Senate Standing Committee on Local Government

Okay. Good morning. The Senate Committee on Local Government will come to order. Good morning. Thank you for joining us for this meeting. The Senate welcomes the public in person, and we are holding our Committee hearings here in the O Street building. I ask all Members of the Committee be present in room 2200 so we can establish our quorum and begin our hearing. We have 11 bills on today's agenda, five of which are on consent: file number two, SB 1048, Senator Jones file number 8311.

Is that by the Committee on Local Government? And then I want to. Just a little bit of housekeeping items number 1 and 7. Item one is SB 917 and 915. Sorry, SB 915. And also SB 1494 by Senator Glazer. Both of those have been pulled by the authors. We expect to hear those bills at our April 17 hearing. And also, by the way, Senator Glazer will not be present today.

I see we don't have a quorum yet, assistance, so we're gonna move on as a Committee. Subcommitee. As a Subcommitee. And when we get more, then we'll go on. Okay. We're going to hear from our first author. We're going to accommodate Senator Archuleta to go first. Welcome. And I think you will be presenting Senator Stern's first. Start with Senator Stern's. Yeah, you want to go to the. You're going to go to the podium?

Well, good morning, everyone.

Good morning.

And Madam Chair, thank you so much. And Committee Members, I would like to begin and acknowledge the suggested amendment on page five of the Committee analysis. And as you had mentioned, I am presenting on behalf of Senator Stern and he will certainly consider including the amendments in this bill should the bill advance through the Senate Energy Committee, where they consider such matters.

And Senate Bill 1251 seeks to improve many mosquito vector control districts in the capacity to protect public health and constituents from the growing problem of mosquitoes. And I'm assuming Senator Stern asked me to step in because I sat on the LA County vector control for 12 years, representing district that I serve, Pico Rivera and the surrounding areas. And vector control is extremely important to the State of California, the counties, the cities, and everything else. And I think that's why he probably tapped me.

He must have heard about that, thought it was a secret. But we'll continue. Well, many of us simply experience a mosquito bite as something irritating. These tiny pests can transfer some really, really serious diseases with a single bite that can result in very, very severe illnesses, as we all know. With me today to testify and support on the bill is Vanessa Cajina, representing the Mosquito and Vector Control Association, and Jodi Holeman, the manager of the Consolidated Mosquito Abatement district covering parts of Fresno and King County. And I respectfully ask your aye vote on behalf of Senator Stern.

Thank you. Thank you, Senator Archuleta. We're going to move on to your two lead witnesses, but I just want to remind us that each side will be permitted two lead witnesses, and we'll have two minutes each for their testimony. All others who wish to testify must limit their comments to name, affiliation, and position. So let's hear from our lead witnesses.

Thank you very much, Madam Chair, Mr. Vice Chair. Vanessa Cajina with KP Public Affairs, on behalf of the Mosquito and Vector Control Association of California, were pleased to sponsor SB 1251. This bill would allow mosquito control districts to request and enter into an agreement with their local utility corporation to manage mosquito production by finding, accessing, treating, and surveilling mosquitoes and utility vaults.

My colleague, who's going to join me today, works to protect her residents from invasive species and mosquitoes that spread diseases and are much more likely to reproduce in the warmer climates we're facing. She'll discuss why utility vaults and accessing them are a unique problem and why we need this bill as a solution. Mosquito control agencies have relationships with their local communities to treat the sources of mosquito production, and most are cooperative and productive.

All mosquito control agencies are seeing rising temperatures, paired with the way that the built environment traps water, as something that must be taken seriously and routinely before public health crises occur, so that local cooperation is very critical. However, over the past 10 years, we've seen a lot of inconsistency in our ability to develop those cooperative plans with some utilities, resulting in the increased and untreated mosquito production in some of these areas.

This approach provides a lot of flexibility, giving utilities six months to develop a plan in accord with their mosquito control district only when requested. We have members who are unable to develop consistent plans to treat utility vaults, but other mosquito control agencies who can demonstrate best practices to combat disease spreading mosquitoes. If this could have been addressed locally in the past many years, it would have. For those reasons, we are pleased to sponsor SB 1251, and we respectfully ask for your aye vote.

Thank you very much.

Good morning, Madam Chair and Members. My name is Jodi Holeman. I am the district manager of the Consolidated Mosquito Abatement District, an independent special district in the Central Valley that covers just over 1000 square miles. We cover cities like the City of Selma, Clovis, and part of the city of Fresno.

I'm also a member of the board of directors for the Mosquito and Vector Control Association of California and serve as the South San Joaquin Valley representative on the board, putting me in constant communication with district managers around the state. Our district and many others in the Central Valley and Southern California have identified below ground utility vaults as a source of mosquito production. Utility vault lids are designed with vents that allow air to escape. However, these vents also allow water to enter.

Water from precipitation events or more commonly, landscape irrigation can accumulate in vaults and create perfect mosquito development conditions. A single vault can produce hundreds of mosquitoes that can exit the enclosure onto a resident's front lawn. While enclosures are not intended to hold water, more than 50% of the enclosures we've inspected hold enough water for mosquito development. Out of the approximate 2,600 enclosures inspected by my district early in the season, 10% were found to be breeding mosquitoes. During the summer months, mosquito production increases significantly.

If enclosures are left untreated, this number could rise significantly, threatening nearby residents. Why does this matter? Our districts are on the front lines of addressing the climate change adaptation challenges. Over the past decade, we have seen an influx of invasive mosquito species that can carry and transmit exotic diseases such as dengue, yellow fever, zika, and others. This new threat could overwhelm our districts unless we take adaptations seriously and prevent the crisis before it happens.

