AB 516: Mitigation Fee Act: fees for improvements: reports and audits.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-10-11
Current Status:
Passed
(2023-10-11: Chaptered by Secretary of State - Chapter 741, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill increases transparency for people who pay development fees by requiring local governments to report each year whether previously listed public improvements actually began on the dates promised, explain delays and give revised start dates, list how many people or entities will get refunds, and notify fee payers of their right to request an audit and to receive mailed notice with a link to the online report; it also lets auditors review when fee revenue will be spent and when improvements will be completed.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law, the Mitigation Fee Act, imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, as defined, or service provided by the local agency. Existing law prohibits a local agency from imposing water or sewer connection fees or capacity charges that exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed, unless voter approval is obtained, as specified.
This bill, except with respect to the above-described connection fees and capacity charges, would expand the purposes of the audit to include a determination of when the revenue generated by a fee or charge is scheduled to be expended and when the public improvement is scheduled to be completed.
The bill would require a local agency to inform a person paying a fee imposed as a condition of approval of a development project, as described above, of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public, as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public, as described above, is available for review.
By imposing new duties on local agencies, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, as defined, or service provided by the local agency. Existing law prohibits a local agency from imposing water or sewer connection fees or capacity charges that exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed, unless voter approval is obtained, as specified.
This bill, except with respect to the above-described connection fees and capacity charges, would expand the purposes of the audit to include a determination of when the revenue generated by a fee or charge is scheduled to be expended and when the public improvement is scheduled to be completed.
The bill would require a local agency to inform a person paying a fee imposed as a condition of approval of a development project, as described above, of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public, as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public, as described above, is available for review.
By imposing new duties on local agencies, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, as defined, or service provided by the local agency. Existing law prohibits a local agency from imposing water or sewer connection fees, fees or capacity charges that exceed the estimated reasonable cost of providing the service for which the fee or charge is charged, imposed, unless voter approval is obtained, as specified.
This bill bill, except with respect to the above-described connection fees and capacity charges, would expand the purposes of the audit to include a determination of when the revenue generated by a fee or charge is scheduled to be expended and when the public improvement is scheduled to be completed. The bill would exempt the above-described connection fees and capacity charges from being audited with respect to whether the fee amount exceeds the reasonable costs of the local agency and when the revenue generated is scheduled to be expended under these provisions.
The bill would require a local agency to inform a person paying a fee imposed as a condition of approval of a development project, as described above, of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public, as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public, as described above, is available for review.
By imposing new duties on local agencies, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, as defined, or service provided by the local agency. Existing law prohibits a local agency from imposing water or sewer connection fees, or capacity charges that exceed the estimated reasonable cost of providing the service for which the fee is charged, unless voter approval is obtained, as specified.
This bill would expand the purposes of the audit to include a determination of when the revenue generated by a fee or charge is scheduled to be expended and when the development project public improvement is scheduled to be completed. The bill would exempt the above-described connection fees and capacity charges from being audited with respect to whether the fee amount exceeds the reasonable costs of the local agency and when the revenue generated is scheduled to be expended under these provisions.
The bill would require a local agency to inform a person paying an applicable fee a fee imposed as a condition of approval of a development project, as described above, of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public public, as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public public, as described above above, is available for review.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, or service provided by the local agency.
This bill would expand the purposes of the audit to include a determination whether of when the revenue generated by a fee or charge will be expended in a reasonable amount of time. is scheduled to be expended and when the development project is scheduled to be completed.
The bill would require a local agency to inform a person paying an applicable fee of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public as described above is available for review.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, requires imposes certain requirements on a local agency that establishes, increases, or imposes a fee as a condition of approval of a development project to, among other things, determine a reasonable relationship between the fees use and the type of development project on which the fee is imposed. The Mitigation Fee Act also imposes additional requirements for fees that is imposed to provide for an improvement to be constructed to serve a the development project, or which is a fee for public improvements, as specified, including that the fees be deposited specified. In this regard, the Mitigation Fee Act requires the local agency to deposit the fee in a separate capital facilities account or fund. fund, and to make certain information about the account or fund public annually, as specified. The Mitigation Fee Act requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. The Mitigation Fee Act also requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
This bill would require a local agency that requires a qualified applicant, as described, to deposit fees for improvements, as described, into an escrow account as a condition for receiving a conditional use permit or equivalent development permit to expend the fees within a reasonable time of the deposit. The bill would require any fees not expended within this period to be returned to the qualified applicant that originally deposited the fees. By imposing new duties on local officials, the bill would impose a state-mandated local program.The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.This bill would require the report to include an identification of each public improvement identified in a previous report, whether construction began on the approximate date noted in the previous report, the reason for the delay, if any, and a revised approximate date that the local agency will commence construction, if applicable. The bill would also require the report to include the number of persons or entities identified to receive refunds.
The Mitigation Fee Act authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, or service provided by the local agency.
This bill would expand the purposes of the audit to include a determination whether the revenue generated by a fee or charge will be expended in a reasonable amount of time.
The bill would require a local agency to inform a person paying an applicable fee of their right to request the audit described above and their right to file a written request for mailed notice of the local agencys meeting to review the fee account or fund information made public as described above. The bill would also require the local agency to provide the person with a link to the page on the local agencys website where the fee account or fund information made public as described above is available for review.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Mitigation Fee Act, requires a local agency that establishes, increases, or imposes a fee as a condition of approval of a development project to, among other things, determine a reasonable relationship between the fees use and the type of development project on which the fee is imposed. The Mitigation Fee Act also imposes additional requirements for fees imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements, as specified, including that the fees be deposited in a separate capital facilities account or fund.
This bill would require a local agency that requires a qualified applicant, as described, to deposit fees for improvements, as described, into an escrow account as a condition for receiving a conditional use permit or equivalent development permit to expend the fees within a reasonable time of the deposit. The bill would require any fees not expended within this period to be returned to the qualified applicant that originally deposited the fees. By imposing new duties on local officials, the bill would impose a state-mandated local program.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)(1)Except as otherwise provided in paragraph (3), a person may request an audit in order to determine all of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency.
(B)When the revenue generated by a fee or charge is scheduled to be expended.
(C)When the public improvement is scheduled to be completed.
(2)(A)Except as provided in subparagraph (B), if a person makes a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable, when the revenue generated by a fee or charge is scheduled to be expended, and when the project is scheduled to be completed.
(B)The legislative body is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(3)Subparagraphs (B) and (C) of paragraph (1) shall not apply to a fee subject to Section 66013.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)(1)Except as otherwise provided in paragraph (3), a person may request an audit in order to determine all of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency.
