in the previous year and how those functions are consistent with applicable state and local laws. The legislative body of the city must review and approve the report at a noticed public hearing.

AB 504 allows the planning actions taken by a nonprofit to be appealed to the legislative body of the city.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. AB 504 codifies caselaw in order to clarify the legal status of nonprofit entities that perform planning functions for cities in California. Under current law, these nonprofit entities can make decisions with significant effects on local communities and entire cities without the ability of citizens to appeal those decisions to their elected leaders. Of particular concern is CivicSD’s ability to permit large developments by issuing Centre City Development Permits administratively, without the ability to appeal the decision or review the environmental and community impacts of the project. This amounts to an improper delegation of local government’s police powers and minimal opportunity for public input. These concerns are magnified by potential plans to expand CivicSD’s jurisdiction to other parts of the city. By prohibiting nonprofit organizations that perform planning functions from making decisions that require discretion, AB 504 ensures that cities retain the required control over the land use permitting decisions that nonprofit entities make on their behalf and prevents legal challenges to the status of those entities. At the same time, the bill enhances the transparency of the permitting process and allows citizens to provide input on major development decisions that would otherwise proceed without any opportunity for the interests of the community to be heard.

2. Unnecessary economic harm. CivicSD has been successfully promoting development of blighted areas in San Diego since 1975. On behalf of the City of San Diego, CivicSD has been involved in the creation of nearly 7,000 affordable housing units and brought in large amounts of private capital to boost the public’s investment in the area. With the end of redevelopment, CivicSD’s ability to leverage private funds and encourage development in the city’s urban communities is more important than ever. The City of San Diego already retains extensive control over CivicSD because it appoints key positions, oversees the budget, and sets the terms of the operating agreement. AB 504 adds unnecessary layers of bureaucracy that would jeopardize CivicSD’s ability to process permit applications. While some projects could withstand the additional time and cost of the additional appeals process, others will fail. The bill also severely limits the types of permits CivicSD can issue by prohibiting it from taking actions that require any discretion. As a result, CivicSD could not approve community gardens, live entertainment, or other community-building activities within its area. This bill would undo much of the progress made to date on attracting economic development to the parts of San Diego that need it most and would make it more difficult to meet the City’s goals for affordable housing.

3. A middle ground. AB 504 would allow appeals of even the smallest projects within CivicSD’s area. While some of those projects may require additional scrutiny, others may not. In order to limit the scope of appeals to those projects that truly warrant a closer look, the Committee may wish to consider amending AB 504 to provide appeals to the City Council only for specific types of developments that are of broader concern to the San Diego community at large.

4. Statewide implications. While CivicSD is currently the only nonprofit organization in the state that performs this type of land use permitting on behalf of a city or county, other local agencies might decide to use this model in the future. AB 504 creates statewide rules that would apply to other jurisdictions based on a single case. Since AB 504 addresses issues that relate specifically to CivicSD (such as the ability to permit certain large projects without an appeals process), it is unclear whether this is the best set of rules to apply statewide.

5. Lawyer up. On April 10, 2015, the San Diego County Building & Construction Trades Council, AFL-CIO, and Murtaza Baxamusa, Ph.D., a Director on the CivicSD Board of Directors filed a petition in the Superior Court of California, County of San Diego against CivicSD and the City of San Diego. The lawsuit asks the court to rule on a number of topics related to the provisions of this bill, including whether (1) the City improperly delegated authority to CivicSD without appropriate oversight, and (2) decisions made by Civic San Diego must be allowed to be appealed to the City Council. Accordingly, the Committee may wish to consider whether legislation is necessary, or whether this issue is best left to the Courts to decide.

6. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn’t define “municipal affairs,” the courts determine whether a topic is a municipal affair or whether it’s an issue of statewide concern. AB 504 says that it applies to all cities, including charter cities. To support this assertion, the bill includes a legislative finding and declaration that authorizing a city to delegate authority to perform planning functions is a matter of statewide concern because maintaining uniformity in the planning responsibilities of cities has a direct impact on the well-being of all residents of the state. Ultimately, the courts may decide whether AB 504 applies to charter cities.

7. Technical amendment. AB 504 refers to “planning function” in all but one case, where it refers to “planning action taken by a nonprofit.” In order to ensure that the terminology is consistent throughout the bill, the Committee may wish to consider a technical amendment to change “action” to “function.”

Assembly Actions

Assembly Local Government Committee: 6-3

Assembly Floor: 53-27

Support and Opposition

(6/25/15)

Support: Roofers, Waterproofers Local Union # 45; Plumbers and Steamfitters Local Union #230; United Food & Commercial Workers Union Local 135; San Diego County Building and Construction Trades Council; Center on Policy Initiatives; International Brotherhood of Electrical Workers Local #569; City Heights Community Development Corporation; UNITE HERE Local #30; Marti Emerald, City of San Diego Council President Pro Tem; State Building and Trades Council; Environmental Health Coalition; United Taxi Workers of San Diego; San Diego and Imperial Counties Labor Council.

Opposition: City of San Diego; Downtown San Diego Partnership; AVRP Studios, Inc; San Diego Regional Chamber of Commerce; Alliance for Habitat Conservation; National Black Contractors Association; Chelsea Investment Corporation; San Diego County Taxpayers Association; California Restaurant Association; United Missionary Baptist Church; The City of Hope International; Muhammad Mosque #8, San Diego; Downtown Community Planning Council; St. Stephen’s Cathedral Church of God in Christ; East Village Residence Group; Building Industry Association of San Diego County; Wakeland Housing and Development Corporation; Encanto Neighborhood Community Planning Group; Associated Builders and Contractors, San Diego; San Diego Downton Residents Group; San Diego Regional Chamber of Commerce; Cortez Hill Active Residents Group; East Village Association; Civic Link Strategies.

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ASSEMBLY THIRD READING

ATR Bill Id:AB 504

Author:(Gonzalez)

As Amended Ver:March 26, 2015

Majority vote

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.

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.

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 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.

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 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 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).

"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 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 following:

   1. 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.

   2. 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

Date of Hearing: May 6, 2015

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Brian Maienschein, Chair

ABPCA Bill Id:AB 504

Author:(Gonzalez) – As Amended Ver:March 26, 2015

SUBJECT: Local planning.

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.

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.

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 or nonministerial planning functions. Should a nonprofit corporation undertake administrative or ministerial planning functions, the 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. The 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 an author-sponsored measure.

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, 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 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 & 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 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 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).

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.4^th 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 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 Committee may wish to consider the following:

   1. Terminology. The terms used in the 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 Committee may wish to consider whether these terms are consistent with court actions and plainly understood.

   2. Necessary? Given the lawsuit filed on April 10, 2015, the Committee 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 the bill could slow development to a crawl, putting at risk millions in development and thousands of good paying jobs.

REGISTERED SUPPORT / OPPOSITION:

Support

Center on Policy Initiatives

City Heights Community Development Corporation

International Brotherhood of Electrical Workers, Local Union 569

Plumbers & Steamfitters Local Union #230

San Diego County Building and Construction Trades Council

State Building and Construction Trades Council

UNITE HERE Local 30

United Taxi Workers of San Diego

United Union of Roofers, Waterproofers & Allied Workers Local 45

Opposition

Associated Builders and Contractors – San Diego Chapter

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958