These vaults are a prime example of the kind of threats that we need to address now. From 2014 to 2022, we worked with our local utility provider to safely treat and monitor utility vaults, but changes in management and a lack of formal plans eroded those gains. We are now without any systematic process for finding and treating vaults that are a source of mosquito production. This problem is replicated all over the Central Valley and throughout much of the state.

Those mosquito control districts who have managed to gain some level of cooperation from investor owned utility companies in the Central Valley have found that communication is often inconsistent. Additionally, the level of support and cooperation in achieving efficient access and treatment is also inconsistent. Despite signing multiple non disclosure agreements to obtain updated data sets on vault locations to address newly built housing developments, we continue to wait for the utility company to provide data they agreed to provide.

Our district has routinely outlined the number of treatments to be made, where the treatments need to be made, and a timely treatment schedule based on resources. However, year to year, these requests are consistently not addressed. For those reasons, having a requirement to develop a cooperative plan with investor owned utility companies within six months of the mosquito control district's request to do so is a common sense measure to prevent what could be a public health crisis. Thank you for your consideration.

Thank you very much. Do we have any further support witnesses here?

Good morning, Madam Chair. Betsy Armstrong, on behalf of the County Health Executives Association, representing local health departments, in support.

Thank you.

Good morning, Committee and Chair. My name is Braden Doyle. On behalf of the California Special Districts Association, we are in support. Thank you.

Thank you. Okay, do we have any lead? Opposition witnesses? No. Seeing no lead. Anyone here wishing to speak in opposition to this bill? Okay, seeing none. Do you have any. Oh, comments. I'm sorry. Questions and comments.

Yes, a question for vector control. This is a serious health crisis. The mosquito population has been exploding, especially little guys that you can't really see. And can you describe some of the environments because I've heard that they can breed in a thimble, in a bottle cap, if there's a bottle cap left out with water, so that people understand how serious this is and why it's very important for us to address this.

Yeah. So the big challenge that we deal with up and down the state is a new invasive species, aedes aegypti and aedes albopictus. Multiple invasive species. These are different from our native species in that they will breed in very small amounts of water, unlike some of our native species that you will find in larger water bodies. Like, a lot of people see swamps, marshes, things like that, and think of mosquitoes.

They don't think of maybe some trash that was left in their backyard that's accumulating sprinkler water. But absolutely, those things can breed mosquitoes. And the utility enclosures also are dense in urban residential areas that are also producing these mosquitoes as well.

Right. And they catch runoff a lot of times from the irrigation that people are doing.

They do. So they're a source pretty much year round in the state of California. And many parts of the state don't experience any precipitation events during peak mosquito season, which is July, August, and September. But residents, businesses continue to do landscaping, irrigation that enters water into these. So they will breed mosquitoes throughout the mosquito development season.

And even though the vaults are actually designed to drain off water, a lot of times, like all other things that you thought you designed to drain off, it doesn't always drain off. And so it's important for the IOUs to get out there and, yes, and do these inspections. But this looks like it provides a backstop to them not doing that process. Just like if they were not doing the clearance of overhead wires, doing fire mitigation underneath. This is actually what they have to do for these vaults and assure our safety.

That's correct. Thank you very much, Senator. This does provide that backstop in that we've had, as Ms. Holeman indicated, different levels of cooperation. But we also have some best practices where the utility is able to do that on their own in coordination with the mosquito control agency. We find this to have a lot of flexibility in terms of the approach and the on ramp for it.

I'd want to be working really carefully with our vector control to make sure that our agency wouldn't be responsible for giving us all these mosquitoes. With that, I appreciate Senator Stern's bill addressing this. I think it makes a lot of sense. Thank you.

Thank you.

Thank you.

Senator Archuleta, any close?

I'd like to just close by saying thank you. And it's so important as we're approaching the summer months, children, people don't even realize the danger that we have. And all the people in the veto control industry across California, their mission, keep us safe. And I'm so proud to present this bill on behalf of Senator Stern. I respectfully ask for your aye vote.

Thank you. And because we don't have the quorum, we will not be taking this bill up until we get more of our Members. Thank you very much to our witnesses for being here. Senator Archuleta, do you want to proceed with the next bill? This is SB 1418.

Okay. There you go. Once again, thank you, Madam Chair, for allowing me to present my Bill and the Committee Members. I would like to start by thanking the Chair and her staff for working with me on this Bill and to note that I agree to accept all of the Committee suggested amendments as outlined in tab 5 and 6 in the Committee analysis.

As the Chair of the Select Committee on Hydrogen Energy, it has come to my attention that pivotal component of our transition towards a cleaner, more sustainable mode of transportation, hydrogen fueling stations, are at the times not being built or unnecessarily delayed due to an overly burdensome permitting process by local municipalities in some counties as well. Senate Bill 1418 addresses this important issue, as hydrogen has shown great potential towards decarbonizing our heavy-duty transportation sector.

Senate Bill 1418 transcends simple local ordinances or municipalities concerns and rather addresses the statewide imperative. This Bill recognizes the vital need for consistent standards across all jurisdictions to facilitate the prompt and cost-effective deployment of these critical zero-emission fueling stations. Senate Bill 1418 underscores our legislative commitment to fostering zero-emission vehicle infrastructure while mitigating barriers to the installation of hydrogen fueling stations. We've got to open the doors and welcome these stations into our state.

Senate Bill 1418 brings parity to the electric vehicle permitting process by streamlining the administrative approval process for hydrogen fueling stations in the same way that we do for the charging stations. Specifically, Senate Bill 1418 mandates that cities and counties must adopt an ordinance and checklist that creates an expedited, streamlined permitting process for hydrogen fueling stations. This directive is designed to expedite procedures and ensure that citizens have access to clean energy options without unnecessary administrative hurdles.