(B)When the revenue generated by a fee or charge is scheduled to be expended.
(C)When the public improvement is scheduled to be completed.
(2)(A)Except as provided in subparagraph (B), if a person makes a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable, when the revenue generated by a fee or charge is scheduled to be expended, and when the project is scheduled to be completed.
(B)The legislative body is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(3)Subparagraphs (B) and (C) of paragraph (1) shall not apply to a fee subject to Section 66013.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)(1)Except as otherwise provided in paragraph (3), a person may request an audit in order to determine all of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency.
(B)When the revenue generated by a fee or charge is scheduled to be expended.
(C)When the public improvement is scheduled to be completed.
(2)(A)Except as provided in subparagraph (B), if a person makes a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable, when the revenue generated by a fee or charge is scheduled to be expended, and when the project is scheduled to be completed.
(B)The legislative body is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(3)Subparagraphs (A) and (B) (B) and (C) of paragraph (1) shall not apply to a fee subject to Section 66013.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)(1)A Except as otherwise provided in paragraph (3), a person may request an audit in order to determine all of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency.
(B)When the revenue generated by a fee or charge is scheduled to be expended.
(C)When the development project public improvement is scheduled to be completed.
(2)(A)Except as provided in subparagraph (B), if a person makes a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable, when the revenue generated by a fee or charge is scheduled to be expended, and when the project is scheduled to be completed.
(B)The legislative body is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(3)Subparagraphs (A) and (B) of paragraph (1) shall not apply to a fee subject to Section 66013.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)(1)A person may request an audit in order to determine either all of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency.
(B)Whether When the revenue generated by a fee or charge will be expended in a reasonable amount of time. is scheduled to be expended.
(C)When the development project is scheduled to be completed.
(2)If (A)Except as provided in subparagraph (B), if a person makes a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable or will be expended in a reasonable amount of time, but reasonable, when the revenue generated by a fee or charge is scheduled to be expended, and when the project is scheduled to be completed.
(B)The legislative body is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)If a local agency requires the payment of a fee specified in subdivision (c) in connection with the approval of a development project, the local agency receiving the fee shall deposit it with the other fees for the improvement in a separate capital facilities account or fund in a manner to avoid any commingling of the fees with other revenues and funds of the local agency, except for temporary investments, and expend those fees solely for the purpose for which the fee was collected. Any interest income earned by moneys in the capital facilities account or fund shall also be deposited in that account or fund and shall be expended only for the purpose for which the fee was originally collected.
(b)(1)For each separate account or fund established pursuant to subdivision (a), the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the following information for the fiscal year:
(A)A brief description of the type of fee in the account or fund.
(B)The amount of the fee.
(C)The beginning and ending balance of the account or fund.
(D)The amount of the fees collected and the interest earned.
(E)An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
(F)(i)An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as identified in paragraph (2) of subdivision (a) of Section 66001, and the public improvement remains incomplete.
(ii)An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii)For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G)A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.
(H)The amount of refunds made pursuant to subdivision (e) of Section 66001 66001, the number of persons or entities identified to receive those refunds, and any allocations pursuant to subdivision (f) of Section 66001.
(2)The local agency shall review the information made available to the public pursuant to paragraph (1) at the next regularly scheduled public meeting not less than 15 days after this information is made available to the public, as required by this subdivision. Notice of the time and place of the meeting, including the address where this information may be reviewed, shall be mailed, at least 15 days prior to the meeting, to any interested party who files a written request with the local agency for mailed notice of the meeting. Any written request for mailed notices shall be valid for one year from the date on which it is filed unless a renewal request is filed. Renewal requests for mailed notices shall be filed on or before April 1 of each year. The legislative body may establish a reasonable annual charge for sending notices based on the estimated cost of providing the service.
(c)For purposes of this section, fee means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(d)Any person may request an audit of any local agency fee or charge that is subject to Section 66023, including fees or charges of school districts, in accordance with that section.
(e)(1)A local agency shall inform a person paying a fee subject to this section of both of the following:
(A)The persons right to request an audit pursuant to Section 66023.
(B)The persons right, pursuant to paragraph (1) of subdivision (b), to file a written request for mailed notice of the local agencys meeting to review the information made public pursuant to paragraph (1) of subdivision (b).
(2)A local agency shall provide a person paying a fee subject to this section a link to the page on the local agencys internet website where the information made public pursuant to paragraph (1) of subdivision (b) is available for review.
(e)(f)The Legislature finds and declares that untimely or improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.
(f)(g)At the time the local agency imposes a fee for public improvements on a specific development project, it shall identify the public improvement that the fee will be used to finance.
SEC. 2.Section 66008 of the Government Code is amended to read:66008.A local agency shall expend a fee for public improvements, as accounted for pursuant to Section 66006, solely and exclusively for the purpose or purposes, as identified in subdivision (f) (g) of Section 66006, for which the fee was collected. The fee shall not be levied, collected, or imposed for general revenue purposes.
SEC. 3.Section 66023 of the Government Code is amended to read:66023.(a)Any (1)A person may request an audit in order to determine whether either of the following:
(A)Whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, as defined in Section 66000, or service provided by the local agency. If
(B)Whether the revenue generated by a fee or charge will be expended in a reasonable amount of time.
(2)If a person makes that request, a request pursuant to paragraph (1), the legislative body of the local agency may retain an independent auditor to conduct an audit to determine whether the fee or charge is reasonable, reasonable or will be expended in a reasonable amount of time, but is not required to conduct the audit if an audit has been performed for the same fee within the previous 12 months.
(b)To the extent that the audit determines that the amount of any fee or charge does not meet the requirements of this section, the local agency shall adjust the fee accordingly. This subdivision does not apply to a fee authorized pursuant to Section 17620 of the Education Code, or Sections 65995.5 and 65995.7.
(c)Except as otherwise provided in subdivision (h), the local agency shall retain an independent auditor to conduct an audit only if the person who requests the audit deposits with the local agency the amount of the local agencys reasonable estimate of the cost of the independent audit. At the conclusion of the audit, the local agency shall reimburse unused sums, if any, or the requesting person shall pay the local agency the excess of the actual cost of the audit over the sum which was deposited.
(d)Any audit conducted by an independent auditor to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of providing the product or service shall conform to generally accepted auditing standards.
(e)The procedures specified in this section shall be alternative and in addition to those specified in Section 54985.
(f)The Legislature finds and declares that oversight of local agency fees is a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this chapter shall supersede all conflicting local laws and shall apply in charter cities.
