Senate Standing Committee on Local Government

Ready Freddie. Okay. Now my gavel. 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. Well, we'll begin anyway, right? We have eight bills on today's agenda with three bills on consent.

First, please note that Item Six: SB 1291, has been pulled from today's agenda. The following three bills are on consent: Item Number One: SB 994, Item Number Four: SB 1169, and Item Seven: SB 1405. In addition, Item Eight: SB 1439 by Senator Ashby will be presented by Senator Atkins, and we see that we do not have a quorum, so we will operate as a Subcommittee. Let's see. Okay, now let's hear from our first author. I think that will be--yes. Senator Caballero, think you are presenting.

Good morning, Madam Chair.

Senator Caballero, you could either do your own first or Senator Padilla's.

I'll start with Senator Padilla's. He's in front of me. So thank you very much, Madam Chair and members. As I indicated, I'm here to present Senate Bill 1072 on behalf of Senator Padilla. Due to the impacts of repeated droughts and climate change, potable water has become scarce and water conservation has become necessary. Retail water and wastewater agencies throughout the state are facing legal challenges to their service fee structure as they charge higher fees for residents and consumers that use excessive water.

These challenges are based on Proposition 218's substantive limitations, specifically the cost of service and proportionality provisions. Often, challengers are high water users who claim the charges are not proportional, and these high water users demand a refund. In litigation, however, refunds are not expressly authorized by Proposition 218. Since Proposition 218 amended the California Constitution in 1996, courts have remedied violations through writs of mandate, declaratory relief, and injunctive relief.

These prospective remedies adequately address the violation by directing the agency to reform its rate approach going forward with excess revenues used to remediate future future cost of service. Yet, as of January 2024, there are at least three cases under consideration by the California Courts of appeal in Senator Padilla's district, where the validity of refunds as a remedy is at issue.

These cases threaten the solvency of local public agencies because if a refund remedy were granted, it would operate retroactively, creating an extreme financial burden for the agency in question. Public water districts often have no revenue source other than their rates and charges. A public agency sets its charges to merely cover costs annually and receives no profit. So any refund would need to be funded by raising rates on future taxpayers.

SB 1072 would clarify existing law that if a court determines that an excess fee has been charged, the agency must credit that amount against the cost of providing the service. Let's be clear, this is a matter of equity. SB 1072 ensures that low-income water users are not subsidizing high-income water issues. Because these lawsuits are brought on by large water users, any refund provided retroactively would inevitably hit low-income customers the hardest.

SB 1072 is a critical protection for public agencies as they address the fee challenges. It's vital that people get the money they are due while we provide our agency with the flexibility they need to operate. With me to testify and support are Claire Collins, partner at Hanson Bridget and special counsel to the Otay Water District, and Moira Topp, representing the City of San Diego.

Welcome and we will give two witnesses two minutes each.

Thank you, Madam Chair and members, my name is Claire Collins. I am a partner at the law firm of Hanson Bridget, where I am the chair of the public revenue group, and I'm also special counsel to Otay Water District. Water, wastewater and solid waste are essential public services and they are primarily provided by public entities. Approximately 90% of the state's water wastewater is provided by public entities. Because they're public, they cannot make a profit.

They are revenue neutral, and they have no shareholders that would derive a benefit from a profit. When collecting fees for their services, they estimate the total amount needed to provide that service throughout the year and throughout their service area, and then they divide those costs proportionally among their customers based on those customers' customer type and their amount of use. The hallmark of this system under Prop 218 is that each user pays its proportionate fair share of the overall cost of service.

But agencies have been subjected to increasing lawsuits from high water users claiming that they are paying more than their fair share. They demand refunds in litigation, which, if awarded, would require that public agencies raise their future rates in order to pay back prior water users. In some cases, this is as much as 40% more in a given year. As a result, everyone's charges will go up in the future in order to pay back the past.

There is no reported case that provides for a refund, and Proposition 218 does allow the Legislature to make law implementing Prop 218. And in fact, that law is called the Proposition 218 on Omnibus Implementation Act, and the Legislature has done so multiple times in the past. An approach that provides for offsets instead is what's proposed in this bill. It would provide for an offset against future rates instead of a retrospective refund.