While Senate Bill 1418 streamlines the permitting process, health and safety remains top priority. My previous Bill, Senate Bill 1291, which passed and was signed by the Governor, ensures hydrogen fueling station permits adhere to stringent health and safety components and performance standards. Senate Bill 1418 keeps these core components in place.

Furthermore, to address physical and procedural concerns, Senate Bill 1418 phases in requirements that most cities and counties in the state will not have to develop an ordinance until September of 2026, well after GO-Biz releases its model ordinance and checklist for hydrogen fueling stations permitting. In conclusion, Madam Chair and Committee Members, California has more fuel cell electric vehicles and the hydrogen stations necessary to fuel them than any other state in the nation.

And with California's recent success in securing substantial federal funding for clean renewable hydrogen initiatives through the Alliance of Renewable Clean Energy Hydrogen, also known as ARCHES, the timely passage of Senate Bill 1418 is essential to take full advantage of these federal dollars to expedite the development and deploying of hydrogen infrastructure, in turn facilitating our state's transition to a cleaner transportation future. Senate Bill 14 represents a pivotal step towards realizing our environmentalist stewardship and obligation and advancing our sustainable transportation objectives.

For these reasons, I respectfully ask for your aye ote, and today with me, I have and support Teresa Cooke, representing the California Hydrogen Coalition, who can also assist in answering any technical questions you might have. And I respectfully ask for your aye vote once again.

Thank you, Senator. Miss Cooke.

Good morning, Chair and Members. Teresa Cooke here on behalf of the California Hydrogen Coalition, very pleased to be in support of Mister Archuleta's 1418. This Bill, as noted, would align the infrastructure permitting for hydrogen refueling stations for fuel cell electric vehicles with that of charging stations for battery electric vehicles.

In the ARB's annual AB 8 report, they note, you know, very regularly that permitting is one of the biggest causes of project delays, and the upfront checklist in particular that this Bill provides is wildly popular amongst our hydrogen fueling station developers. According to the Air Board, fuel cell vehicles will be 20% of the passenger market and much higher in heavy-duty applications. And to Mister Archuleta's point, it's important that we start creating the opportunities for the build-out of these stations as quickly as possible.

As we all know, infrastructure needs to be in place before these vehicles are deployed. And so for that reason, 1418 is critical for us to meet our zero-emission vehicle goals. But most particularly for households that are living in multi-unit dwellings that don't have access to garage charging. We have a lot of super commuters in this state, a lot of folks that need larger-size vehicles, that fuel cell vehicles are uniquely positioned to serve. So for those reasons, we thank you for your support today and ncourage your support today.

Thank you. Thank you very much. Do we have any other witnesses in support of SB 1418? Please come up.

Thank you, Madam Chair Bobbie Cane, California Hydrogen Car Owners Association, in support of this Bill.

Thank you.

Madam Chair, Bernice Jimenez Creager, with the California Trucking Association, support for this Bill.

Thank you.

Madam Chair and Members. Vince Wiraatmadja with Air Products in support.

Thank you.

Thank you, Madam Chair. Jack Yanos, on behalf of the California Fuels and Convenience Alliance, in support.

Thank you.

Glenn Rambach, 50-year researcher in advanced energy, 40 years in hydrogen. I encourage you to support this Bill.

Thank you very much. Do we have any witnesses... anyone speaking in opposition to SB 1418? Yes, please come forward.

Damon Conklin with the League of California Cities. First and foremost, we want to acknowledge and appreciate the work of the author and his staff to address some of our concerns with the most recent amendments. Despite these amendments, we still remain opposed unless amended continuing. Cities throughout the state are very supportive of helping the state address climate change, as well as achieving the state's transportation and climate goals. For years, cities have been leaders in supporting projects and programs to reduce greenhouse gas emissions.

We would even submit that we believe the basic premise of of the intent of the Bill in that hydrogen is often, if not overlooked, sometimes pushed to the side technology in contrast to EV charging, and when we look at medium to heavy duty and advanced clean fleets, we see hydrogen is really a better option in many templates and systems. However, this Bill is framed on this false premise that cities are the barriers, cities are the ones that are inhibiting the proliferation of hydrogen hubs.

It takes a lot of energy to produce hydrogen, three to nine times more energy than electric fuel charging. It's four times the price of gasoline, 16 gallons of gas. There is tremendous amount of complexity with the engineering, the structure, transportation, storage, electrical codes, lack of capital investment. These are the barriers. Last month, I think we saw more applications withdrawn than actual pending applications throughout the state. I think the California Hydrogen Coalition's own website noted 18 pending applications that are being reviewed throughout the state.

And we're making a one-size-fits-all policy here where every city, no matter their size, no matter their financial resources, may never, ever see an application before them, have to develop this permitting system and compete with solar and EV charging and other edicts from the state that say, thou shall do this first. So we would love to work with the author's office to say, hey, is there, you know, a way that this is applicable to those jurisdictions that actually receive permits? Happy to do so.

It just doesn't feel appropriate to make it apply to every jurisdiction, regardless of their size. And for those reasons, we remain opposed unless amended.

Thank you very much, Mister Conklin. Anyone else wishing to speak in opposition? Yes.

Christina Scaringe with the Center for Biological Diversity in opposition. I urge the Committee to look at some of the reports from AEFA and others noting that this does not make sense from an economic perspective. The state really needs to look at how it spends its limited dollars. Thank you.

Thank you very much. Anyone else wishing to speak in opposition? Seeing none. Members? Senator.

Okay, I'll comment a little bit. So I am all for the development of hydrogen fuel cell and that technology and getting as many trucks, cars, etcetera, as can be done to help create a cleaner environment for us. A lot of the sentiments that have been expressed by the representative from the League of Cities are sentiments that I hold, especially coming from local government and having the frustrations of watching projects that we really want done held up beyond our control.