(g)This section shall not be construed as granting any additional authority to any local agency to levy any fee or charge which is not otherwise authorized by another provision of law, nor shall its provisions be construed as granting authority to any local agency to levy a new fee or charge when other provisions of law specifically prohibit the levy of a fee or charge.
(h)Notwithstanding subdivision (c), if a local agency does not comply with subdivision (b) of Section 66006 for three consecutive years, both of the following shall apply:
(1)The local agency shall not require a deposit for an independent audit requested pursuant to this section and shall pay the cost of the audit.
(2)The independent audit conducted shall include each consecutive year the local agency did not comply with subdivision (b) of Section 66006.
SEC. 3.SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)Notwithstanding any other law, a local agency that requires a qualified applicant to deposit fees for improvements into an escrow account as a condition for receiving a conditional use permit or equivalent development permit shall expend the fees within a reasonable time of the deposit. Any fees for improvements that are collected and that are not expended within this period shall be returned to the qualified applicant that originally deposited the fees.
(b)For purposes of this section, both of the following definitions apply:
(1)Fees for improvement means any fee imposed to provide for an improvement to be constructed to serve a development project, or which is a fee for public improvements within the meaning of subdivision (b) of Section 66000, and that is imposed by the local agency as a condition of approving the development project.
(2)Qualified applicant means an applicant for a conditional use permit or equivalent development permit for a business and that employs 25 or fewer employees for that business at the time the fees are deposited into the escrow account.
SEC. 2.The Legislature finds and declares that the implementation of uniform and reasonable safeguards on the use of public improvement fees held in escrow is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act adding Section 66008.1 to the Government Code applies to all cities, including charter cities.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
|
Date
|
Status
|
|---|---|
| Oct 11, 2023 | Chaptered by Secretary of State - Chapter 741, Statutes of 2023. |
| Oct 11, 2023 | Approved by the Governor. |
| Sep 13, 2023 | Enrolled and presented to the Governor at 3 p.m. |
| Sep 7, 2023 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 79. Noes 0. Page 3019.). |
| Sep 5, 2023 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 7 pursuant to Assembly Rule 77. |
| Sep 5, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 2368.). |
| Jul 12, 2023 | Read second time. Ordered to third reading. |
| Jul 11, 2023 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| Jul 10, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR. |
| Jul 5, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR. |
| Jun 29, 2023 | In committee: Hearing postponed by committee. |
| Jun 22, 2023 | In committee: Hearing postponed by committee. |
| Jun 15, 2023 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun 14, 2023 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 0.) (June 14). |
| Jun 7, 2023 | Referred to Com. on GOV. & F. |
| May 26, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 25, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 76. Noes 0. Page 1811.) |
| May 18, 2023 | Read second time. Ordered to Consent Calendar. |
| May 17, 2023 | From committee: Do pass. To Consent Calendar. (Ayes 15. Noes 0.) (May 17). |
| Apr 27, 2023 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 8. Noes 0.) (April 26). Re-referred to Com. on APPR. |
| Apr 20, 2023 | From committee: Do pass and re-refer to Com. on H. & C.D. (Ayes 8. Noes 0.) (April 19). Re-referred to Com. on H. & C.D. |
| Apr 6, 2023 | Re-referred to Com. on L. GOV. |
| Apr 5, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended. |
| Feb 17, 2023 | Referred to Coms. on L. GOV. and H. & C.D. |
| Feb 8, 2023 | From printer. May be heard in committee March 10. |
| Feb 7, 2023 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 7, 2023 | AB 516 Ramos Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Sep 5, 2023 | Assembly 3rd Reading AB516 Ramos By Alvarado-Gil | Senate Floor |
Passed |
|
| Jun 14, 2023 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Governance and Finance |
Passed |
|
| May 25, 2023 | AB 516 Ramos Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| May 17, 2023 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 26, 2023 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Housing and Community Development |
Passed |
|
| Apr 19, 2023 | Do pass and be re-referred to the Committee on [Housing and Community Development] | Assembly Standing Committee on Local Government |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Apartment Association | ** Support | |
| California Association Of Realtors | ** Support | |
| California Building Industry Association | ** Support | |
| Govern for California | ** Support | |
| High Desert Hispanic Chamber of Commerce | ** Support | |
| Hispanic Coalition of Small Businesses | ** Support | |
| Latino Restaurant Association | ** Support | |
| National Latina Business Women Association | ** Support | |
| Southern California Black Chamber of Commerce | ** Support | |
| The High Desert Hispanic Chamber of Commerce | ** Support |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 516
Author:(Ramos)
As Amended Ver:July 10, 2023
Majority vote
SUMMARY
This bill requires local agencies to provide more information in their Mitigation Fee Act reports.
Senate Amendments
Make technical and clarifying changes and specify that a local agency is not required to conduct an audit on fee if one an audit was performed for the same fee within the previous 12 months.
COMMENTS
- The Mitigation Fee Act. Local agencies approving development projects can require developers to mitigate a project's effects by paying impact fees. Impact fees stem from a straightforward principle: new developments should pay for the impacts that they have on the community and the burden they impose on public services. Prior to establishing, increasing, or imposing a fee as a condition of approving a development project, the Mitigation Fee Act requires local officials to:
- Identify the fee's purpose.
- Identify the fee's use, including the public facilities to be financed.
- Determine a reasonable relationship between the fee's use and the development.
- Determine a reasonable relationship between the public facility's need and the development.
The Mitigation Fee Act also requires local officials that impose a fee as a condition of approving a development project to demonstrate a reasonable relationship between the amount of the fee and the cost of the public facilities supported by the fee.
- Impact Fee Audit Requirements. Any person may request an independent audit of how the impact fees have been collected and spent, including an assessment of whether the fees exceed the amount reasonably necessary to cover the costs of the stated projects or services. If a person makes that request, the local agency retains an independent auditor to conduct the audit, provided that an audit has not been performed for the same fee within the previous 12 months and the requestor deposits the estimated cost for the audit with the local agency. A local agency must adjust its fees if the audit finds that the fees are set too high.
In response to reports of some local agencies not filing the annual impact fee reports in a timely fashion, the Legislature enacted SB 1202 (Stone) Chapter 357, Statutes of 2018, which required local agencies that do not complete their impact fee annual reports for three consecutive years to pay the costs of any requested audits.
According to the Author
"Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state."
Arguments in Support
The California Association of Realtors writes in support, "AB 516 seeks to make modest clarifications to existing law which allows for continued updates to the status of the projects based [on] the report provided in the previous year. Additionally, it requires any delays to the projects to be reported and the reason for the delay. Furthermore, AB 516 seeks to provide refunds to affected persons or entities if the local agency has collected sufficient funds to complete a project. Lastly, the bill allows for more accountability of funds by disclosing that a local agency must provide information to a person subject to paying a fee that they have the right to request an audit of the funds collected and how the fees are being used."
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Appropriations Committee: No state costs. Local costs are not reimbursable by the state because local agencies have general authority to charge fees or service charges to cover the cost of compliance.
VOTES:
ASM LOCAL GOVERNMENT: 7-0-0
YES: Aguiar-Curry, Dixon, Pacheco, Ramos, Robert Rivas, Waldron, Wilson
ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0
YES: Wicks, Joe Patterson, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Sanchez, Ward
ASM APPROPRIATIONS: 15-0-1
YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Robert Rivas, Sanchez, Ortega
ABS, ABST OR NV: Weber
ASSEMBLY FLOOR: 76-0-4
YES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
ABS, ABST OR NV: Aguiar-Curry, Kalra, Mathis, Papan
SENATE FLOOR: 39-0-1
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ABS, ABST OR NV: Padilla
UPDATED
VERSION: July 10, 2023
CONSULTANT: Hank Brady / L. GOV. / (916) 319-3958 FN: 0001372
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 516 |
THIRD READING
Bill No: AB 516
Author: Ramos (D)
Amended: 7/10/23 in Senate
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 8-0, 6/14/23
AYES: Caballero, Seyarto, Blakespear, Dahle, Durazo, Glazer, Skinner, Wiener
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 5/25/23 (Consent) - See last page for vote
SUBJECT: Mitigation Fee Act: fees for improvements: reports and audits
SOURCE: Hispanic Coalition of Small Businesses
DIGEST:
This bill requires local agencies to provide more information in their Mitigation Fee Act reports.
ANALYSIS:
Existing law, pursuant to the Mitigation Fee Act:
- Imposes certain requirements on a local agency that imposes a fee as a condition of approval of a development project that is imposed to provide for an improvement to be constructed to serve the development project, or a fee for public improvements, as specified, and requires the local agency to deposit the fee in a separate capital facilities account or fund. Additionally, requires certain information about the account or fund public annually, as specified.
- Requires that information to include an identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement, as specified. Additionally, requires that information to include the amount of refunds made to the owners of the lots or units of the development project, as specified.
- Authorizes a person to request an audit to determine whether a fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of a product, public facility, as defined, or service provided by the local agency.
This bill:
- Requires local agencies to include some additional information in their annual Mitigation Fee Act reports. Specifically, this bill requires local agencies to:
- Include information on projects noted in prior reports and whether construction began on the approximate date noted in the previous report;
- Explain the reason for any delay in the start of the project and provide a new approximate date construction will begin; and
- Identify the number of people or entities that receive refunds of Mitigation Fee Act fees.
- Requires local agencies to inform people paying mitigation fees that they:
- Can request an audit to determine if the fees charged by a local agency are more than the amount of money needed to cover the cost of the public improvements;
- Can receive information by mail about when the local agency will meet to review its annual Mitigation Fee Act report; and
- Can access and review mitigation fee information on the local agency’s website, and how to do so.
- Allows a person asking for an audit of Mitigation Fee Act funds to also request information about when the fee revenue generated is scheduled to be spent and when the public improvement is scheduled to be completed.
- Clarifies the portion of the audit request in this bill related to when the fee revenue generated is scheduled to be spent and when the public improvement is scheduled to be completed does not apply to local agency fees for water connections, sewer connections, or capacity charges.
Background
Local governments approving development projects can require applicants to mitigate the project's effects by paying fees – known as mitigation fees, impact fees, or developer fees. The California courts have continually upheld a local government’s right to impose these fees to pay to build sidewalks, parks, schools, and many other public projects.
Under the Mitigation Fee Act, local officials who want to impose fees must:
- Identify the fee's purpose;
- Identify the fee's use, including the public facilities to be financed;
- Determine a reasonable relationship between the fee's use and the development; and
- Determine a reasonable relationship between the public facility's need and the development.
When imposing a fee as a condition of approving a development project, the Mitigation Fee Act also requires local officials to determine a reasonable relationship between the fee's amount and the cost of the public facility. Furthermore, local officials must:
- Hold at least one open and public meeting prior to levying a new fee or increasing an existing one;
- Adopt capital improvement plans;
- Deposit and spend the fees within five years of collecting them; and
- Refund fees or make specific findings on when and how the fees will be spent for construction, if the fees are not spent within five years of collection.
Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes:
- A brief description of the type of fee in the account or fund;
- The amount of the fee;
- The beginning and ending balance of the account or fund;
- The amount of fees collected and the interest earned;
- The amount spent on each public improvement, including the total percentage of the cost of the public improvement paid for by fees;
- The approximate date by which the construction of the public improvement will begin;
- A description of each interfund transfer or loan made from the account or fund; and
- The amount of refunds of fees unspent after five years.
Anyone can request an audit to determine if the fees charged by the local agency are more than the amount of money needed to cover the cost of the public improvements. The agency will hire an independent auditor to conduct the audit as long as the same fund hasn’t been audited in the prior 12 months and the requestor deposits funds to cover the estimated cost of the audit.
Comments
- Purpose of the bill. According to the author, “Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when AB 516 (Ramos) 4/5/23 Page 3 of 4 construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state.”
- Putting the “g” in “granularity.” In an attempt to provide people paying mitigation fees – as well as the general public – with more information about how the money is being spent and the status of the projects the money is collected to pay for, this bill requires local agencies to provide more detailed information in their annual Mitigation Fee Act reports. This bill requires the reports to:
- Include information on projects noted in prior reports and whether construction began on the approximate date noted in the previous report;
- Explain the reason for any delay in the start of the project and provide a new approximate date that construction will begin; and
- Identify the number of people or entities that receive refunds of Mitigation Fee Act fees.
Adding new reporting requirements will provide additional information for the public, but that information will also likely come with an increased cost. According to the League of California Cities, the Mitigation Fee Act reports are generally paid for out of the collected mitigation fees, so any increase costs resulting from this bill are most likely to be borne by those entities paying mitigation fees.
- Know your rights & how to exercise them. It’s one thing to have access to information, but it’s another thing to know you have that access – and how to use it. This bill proposes to make people aware of some of the rights they have under the law:
- Anyone can request an audit, so this bill requires people paying mitigation fees to be told about that right;
- Anyone can be put on a mailing list to receive a notice about when the local agency will meet to review its annual Mitigation Fee Act report, so this bill requires people paying mitigation fees to be told about that right; and
- Anyone can review the report and information related to mitigation fees on the local agency’s website, so this bill requires people paying mitigation fees to be told about that right.