And, you know, we have a lot of regulations that we have to make people go through in order in studies, etcetera. CEQA. All of those things have to be done. Those are a lot of times outside the control of local government. And so they wind up being the people who get blamed because they're ultimately the person they have to give the permit.

But if all the boxes aren't checked from all of these other things, then, you know, they're the ones who wind up having to turn it down. And I think a lot of governments that are trying desperately to do this technology, they're already trying.

And unless we address some of the other issues that are really causing these delays and some of them are necessary and some are unnecessary, and when you're talking about hydrogen fuel, you know, there is a public perception out there that people don't want things like this rushed through because they're afraid of it. They're afraid of what they, what they view as an, you know, potential for, you know, explosions and things like that.

And maybe those are unfounded nowadays because of the technology that we have, but it's still out there. And so we need to be cognizant of that and where they're placed and what the regulations are around them, because they're not regulations. Some of them aren't regulations that can be necessary, necessarily skirted around.

And so for those reasons, I'm not probably going to support the Bill, because I would rather have the cities remain in full control of being able to get through these processes and be able to participate or not participate if they're not in that position to participate. So with that, that's kind of my thoughts on the Bill. Thank you.

Madam Chair, may I comment?

Yes.

Okay. I'd like to thank the witness for coming forward. Thank you. We'd appreciate it. But California is in the forefront with hydrogen. And that's why when my Bill, Senate Bill 1291, was presented to the committees and worked its way through the Senate Assembly and through the Governor, it was to open the doors to this new technology, hydrogen fuel cell batteries. And I will share something with you on a personal note.

I went home and told my wife that I'm looking seriously in obtaining a fuel cell battery automobile. And I'm sorry, I went back and I said, I'm looking to buy a hydrogen automobile. And she goes, not in my garage, as you mentioned. So why did I even ask that? Because one of my staff members have it. A couple of our Senators own the type of car.

So I went back home and I said, I'm looking at a fuel cell battery car that gets 400 miles per tank. And she goes, wow, when do we get it? And then I said, we're going to keep looking. We need to fuel cell hydrogen station to be able to go. That is our setback. My two trips to Japan to meet with them and their hydrogen production and everything that's done there.

The industry that I've met with time and time again, one of the things I learned is safety. And I'll give you an example. If I had a drop, if this were a desk and I had a drop of gas, put it right there, and a drop of hydrogen, and I lit them, this would burn through the table. Hydrogen would dissipate. Safe. That's one thing. The other thing is California seeked $1.5 billion from the Federal Government.

My resolution that we signed on and we sent to Washington to bring the hub here to open up the doors for cities and municipalities and businesses, good labor-oriented businesses, union wage businesses in the hydrogen energy. That money came. So now we're trying to figure out who can participate in the future of hydrogen. And I will tell you this, Senator, that in California we have a treasure chest of energy. You open that up, and we've got fuel cell batteries. Of course, we've got energy electric.

We've got everything and solar, and we have got to utilize everything in our power and our possession. In my community, there might be an eight-story apartment house or a four-story apartment house. And not everybody can afford the cost of these electric vehicles, so they should have an option. And if we had the fueling stations, maybe they can purchase these vehicles not at the cost of the state or other public entities, but the individuals themselves.

Now we're asking for the cities to understand that the cities will decide who comes first, a solar energy or hydrogen. It's up to them. So we're not taking away the city requirements, the cost, the city will go ahead and levy those fees, not the state. So it's all back to the local government. The other thing is that now that we have the $1.5 billion from ARCHES, now people are going to start looking more various automobile industries.

We talked about the port of Los Angeles, the port of Long Beach, and the vehicles that are there. They're transitioning into hydrogen as well. The technology is there. The safety has already been looked at, and we have to participate in the future of this. All this Bill does is open up the doors to the municipalities that says you can go ahead and process these things and you do the permitting, you've got the authority and. But public safety is number one. We've already done that.

So that's all we're doing is just opening up the door. Not every city will participate because not every city will have an applicant that will do it. But we don't want to close the doors. We want to keep those doors open for everyone.

Yes, Senator.

I have a quick question. What are some of the regulatory agencies that you have to go through to be able to open up a hydrogen cell, hydrogen fuel station?

All local. We don't have state-level issues.

You don't have Air Resources Board?

No. No, we don't. So the CEC issued years ago, sort of a blanket exemption for, I think it's like a neg DAC or something like that for CEQA for charging infrastructure and hydrogen refueling structure. So we don't really run into state-level issues when it comes to permitting. It's predominantly local.

Okay, then where is the hang up in the permitting locally?

Honestly, I think there is still some of what you noted, which is the lack of familiarity around hydrogen. There are a lot of folks out there that are hydrogen skeptics, and those things are permeating both in a state level that we experience sometimes here in Legislature from time to time, but also locally as well. So, you know, we have seen cities outright refuse to consider anything related to hydrogen, which was pretty devastating.

We have seen folks just unfamiliar with the amount of research and resources that are available on hydrogen refueling. One of the things our industry did very, very well is before a vehicle ever came to market or a station was built, we came up with the safety standards, with the state fire marshal and others on this infrastructure. You know, GO-Biz has a permitting handbook. There are plenty.

There's a wealth of resources out there that are meant to inform city and county permitting staff about how to do this safely and well. We're still running into challenges to the extent that 20 or that 1418 adds a little bit of urgency and demand to focus in on that, more so, is what we're after here. I mean, I'll remind you, Senator, that California is one of the three largest hydrogen-producing states.

It's the most abundant element on earth and something that we have a lot of familiarity with.