- State mandate. This bill provides that no reimbursement is required pursuant to Section 6 of Article XIII B of the California Constitution, because a local agency or school district has the authority to levy service charges, fees, or assessments necessary to pay for the changes mandated by this bill.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 7/11/23)
Hispanic Coalition of Small Businesses (source)
California Apartment Association
California Association of Realtors
California Building Industry Association
Govern for California
OPPOSITION: (Verified 7/11/23)
None received
ARGUMENTS IN SUPPORT: According to the Hispanic Coalition of Small Businesses (HCSB):
“Mitigation fees are often a huge barrier to small businesses across the state. The Mitigation Fee Act often has requirements for fees imposed to provide funds for public improvements deposited into an account. Often times, those who have paid these fees see their money sit idly as no improvements get completed. As business owners who pay into these fees, this is frustrating and a huge burden on our funds. This is why we are proud to sponsor AB 516 which calls for the fees to be refunded within a reasonable timeframe if not spent.
“Another issue with paying the mitigation fees arises with the refund of the fees. As stated, the process can be long and drawn out which causes the original payee of these fees to often leave and sell their property. When a local agency does pay the fees back, they sometimes go to the current owner of that land. This is an oversight that needs to be fixed. The second aspect of AB 516 states that the funds refunded within a reasonable timeframe are also returned to the original applicant.”
ASSEMBLY FLOOR: 76-0, 5/25/23
AYES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO VOTE RECORDED: Aguiar-Curry, Kalra, Mathis, Papan
Prepared by: Evan Goldberg / GOV. & F. / (916) 651-4119
7/12/23 16:02:52
**** END ****
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Anna M. Caballero, Chair
2023 - 2024 Regular
Bill No: | AB 516 | Hearing Date: | 6/14/23 |
Author: | Ramos | Tax Levy: | No |
Version: | 4/5/23 | Fiscal: | Yes |
Consultant: | Goldberg | ||
Mitigation Fee Act: fees for improvements: expenditure reports and audits
Requires local agencies to provide more information in their Mitigation Fee Act reports.
Background
Local governments approving development projects can require applicants to mitigate the project's effects by paying fees – known as mitigation fees, impact fees, or developer fees. The California courts have continually upheld a local government’s right to impose these fees to pay to build sidewalks, parks, schools, and many other public projects.
Under the Mitigation Fee Act, local officials who want to impose fees must:
- Identify the fee's purpose;
- Identify the fee's use, including the public facilities to be financed;
- Determine a reasonable relationship between the fee's use and the development; and
- Determine a reasonable relationship between the public facility's need and the development.
When imposing a fee as a condition of approving a development project, the Mitigation Fee Act also requires local officials to determine a reasonable relationship between the fee's amount and the cost of the public facility. Furthermore, local officials must:
- Hold at least one open and public meeting prior to levying a new fee or increasing an existing one;
- Adopt capital improvement plans;
- Deposit and spend the fees within five years of collecting them; and
- Refund fees or make specific findings on when and how the fees will be spent for construction, if the fees are not spent within five years of collection.
Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes:
- A brief description of the type of fee in the account or fund;
- The amount of the fee;
- The beginning and ending balance of the account or fund;
- The amount of fees collected and the interest earned;
- The amount spent on each public improvement, including the total percentage of the cost of the public improvement paid for by fees;
- The approximate date by which the construction of the public improvement will begin;
- A description of each interfund transfer or loan made from the account or fund; and
- The amount of refunds of fees unspent after five years.
Anyone can request an audit to determine if the fees charged by the local agency are more than the amount of money needed to cover the cost of the public improvements. The agency will hire an independent auditor to conduct the audit as long as the same fund hasn’t been audited in the prior 12 months and the requestor deposits funds to cover the estimated cost of the audit.
The author’s overall goal is to provide those entities paying mitigation fees – as well as any member of the public – with more detailed information on where the money is going, whether projects are started on time, how to review the reports mandated by law, and more.
Proposed Law
Assembly Bill 516 requires local agencies to include some additional information in their annual Mitigation Fee Act reports. Specifically, the bill requires local agencies to:
- Include information on projects noted in prior reports and whether construction began on the approximate date noted in the previous report.
- Explain the reason for any delay in the start of the project and provide a new approximate date construction will begin.
- Identify the number of people or entities that receive refunds of Mitigation Fee Act fees.
The bill requires local agencies to inform people paying mitigation fees that they:
- Can request an audit to determine if the fees charged by a local agency are more than the amount of money needed to cover the cost of the public improvements.
- Can receive information by mail about when the local agency will meet to review its annual Mitigation Fee Act report.
- Can access and review mitigation fee information on the local agency’s website, and how to do so.
Finally, the bill allows a person asking for an audit of Mitigation Fee Act funds to also ask for an audit to determine if the money collected will be spent in a “reasonable amount of time.”
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill. According to the author, “Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state.”
2. Putting the “g” in “granularity”. In an attempt to provide people paying mitigation fees – as well as the general public – with more information about how the money is being spent and the status of the projects the money is collected to pay for, the bill requires local agencies to provide more detailed information in their annual Mitigation Fee Act reports. The bill requires the reports to:
- Include information on projects noted in prior reports and whether construction began on the approximate date noted in the previous report.
- Explain the reason for any delay in the start of the project and provide a new approximate date that construction will begin.
- Identify the number of people or entities that receive refunds of Mitigation Fee Act fees.
Adding new reporting requirements will provide additional information for the public, but will there be an additional cost to provide this information? According to the League of California Cities, the Mitigation Fee Act reports are generally paid for out of the collected mitigation fees, so any increase costs resulting from this bill are most likely to be borne by those entities paying mitigation fees.
3. Know your rights & how to exercise them. It’s one thing to have access to information, but it’s another thing to know you have that access – and how to use it. This bill proposes to make people aware of some of the rights they have under the law:
- Anyone can request an audit, so this bill requires people paying mitigation fees to be told about that right.
- Anyone can be put on a mailing list to receive a notice about when the local agency will meet to review its annual Mitigation Fee Act report, so this bill requires people paying mitigation fees to be told about that right.
- Anyone can review the report and information related to mitigation fees on the local agency’s website, so this bill requires people paying mitigation fees to be told about that right.
4. Carnac the Magnificent. Current law gives anyone the right to request an audit to determine if the mitigation fees being charged exceed the amount of money needed to reasonably cover the cost of providing the product the fees were collected to pay for.