Yeah, I don't need to be talked into the technology. I'm all for it. What I have to come to grips with is the superseding of local control on the basis that they're holding things up, and I want to know why they're holding things up. Do you have an answer of what's being, what the process.

The passage of this bill is not going to somehow tip the scales and create this tsunami of floodgates in the permit desks. It is the inhibitor of capital. There's lack of interest, there's skepticism within drivers. I think there were supply chain issues during the pandemic where vehicles could not get refueled with existing stations.

There's one station here in Sacramento servicing kind of a tri, multicounty area, and it was empty, and people had refueling issues and challenges and turned those cars in when the lease was up. It's not a local permitting barrier. It's all these other factors. And locals are looking at the complexities of the engineering, the transportation, the storage, electoral codes. And so we are restricted only to health and safety. So...

I'm sorry, I'm just going to interrupt. Just not stopping the...

Yeah, just so we can do the quorum.

Just to do the quorum. So if our Assistant would please establish quorum.

[Roll Call] You have a quorum.

Thank you. Yes, Senator, if you want to continue.

All right. No, that was. I appreciate both of your explanations. If a community doesn't want it, does this require them to come up with a plan to have it?

Here's the thing. We're talking about 40 million people in the State of California, cities upon cities, counties upon counties. Not every city is going to jump into allowing it. All we're saying is that, if you have an application, don't put it down in the bottom of the barrel. Make sure that you attend to it. And that's what we're saying.

They go in the front of the line with all the other things that are in the front of the line. That's what I'm afraid.

So we're not asking to put it in the front of the line, but certainly get it out from the bottom of the barrel. And that's all it is. It's a simple ask.

All right. Thank you.

And the fact is that there are cities that will have a moratorium. All right. And it has been noted that a city has received information that because of Senate Bill that I, Senate Bill 1291, they had to lift the moratorium because they were in violation of the law. We don't want anyone to be in violation of this law either. All it says is, again, open the doors to people who will apply, make it easier, because partnership, investment.

And that's why the federal government has given money to California, so we can proceed with that energy source, zero emissions. This is what it does. And for a lot of people don't know, it's 18 wheelers right now are running on hydrogen, and probably the size of my fingers here of the emissions with water coming out of the back end.

I mean, it is the future of California, and to be part of it. And this is one step. There's going to be more and more, but the infrastructure itself needs to happen. Without the infrastructure, we're not going to be able to move these vehicles out of Long Beach and San Pedro and everyone else. So with that, I respectfully ask for your aye vote.

And I'll take that as a beautiful closing statement.

Thank you.

And I do want to comment in addition to... Oh, go ahead. Not yet. I was just going to say something. Okay. It's appropriate. Thank you very much, Senator. Thank you. I just want to say I do sympathize with one of your remarks, and that is, if you're going to get more and more expedited requests, if you're going to have to, if you're going to be required to move things more expeditiously from one subject to another, then how do you make those choices?

So I think that's a very valid point, and I think you should continue to talk to each other about that concern because we want expedited to mean expedited, not expedited, when there's 10 other things that have to be expedited. So with that, we have a motion by Senator Wahab, and we call the roll.

Motion is do pass... Motion is do pass as amended to the Committee on Transportation. [Roll Call] Three to zero.

So we'll hold on. We'll put it on call. Thank you very much.

Thank you, Madam Chair, Committee Members.

Thank you, Senator Archuleta. We're going on now. Wait, hold on a second. Okay, we're gonna go now. We're gonna go back to. Oh, we're right in the right order. Senator Wiener, you presenting SB 937? Oh, I'm sorry, Senator Wiener. Before you start, we're going to take up the consent calendar.

Motion is adopt the consent calendar. [Roll Call] Four to zero.

Thank you. Okay, now, Senator Wiener, move with SB 937.

Great. Thank you very much, Madam Chair. First of all, I wanna really thank you, Madam Chair, and your staff for working with us on this bill. We made some amendments we put into print before the analysis, working with your Committee and also with various stakeholders, including some of the water districts, park districts, et cetera. And then we have additionally worked on additional amendments in lieu of the amendments and the analysis. I just want to, I know that the language has been distributed.

I just want to go through them so it's on the record, and I'm very appreciative for the Chair's engagement. So for the both the fee deferrals and the entitlement extension, the following projects would be eligible: projects that are 100% affordable housing projects, projects subject to entitlement under SB 35 or SB 423, which is the successor law, AB 2011 State Density Bonus Law, SB 4, SB 2, the Low Barrier Navigation Centers, or any project globally that is 10 units or less, so small projects.

In addition, there are amendments that we're agreeing to, and that's just a caveat for ongoing work with the Committee. Amendments that were requested by local government groups relating to utility service fees, clarifying that connection and capacity charges can be charged at the time of application to restore the ability for local agencies to charge fees earlier for expenditures previously made. In other words, if they are incurring ongoing expenses that would be allowed to be collected earlier.

One caveat there that we'll continue to work with the Committee on is that, if it is a long range plan without a construction schedule, they're not really paying the money right now. And so we'd like to continue to work with the Committee on that issue. I think we sort of ran out of time before today's hearing. An amendment to restore language allowing local governments to require the posting of a performance bond or a letter of credit for projects that are at least 49% affordable.

And again, we ran out of time discussing that. We want to continue to work with the Committee on that, but we are agreeing for that to go into the bill. To restore language allowing local governments to require developers to enter into a contract with the ability to authorize an officer to approve and execute contracts and post a model form of contract on its website, and to clarify that if a local agency does not issue certificates of occupancy, final inspection serves as the certificate of occupancy.

So those are the amendments we've agreed to, those two areas. I appreciate the Chair's willingness to continue to work with us. We, of course, will make no amendments without the sign off of the Chair going forward in those areas. So thank you so much. Okay. With all that said, this bill does two things. First of all, for projects that received their entitlement at some point between January 1, 2024. Excuse me.

For projects where their entitlement is set to expire between January 1, 2024 and December 31, 2025 it will extend those entitlements by 24 months. We're in a period right now where we have projects that have been fully entitled, gone through the process. Interest rates are extremely high right now, and there are projects that are getting frozen because the financing doesn't work with the high interest rates. This will just create some more breathing room for them so these projects do not fall apart.

The other piece of the bill for certain types of impact fees allows payment of them at the issuance of certificate of occupancy as opposed to at the beginning of the project. We know that, and there was actually just a very sobering article in the Los Angeles Times today about the deceleration of certain kinds of housing production because of both, not just high interest rates, but also the significant escalation of construction costs.

And so the change in the timing of the payment of these particular fees will help projects actually happen. I do want to stress that if a developer pays impact fees and the project then doesn't happen, for example, if it becomes infeasible, cities are required to reimburse those fees. So, for example, my understanding is right now that some cities are holding fees in escrow because otherwise they could be liable for repayment, and they've already expended the fees. So this is, I think, a good pro-housing approach.

So that is the bill. Again, I'm very appreciative of the Chair's engagement and work with us. And with me here to testify are Graciela Castillo-Krings, on behalf of the California Housing Consortium, one of our cosponsors, and Muhammad Alameldin, a Policy Associate with UC Berkeley Terner Center for Housing Innovation.

Good morning, Madam Chair.

Welcome to the hearing. Thank you, Senator.

Thank you.

Good morning, Madam Chair and Members. Graciela Castillo-Krings. I'm here on behalf of the California Housing Consortium and wanted to echo the Senator's comments. Really appreciate the numerous hours that you and your staff have spent on the bill. We look forward to additional conversations. The Housing Consortium is a nonprofit organization that advocates for housing that is affordable to both low income and moderate households.

Every Member of this Committee is very aware of the housing shortage and the crisis that that is creating for a lot of our families and a lot of seniors that are ending up on the street streets. The problem is further compounded by the lack of a sustainable funding source, and considering this reality, the housing community is searching for policy solutions that can help us kind of weather this upcoming storm. SB 937 seeks to add another tool into the tool belt and help address the problem.

SB 937 does not prevent local fees from being from being levied. They simply change when these fees are collected. This change helps keep funding flowing for local governments while at the same time ensuring that projects pencil out. When impact fees are collected at the early stages of development, that is when the actual borrowing costs are the most expensive. Simply because the construction has not started, banks don't lend at that point. Just to quote a paper that was issued by UCLA Lewis Center.

They found that assessing fees at earlier stages can do real harm by deterring housing production. It further went on to say that fee deferral programs can efficiently reduce costs and increase the viability of housing production, and they can do so without asking local governments to forfeit revenue. This was based on looking at the LA Housing Program, which actually defers fees.

So at the time when it's unclear if there is going to be a housing bond on November, on a time when the Governor is proposing to eliminate all General Fund investment in housing, looking for policy solutions can really, that can help bring costs down are crucial and critical. This is one of the reasons we are not just a supporter, but a sponsor of this bill. And for those reasons, we ask for your aye vote thank you.

Thank you very much.

Thank you, Chair Durazo and distinguished Members of the Committee for the opportunity to address you this morning regarding Senate Bill 937. My name is Muhammad Alameldin, and I serve as the policy associate for UC Berkeley's Terner Center for Housing Innovation. The Terner Center is a research center focused on a range of housing issues, from land use to zoning reform, to addressing homelessness, to exploring the nexus between climate change and housing.

It's important to note that my testimony is not intended to express a stance on this bill. Instead, my aim is to share insights based based on on our research on the subject of impact fees. Over the past nine years, the Terner Center has released multiple research papers that delve into the effects of impact fees on housing projects. These fees, which are levied by cities on new housing developments, cover a myriad of municipal costs associated with the increased demand in public facilities and infrastructure.

It's worth highlighting that these fees are particularly steep in California, where the legacies of limited options for municipal revenue have driven the average impact fee to be almost triple the national average. I'll present findings from just two of these research papers today. As it relates to SB 937, it's worth noting that our research residential impact fees in California did indeed find that a large majority of localities imposed impact fees at the time of building permit submission.

Only a quarter of jurisdictions we studied deferred impact fees to final inspection or certificate of occupancy. In terms of understanding the beneficial impact to meeting the state's housing goals from deferring fees, it is not possible to give a definitive answer. However, it is likely materially beneficial, particularly in the current interest rate environment. Five months ago, we released Making It Pencil: The Math Behind Housing Development, where we analyzed prototypical multifamily properties in three major California markets.

We then conducted a financial analysis of the feasibility of building five stories over one story of retail, a very common multifamily development type. Oh. Oh, sorry. In every market examined, we found that these apartment structures do not pencil, meaning that they are not financially feasible under current market conditions. Using this modeling, we were able to assess the impact of deferring impact fees from the date when the first building permit is pulled to the date of certificate of occupancy.

We found that the postponement of fees saves about $7,000 per unit, which varies greatly based on local jurisdictions' fee structure. A better estimation would be that the deferral fees save about 1% of total unit of total development costs.

I'm sorry, you need...

Yeah. While 1% may seem small, it would tip the projects into feasibility and hence allow housing to begin construction that would otherwise happen absent of this change.

Thank you.

Yeah. Thank you.

Thank you very much. Appreciate it. Do we have any other witnesses in support of SB 937? Please come forward. Give your name, organization, and your position.

Good morning. Rebecca Marcus on behalf of LeadingAge California in support. Thank you.

Good morning. Voleck Taing on behalf of the American Council of Engineering Companies in support.