From an auditing perspective, this is a relatively simple task. One example would be an audit to determine whether the fees assessed to build X miles of sidewalk in a housing development exceeded or will exceed the amount of money required to actually provide those sidewalks and, if so, by how much.
This bill allows a person to ask for a separate audit to look ahead and determine if the collected mitigation fees will be spent in a “reasonable amount of time.” Under the Mitigation Fee Act, those funds must be spent within five years.
Unlike the current audit option, which asks an auditor to look at two object facts – how much money was or will be collected and how much was or will be spent – the audit option proposed by this bill asks an auditor to look forward and subjectively conclude whether the collected mitigation fees “will be expended in a reasonable amount of time.”
Predicting the future is always a risky business (see Dewey vs. Truman, 1948, and Mets vs. Orioles, 1969), especially in the construction industry, where projects delays are not uncommon due to a variety of factors (e.g., materials shortages, change orders, weather-related incidents, etc.). Asking an auditor who may not have the necessary expertise to make such a prediction may be of questionable value.
The Committee may wish to consider replacing this section of the bill with a provision to, as part of the audit permitted under current law, have the auditor report on when – based on contracts the local agency may have entered into – the mitigation fees are projected to be spent and when the project is expected to be completed. That will leave it to an audit reader to determine whether the local agency’s timeline is “reasonable.”
5. State mandate. The bill provides that no reimbursement is required pursuant to Section 6 of Article XIII B of the California Constitution, because a local agency or school district has the authority to levy service charges, fees, or assessments necessary to pay for the changes mandated by this bill.
Assembly Actions
Assembly Local Government Committee: 7-0
Assembly Housing & Community Development Committee: 8-0
Assembly Appropriations Committee 15-0
Assembly Floor: 76-0
Support and Opposition
(6/9/23)
Support: California Apartment Association
California Association of Realtors
California Building Industry Association (CBIA)
Govern for California
Opposition: None received.
-- END --
Date of Hearing: May 17, 2023
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Chris Holden, Chair
ABPCA Bill Id:AB 516
Author:(Ramos) – As Amended Ver:April 5, 2023
Policy Committee: | Local Government | Vote: | 8 - 0 |
Housing and Community Development | 8 - 0 | ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill requires local agencies to report and disclose additional information in their public reports regarding Mitigation Fee Act revenue.
Specifically, this bill:
- Requires a local agency to include additional information in its annual public reports on Mitigation Fee Act revenue. Specifically, a local agency must:
- Note each public improvement identified in a previous report and whether construction began on the approximate date noted in the previous report.
- Explain, for a project identified in a previous report for which construction did not commence by the approximate date provided, the reason for the delay and provide a revised approximate date construction will commence.
- Identify the number of persons or entities that received refunds of Mitigation Fee Act fees, as specified.
- Requires a local agency to inform a person paying development fees of the person’s right to request an audit of development fee revenue pursuant to existing law and to request a mailed notice of the local agency’s meeting to review the annual reports on development fee revenue.
- Requires a local agency to provide a person paying a development fee a link to the page on the local agency’s website where the information from the annual report on development fee revenue is available for review.
- Allows a person who requests an audit of development fee revenue to request the audit determine whether the revenue generated will be expended in a reasonable amount of time.
FISCAL EFFECT:
No state costs. Local costs are not reimbursable by the state because local agencies have general authority to charge fees or service charges to cover the cost of compliance.
COMMENTS:
- Purpose. This bill is sponsored by the High Desert Hispanic Chamber of Commerce. According to the author:
Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state.
- Background.
Annual Reports. If a local agency levies an impact fee to fund a capital improvement associated with a development, the local agency must deposit the fees in a separate account or fund. Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes specified information about the fee, including a brief description of the fee, the amount of the fee, the amount of fees collected and refunded, among other items.
This bill adds three reporting requirements to the annual report. This bill also requires the local agency to inform anyone who pays an impact fee of their right to review the report, and a link to the report on the local agency’s website.
Audits. Any person may request an independent audit of the collection and expenditure of an impact fee including an assessment of whether the fees collected exceed the amount reasonably necessary to cover the costs of the stated projects or services. If a person makes an audit request, the local agency retains an independent auditor to conduct the audit, provided an audit has not been performed on the same fee within the previous 12 months and the requestor deposits the estimated cost for the audit with the local agency. A local agency must adjust its fees if the audit finds that the fees are set too high.
This bill requires a local agency to inform anyone paying an impact fee of their right to request an audit and allows the person requesting an audit to analyze whether the revenue generated by a fee or charge will be expended in a reasonable amount of time.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing: April 26, 2023
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Buffy Wicks, Chair
ABPCA Bill Id:AB 516 (
Author:Ramos) – As Amended Ver:April 5, 2023
SUBJECT: Mitigation Fee Act: fees for improvements: expenditure reports and audits
SUMMARY: Imposes additional reporting and disclosure requirements on local agencies relative to Mitigation Fee Act revenue. Specifically, this bill:
- Requires local agencies to include additional information in reports they must file annually on Mitigation Fee Act revenue. Specifically, this bill requires local agencies to:
- Note each public improvement identified in a previous report and whether construction began on the approximate date noted in the previous report;
- Explain, for a project that was identified in a previous report for which construction did not commence by the approximate date provided, the reason for the delay. For such projects, provide a revised approximate date that construction will commence; and
- Identify the number of persons or entities that receive refunds of Mitigation Fee Act fees, as specified.
- Requires local agencies to inform a person paying development fees of the following:
- The person’s right to request an audit of development fee revenue pursuant to existing law; and
- The person’s right to request a mailed notice of the local agency’s meeting to review the annual reports on development fee revenue.
- Requires local agencies to provide a person paying a development fee a link to the page on the local agency’s website where the information from the annual report on development fee revenue is available for review.
- Allows a person that requests an audit of development fee revenue to request that the audit determine whether the revenue generated will be expended in a reasonable amount of time.
EXISTING LAW:
- Establishes the Mitigation Fee Act, which governs development fees local agencies may levy on development projects. (Government Code (GC) Sections 66000-66025).
- Requires local governments to develop a separate capital facilities account for each type of development fee they create. (GC 66006(a))
- Specifies, within the Mitigation Fee Act, that a local agency must make public an annual report for each development fee for which they have created a separate capital facilities account. This report must include:
- A brief description of the fee;
- The amount of the fee;
- The amount of revenues collected;
- The projects on which the revenues were expended;
- The projects on which the revenues are expected to be expended, including approximate date of commencement of construction; and
- The amount of refunds issued in situations where projects were completed and funds collected exceeded the need. (GC 66006(b)(1))
- Provides a process whereby any person may request an audit in order to determine whether any fee or charge levied by a local agency exceeds the amount reasonably necessary to cover the cost of any product, public facility, or service provided by the local agency. (GC 66023)
FISCAL EFFECT: Unknown.
COMMENTS:
Author’s Statement: According to the author, “Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state.”
Constitutional Limits on Local Government Revenues: Local governments rely on local revenue sources to provide services to their residents. Historically, much of that revenue came from property taxes and other special taxes, but the passage of Proposition 13 (1979) capped property taxes and tax increases for existing property owners, and required 2/3 voter approval for special taxes. This resulted in a substantial decline in local revenues. As a result, local governments turned to general taxes. The passage of Proposition 62 (1986) further limited options, by requiring majority voter approval of general taxes. Local governments then turned to assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes and created a landowner-voter process for approving assessments and property-related fees.
With these taxing strategies foreclosed, for the past quarter-century local governments have increasingly turned to imposing other types of fees and assessments that can be passed without voter approval. Such fees include “impact fees” on new housing development, which are levied to fund capital public amenities to serve the new residents of the development.
Legal Framework for Impact Fees: Impact fees are largely governed by the Mitigation Fee Act (Government Code Sections 66000-66025). The Mitigation Fee Act requires local officials to undertake certain steps whenever establishing, increasing, or imposing a fee as a condition of approving a development project. These steps include:
- Identifying the fee’s purpose;
- Identifying the fee’s use, including the public facilities to be financed;
- Determining a “reasonable relationship” between the fee’s use and the development;
- Determining a “reasonable relationship” between the public facility’s need and the development;
- Holding at least one open and public meeting prior to levying a new fee or increasing an existing one;
- Depositing and spending the fees within five years of collecting them; and
- Refunding fees or making specific findings on when and how the fees will be spent for construction, if the fees are not spent within five years of collection.
Impact Fee Reports: If a local agency levies an impact fee to fund a capital improvement associated with a development, it must deposit the fees with any other fees for that improvement in a separate account or fund. Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes:
- A brief description of the type of fee in the account or fund;
- The amount of the fee;
- The beginning and ending balance of the account or fund;
- The amount of the fees collected and the interest earned;
- An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees;
- An identification of an approximate date by which the construction of the public improvement will commence;
- A description of each interfund transfer or loan made from the account or fund; and
- The amount of refunds of fees unspent after five years.
This bill would add three more reporting requirements to the annual report, in that it would require the report to do each of the following:
- Note each public improvement identified in a previous report and whether construction began on the approximate date noted in the previous report;
- Explain, for a project that was identified in a previous report for which construction did not commence by the approximate date provided, the reason for the delay. For such projects, provide a revised approximate date that construction will commence; and
- Identify the number of person or entities that receive refunds of Mitigation Fee Act fees, as specified.
This bill would also require the local agency to inform anyone who pays an impact fee of their right to review the report, and a link to where the report exists on the local agency’s website.
Impact Fee Audit Requirements: Any person may request an independent audit of how the impact fees have been collected and spent, including an assessment of whether the fees exceed the amount reasonably necessary to cover the costs of the stated projects or services. If a person makes that request, the local agency retains an independent auditor to conduct the audit, provided that an audit has not been performed for the same fee within the previous 12 months and the requestor deposits the estimated cost for the audit with the local agency. A local agency must adjust its fees if the audit finds that the fees are set too high.
This bill amends the audit process in the following ways:
- Requires a local agency to inform anyone paying the impact fee of their right to request an audit; and
- Allows a person requesting an audit to request that it analyze whether the revenue generated by a fee or charge will be expended in a reasonable amount of time.
Arguments in Support: Supporters of the bill argue that it will increase transparency for developers and members of the public. It will also help ensure that refunded fees are returned to the correct people. According to the Hispanic Coalition of Small Businesses, the sponsor of the bill, “often times, those who have paid these fees see their money sit idly as no improvements get completed. As business owners who pay into these fees, this is frustrating and a huge burden on our funds. This is why we are proud to sponsor AB 516 which calls for the fees to be refunded within a reasonable timeframe if not spent.”
Arguments in Opposition: None on file.
Related Legislation:
AB 602 (Grayson), Chapter 347, Statutes of 2021: Added new requirements to impact fee nexus studies. Required local agencies to request certain information from development proponents and required the Department of Housing and Community Development to develop a nexus study template.
SB 319 (Melendez), Chapter 385, Statutes of 2021: Required that, when a local agency fails to comply with impact fee reporting requirements, as specified, a local agency must cover the cost of a requested audit that covers each year they failed to report.
SB 1202 (Stone) Chapter 357, Statutes of 2018: Required local agencies that do not complete their impact fee annual reports for three consecutive years to pay the costs of any requested audits.
Double Referred: This bill was also referred to the Assembly Committee on Local Government, where it passed on a vote of 8-0.
REGISTERED SUPPORT / OPPOSITION:
Support
High Desert Hispanic Chamber of Commerce (Sponsor)
Hispanic Coalition of Small Businesses (Sponsor)
National Latina Business Women Association (Sponsor)
California Association of Realtors
California Building Industry Association
Opposition
None on file.
Analysis Prepared by: Steve Wertheim / H. & C.D. / (916) 319-2085
Date of Hearing: April 19, 2023
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cecilia Aguiar-Curry, Chair
ABPCA Bill Id:AB 516 (
Author:Ramos) – As Amended Ver:April 5, 2023
SUBJECT: Mitigation Fee Act: fees for improvements: expenditure reports and audits.
SUMMARY: Imposes additional reporting and disclosure requirements on local agencies relative to Mitigation Fee Act revenue. Specifically, this bill:
- Requires local agencies to include additional information in reports they must file annually on Mitigation Fee Act revenue. Specifically, this bill requires local agencies to:
- Note each public improvement identified in a previous report and whether construction began on the approximate date noted in the previous report.
- For a project that was identified in a previous report for which construction did not commence by the approximate date provided in a previous report, the local agency shall explain the reason for the delay and provide a revised approximate date that construction will commence.
- Identify the number of person or entities that receive refunds of Mitigation Fee Act fees (development fees), as specified.
- Requires local agencies to inform a person paying development fees of the following:
- The person’s right to request an audit of development fee revenue pursuant to existing law.
- The person’s right to request a mailed notice of the local agency’s meeting to review the annual reports on development fee revenue.
- Requires local agencies to provide a person paying a development fee a link to the page on the local agency’s internet website where the information from the annual report on development fee revenue is available for review.