Good morning. Cornelious Burke with the California Building Industry Association. We are California's home builders. We're in strong support of this bill.

Good morning, Chair and Members. David Azevedo, AARP California, in support.

Corey Smith, Housing Action Coalition, one of the cosponsors, in support.

Brooke Pritchard, one of the other cosponsors, on behalf of California YIMBY.

Seamus Garrity, here with Lighthouse Public Affairs on behalf of SPUR, Sand Hill Properties. Excuse me, sorry, I lost it. BuildCasa, Fieldstead, and Habitat for Humanity of California.

Thank you.

Good morning, Kris Rosa on behalf of the Silicon Valley Leadership Group in support.

Thank you.

Good morning, Madam Chair and Members. Sosan Madanat, W Strategies, on behalf of California Community Builders, in support.

Thank you. Do we have any witnesses in opposition? We'll have... You can step up. You can have two minutes each if you want.

I'll be very quick. Kris Anderson on behalf of the Association of California Water Agencies. We didn't have a position. We had concern. The recent author's amendments this week did appear to address our concerns. So just want to thank the author, staff, the Committee for, and the sponsors, for working with us. Thank you.

Okay, we'll take the two principal witnesses. Yes. Okay. Go ahead. And two minutes, please.

Thank you, Madam Chair. Anthony Tannehill with California Special Districts Association. We represent all manner of local services from fire protection and flood protection, healthcare, and everything in between. And our position is opposed unless amended. And I just really wanted to take the time to thank the Committee and your staff, the author, your staff, and the proponents who have had an open door policy.

And we're all fast friends now, and I really appreciate the work and the effort that goes into it. And just want to remind the Committee and the stakeholders that, in order to have the communities built that we want, it has to come with the services, and we want to provide them. And so I do appreciate the thoughtfulness that's going into it. We look forward to seeing it in print and taking it back to our members and going from there. Thank you very much.

Thank you very much. Okay, anyone else in opposition to SB 937?

Good morning. Alyssa Silhi with the Renne Public Policy Group on behalf of the California Association of Recreation and Park Services. Wanted to thank the Member and the Member's staff and Committee staff. We're able to come off of our opposed unless amended position based on the amendments in print.

On behalf of the City of Belmont, I think we might end up being able to be okay, but look forward to seeing the amendments in print that you mentioned today and really think the work of the Committee and the author and hope to get there. Thank you.

Thank you.

Danielle Blacet with the California Municipal Utilities Association, representing water and publicly owned electric utilities. Want to thank the author and the Committee as well. With the amendments that are in print now and the proposed Committee amendments, I believe that will address our concerns. So just want to thank the Committee and the author for your efforts.

Thank you.

Spencer Saks on behalf of the California Association of Sanitation Agencies. I'd like to echo the previous comments. We appreciate the amendments and the work that's gone in, and we look forward to continuing to work with the author and the Committee. Thank you.

Thank you.

Mark Neuburger, California State Association of Counties. Also would like to thank the work of the Committee, as well as the Author's office, on amendments. We are currently have an opposed less amended position, but we look forward to reviewing the amendments and reassessing accordingly.

Thank you.

Good morning, Chair and Members. Brady Guertin on behalf of the League of California Cities. We also have an opposed unless amended position, but given the amendments, we'll reviewing them when they're in print in hopes of removing it. So wanted to thank the Chair and the author's office for their continued conversations about that. We'll look forward to seeing it through. Thank you.

Thank you.

Good morning, Madam Chair and Members. Lauren De Valencia representing the American Planning Association. Would echo the really the big appreciation for all the work that's gone into this. We didn't have a formal position on the bill, but did have some technical concerns and appreciate the sponsors, the author, and the Committee's work on this. And we will be removing. We didn't remove. We didn't have opposition. Sorry. We will be removing any concerns, and move to neutral. Thank you.

Thank you.

Good morning. Tracy Rhine, Rural County Representatives of California. Likewise, we did not have a formal position. We do appreciate all the work of the author, the author staff, the Committee staff, and look forward to working on the bill as it moves forward. We do have some concerns that we want to continue to work out. Thank you.

Thank you. Okay. Seeing no more, no one else in opposition, bring it to the Members.

That was the best opposition I've ever had.

That took a lot of work. Yes, Senator Seyarto.

And here's the cherry on top. I plan to support your bill, with the amendment especially, that allows for local agencies, if they're mid-project and need the money to finish the project, that it goes in. It's important for people to understand that, when money is collected, actually the mitigation money goes into a pot until they have enough from all the different projects to build that amenity.

And so whether it goes into the front or goes into the back isn't that big of a deal unless they're mid-project. And so your amendments took care of that, only that one concern. The financing issue is a big deal right now, especially for any projects upfront. And yeah, it's kind of hard to get all the mitigation money financed when you don't even have something on the ground for collateral. And so, with that stated, appreciate all the work you did to try to smooth out some of the rough edges. And I'll be supporting your bill today. Thank you.

Thank you. Okay. Well, I also want to thank the author. Our Committee worked very, very hard. Thank you very much, Jonathan. I don't know if you're supposed to do that, shout out your staff, but we worked very hard, and I really appreciate that. And thank the author for working with the Committee on these amendments limiting the types of projects that will receive the fee deferrals and entitlement extensions and those two kind of projects that will bring real affordability in our housing.

We all know there's an housing affordability crisis and helping developers make their projects pencil out is important. But we also know that local governments need to be able to finance the infrastructure as we build out that housing, and they need to be able to mitigate the impacts of that development in our communities. They need, local governments need the certainty that they can collect impact fee revenue in a timely fashion.

And the amendments that restore their ability to contract with developers to repay that revenue will help guarantee they receive this revenue that they very much. I don't think we disagree that the infrastructure is needed for the housing. We need the housing done now. So we need to be able to watch out for those. So with the amendments, I will support the bill today and urge, also, support from my colleagues. With that, any closing remarks after such a beautiful presentation by your opposition?

First of all, I want to just reiterate my thanks to the Chair and to the Committee staff for working so diligently with us. And I want to thank all the stakeholders who really worked in good faith with us, and I feel good about where the bill is. I look forward to continued work, and I respectfully ask for an aye vote.

Thank you very much. Okay, motion is moved by Senator Seyarto.

Motion is do pass as amended to the Committee on Housing. [Roll Call] 4 to 0.

There she is. I was thinking she might have piped in her. Got the. We're holding. Put on hold on call. Okay. We're gonna vote on them. Was he motionless? No. Okay, Senator Seyarto, you'll be presenting on SB 955.

Yes.

Hello there.

Hello, Madam Chair.

Okay. Well, first, I know a lot of people say this is a courtesy first, but I want to thank the Committee staff, because you guys have worked with my staff to try to help craft this bill because it went from an idea to, I think, a really good bill that will be helpful for communities. So California continues to suffer from inadequate infrastructure funding, and it leads to unsafe conditions for a lot of our residents.

This bill aims to support our cities and counties and completing vital infrastructure projects on time by creating a Gap Fund and a new, which would be a new grant, but it's a little different than the ones that are currently around, and it can be funded annually by the Legislature. But this particular bill just creates the fund itself, the pot for it, doesn't mean it's getting funded right now.

The gap fund's purpose is to close that last bit of funding that always happens, or that happens a lot, especially to communities that are in more rural areas, like Coachella Valley for me, and some of our other communities where they've gone through the process, they've got all their funding, they get to the end after getting all the stuff done, and now the cost is escalated another one to two or three million dollars.

This has happened in my district a few times, and sometimes we plug that gap with our district asks, but more than not, it does not happen.

And so they wait, and guess what happens? The costs escalate, which puts pressure on what we were just talking about before. It makes the mitigation fees go up more. So we're trying to stop the bleeding with this. That's what this is trying to do. So denying these projects inevitably increases costs over time due to factors like inflation, labor, and materials.

The bill is the last resort for, it's designed to be the last resort for, local governments to fund a project that would otherwise would have been funded. But due to unforeseen foreseen circumstances, costs increased. We all know how difficult and frustrating the process of submitting district budget requests, which then get denied.

And so this will help alleviate some of that by allowing municipalities to apply for a grant directly from this Fund, overseen by the Office of Planning and Research, SB 955 will establish the Gap Fund with the intent of annual funding for the Legislature that provides a reliable monetary source for infrastructure projects throughout California. To further discuss this Bill, I have with me Nicole Wortelman from on behalf of the City of Ontario. So I would go ahead.

Thank you very much. Welcome. And you have two minutes.

Thank you so much. Good morning, Madam Chair. Nicole Wortleman on behalf of the City of Ontario in support of SB 955. SB 955 will provide an additional funding mechanism for infrastructure projects, which is a very high priority for Ontario. Ontario has numerous infrastructure projects underway and has identified approximately 1.2 billion in unfunded infrastructure and neighborhood improvement projects that, over time, will become more expensive to address. All of these projects range from water reclamation to broadband connections and have only increased in their costs over the years.

The cycle of planning, funding, licensing and finally approving shovel ready projects has led to many projects suddenly rising in costs due to longer than expected processes and sudden economic impacts. These impacts have raised the costs of these projects beyond the means of the City of Ontario and created a non achievable financial goal. SB 955 will assist in closing the last gap in unexpected funding and incorporate these generational investments in the community, increasing the safety and well being of Ontario residents.

Therefore, Ontario urges an aye vote on the measure. Thank you.

Thank you very much. Any more witnesses in support of SB 955?

Good morning, Madam Chair. Damon Conklin, on behalf of the League of California Cities, as well as the California State Association of Counties in support. Thank you.

Thank you.

Matt Rubin here. On behalf of Eastern Municipal Water District here in support. Thank you.

Thank you very much. No more in witnesses in support. We'll have anybody in opposition? No. See, nobody in opposition. Come to the Members. Any comments by our Members? No, none. Okay. I think we're good. Would you like to have some closing.

No, I simply ask for an aye vote.

Zero, I'm sorry. Just one more thing. If you are willing to take the amendments.

Yes. We agreed to the amendments and are going to be taking the amendments.

Thank you. Okay, great. Thank you. Okay. Ready to go with our closing remarks?

My closing remarks are. I simply asked for an aye vote, it's a great bill.

Do we have a motion?

And motion.

So moved with amended by as amended.

Okay, we have a motion by Senator Skinner. Do you pass, as amended, to the Senate Appropriations Committee?

Senators Durazo?

Aye.

Durazo, aye. Seyarto?

Aye.

Seyarto, aye. Dahle? Glazer? Skinner?

Aye.

Skinner, aye. Wahab? Wahab, aye. Wiener? Wiener, aye. 5-0.

Thank you.

Thank you very much. That doesn't stay open, so SB 955 will stay on call. Stay open on call. Okay, I need a motion, Senator, on SB 1251. Senator Stern, can I have a motion? Okay, can we roll to the roll?

[Roll Call]

Thank everybody. Okay, we've come to the end of the meeting. Thank you to everyone who participated. If you were not able to testify, please submit your comments or suggestions in writing. There's one person left in this. That's who I'm speaking to. Thank you very much for the end of the meeting. Your comments and suggestions are important to us. We want to include your testimony. Thank you for everyone, your patience, cooperation, and to the Committee, again, for all of your hard work. Thank you.