- Allows a person that requests an audit of development fee revenue to request that the audit determine whether the revenue generated will be expended in a reasonable amount of time.
- Provides that no reimbursement is required by this bill, pursuant to Section 6 of Article XIII B of the California Constitution, because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this bill.
EXISTING LAW: Establishes the Mitigation Fee Act, which governs fees local agencies may levy on development projects (Government Code § 66000-66025).
FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.
COMMENTS:
- The Mitigation Fee Act. Local agencies approving development projects can require developers to mitigate a project's effects by paying impact fees. Impact fees stem from a straightforward principle: new developments should pay for the impacts that they have on the community and the burden they impose on public services. Prior to establishing, increasing, or imposing a fee as a condition of approving a development project, the Mitigation Fee Act requires local officials to:
- Identify the fee's purpose.
- Identify the fee's use, including the public facilities to be financed.
- Determine a reasonable relationship between the fee's use and the development.
- Determine a reasonable relationship between the public facility's need and the development.
The Mitigation Fee Act also requires local officials that impose a fee as a condition of approving a development project to demonstrate a reasonable relationship between the amount of the fee and the cost of the public facilities supported by the fee.
- “Essential Nexus” and “Rough Proportionality.” The U.S. Supreme Court and the California Supreme Court issued a series of decisions in the 1980s and 1990s that affected the scope and application of impact fees. In its 1987 Nollan decision, the U.S. Supreme Court decided that there must be an "essential nexus" between a project's impacts and the conditions for approval. In the 1994 Dolan decision, the U.S. Supreme Court opined that conditions placed on development must have a "rough proportionality" to a project's impacts.
In the 1996 Ehrlich decision, the California Supreme Court distinguished between "legislatively enacted" conditions that apply to all projects and "ad hoc" conditions imposed on a project-by-project basis. Ehrlich applied the "essential nexus" test from Nollan and the "rough proportionality" test from Dolan to "ad hoc" conditions. The Court did not apply the Nollan and Dolan tests to the conditions that were "legislatively enacted." In other words, local officials face greater scrutiny when they impose conditions on a project-by-project basis.
As a result of these decisions and the Mitigation Fee Act, local agencies must conduct a nexus study to ensure that any proposed impact fees meet these legal tests. Other requirements in the Mitigation Fee Act ensure that impact fees are appropriately levied and spent, including that a local agency must:
- Hold at least one open and public meeting prior to levying a new fee or increasing an existing one.
- Deposit and spend the fees within five years of collecting them.
- Refund fees or make specific findings on when and how the fees will be spent for construction, if the fees are not spent within five years of collection.
- Impact Fee Reports. If a local agency levies an impact fee to fund a capital improvement associated with a development, it must deposit the fees with any other fees for that improvement in a separate account or fund. Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes:
- A brief description of the type of fee in the account or fund.
- The amount of the fee.
- The beginning and ending balance of the account or fund.
- The amount of the fees collected and the interest earned.
- An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
- An identification of an approximate date by which the construction of the public improvement will commence.
- A description of each interfund transfer or loan made from the account or fund.
- The amount of refunds of fees unspent after five years.
- Impact Fee Audit Requirements. Any person may request an independent audit of how the impact fees have been collected and spent, including an assessment of whether the fees exceed the amount reasonably necessary to cover the costs of the stated projects or services. If a person makes that request, the local agency retains an independent auditor to conduct the audit, provided that an audit has not been performed for the same fee within the previous 12 months and the requestor deposits the estimated cost for the audit with the local agency. A local agency must adjust its fees if the audit finds that the fees are set too high.
In response to reports of some local agencies not filing the annual impact fee reports in a timely fashion, the Legislature enacted SB 1202 (Stone) Chapter 357, Statutes of 2018, which required local agencies that do not complete their impact fee annual reports for three consecutive years to pay the costs of any requested audits.
- Bill Summary and Author’s Statement. This bill requires local agencies to:
- Include additional information related to proposed projects in their annual reports on Mitigation Fee Act revenue.
- Address the timeliness of expenditures in audits requested by development fee payers.
- Inform fee payers where information on annual development fee reports is available and of their ability to request an audit of development fee revenue.
According to the author, “Small businesses are a pillar to the economy and often struggle the most due to unforeseen expenses. Often times, when small businesses pay a fee as required by the Mitigation Fee Act, they feel left in the dark and as if their money is idly sitting in accounts. The updates my bill aims to make include transparency in the annual reporting so that small business owners are made aware of the reason for any delays and when construction is scheduled to be resumed among other things. It also requires that they are made aware of their right to request an audit. This is one step in providing clarity to the Mitigation Fee Act for small business owners across the state.”
This bill is sponsored by the High Desert Hispanic Chamber of Commerce.
- Previous Legislation. SB 319 (Melendez), Chapter 385, Statutes of 2021, required that, when a local agency fails to comply with impact fee reporting requirements, as specified, a local agency must cover the cost of a requested audit that covers each year they failed to report.
SB 602 (Grayson), Chapter 347, Statutes of 2021, added new requirements to impact fee nexus studies. Required local agencies to request certain information from development proponents and required the Department of Housing and Community Development to develop a nexus study template.
- Double-Referral. This bill is double-referred to the Assembly Committee on Housing and Community Development.
- Arguments in Support. The California Association of Realtors writes in support, “AB 516 seeks to make modest clarifications to existing law which allows for continued updates to the status of the projects based [on] the report provided in the previous year. Additionally, it requires any delays to the projects to be reported and the reason for the delay. Furthermore, AB 516 seeks to provide refunds to affected persons or entities if the local agency has collected sufficient funds to complete a project. Lastly, the bill allows for more accountability of funds by disclosing that a local agency must provide information to a person subject to paying a fee that they have the right to request an audit of the funds collected and how the fees are being used.”
- Arguments in Opposition. None on file.
REGISTERED SUPPORT / OPPOSITION:
Support
The High Desert Hispanic Chamber of Commerce [SPONSOR]
Hispanic Coalition of Small Businesses [SPONSOR]
Latino Restaurant Association [SPONSOR]
National Latina Business Women Association [SPONSOR]
The California Association of Realtors
Southern California Black Chamber of Commerce
Opposition
None on file
Analysis Prepared by: Hank Brady / L. GOV. / (916) 319-3958
Discussed in Hearing
32SEC
Assembly Floor
1MIN
Senate Floor
2MIN
Senate Standing Committee on Governance and Finance
3MIN
Assembly Standing Committee on Local Government
Bill Author
Bill Co-Author(s):