A similar law exists with respect to something called capacity fees, which is the other primary form of revenues that water and wastewater agencies derive from their users. Government code 66016 prohibits refunds for capacity fees and instead provides for the prospective offset similar to this bill.

If you could wrap it up, please.

Sure. In this way, the aggrieved ratepayers retain a remedy and the public service provider retains predictability. Thank you, and I'm happy to answer any questions.

Thank you. Go ahead.

Thank you, Chair and members, I am Moira Topp, here on behalf of the City of San Diego, we're a cosponsor on this measure, and in San Diego, we always say that we are at the end of the pipe in California. The drop stops with us, and ensuring fairness and equity is a paramount concern as the city sets its rates for its millions of ratepayers in the city.

We're doing this all the while, we are meeting our water conservation goals and developing new and sustainable water sources so we're not as reliant on water from outside our jurisdiction. And so while I'm going to defer to Miss Collins, who's the expert lawyer on the cases before courts, and our neighboring sister water agency, I think the most important aspect of this, from our perspective, is that this is clarifying.

We see this as a clarifying measure for the courts to ensure that that paramount goal of equity and fairness is employed within the city. And so we are very grateful for Senator Padilla and Senator Caballero for helping us out today. But on behalf of Mayor Todd Gloria and the City of San Diego, we do ask for your aye vote today.

Thank you very much. Okay. Are there any other support witnesses who would like to me-too your name and organization?

Good morning. I'm Eric Lawyer, speaking on behalf of the California State Association of Counties, in support. Thank you.

Thank you.

Good morning. Chair and members. Marcus Detwiler with the California Special Districts Association, in support. Thank you.

Thank you.

Dennis Albiani, on behalf of Santa Clarita Valley Water Agency, we support.

Thank you.

Good morning. Jay Jefferson, with the Metropolitan Water District, in support.

Thank you.

Good morning. Kylie Wright, on behalf of the Association of California Water Agencies, in support.

Good morning. Baltazar Cornejo, lobbyist for Otay Water District, in strong support.

Good morning. Keshav Kumar, Senate District One resident and UC Davis law student, in strong support.

Thank you. We can. Shall we do the quorum? No? Thank you. Okay, we'll do roll call.

[Roll Call]

Thank you. Okay, we're going to move on now to. Do we have any opposition witnesses? If you'd like to take up to two minutes.

I'll be quick. Scott Kaufman, Howard Jarvis Taxpayers Association. I'll be quick. Proposition 218 is not a complex statute, is part of the Constitution. A statute cannot be used to amend or otherwise supplant the Constitution. Further, there is a huge difference between a credit for future charges and an actual refund. Article 13 D, section six provides the amount of a fee or charge imposed on any parcel or person as an incident of property ownership, shall not exceed the proportional cost of the service attributable to the parcel.

If a taxpayer moves, how will he or she be compensated for a violation of constitutional rights under 6B3 if the agency merely applies the overcharge to reduce rates paid by others in the future? What happens when the exclusive remedy is impossible? These are not damages. These are refunds. And refunds go back to the people that were illegally forced to pay them. The committee's own staff report notes that if this bill becomes law, ratepayers that overpaid would not get their money back. Money owed and not returned is a takings violation. Thank you.

Thank you. Okay. Other opposition witnesses? Okay, seeing none, we're going to bring it back to the committee. Yes, Senator Dawley.

So just a question. So this is. So isn't there a court case? Isn't this in the courts right now and when?

So, yes.

Aren't they going to decide whether? Is there really necessary to have this bill, even though there's a court cases? They're going to decide what's going to happen, right? At some point.

There are three court cases pending right now. That's correct. Otay, San Diego, and Coachella Valley Water District. And the courts at some point may decide the refund issue. Yes. It is one of the issues within those cases.

Okay, so now I have a follow-up question. So. Or maybe just a comment. I don't. This is a complicated issue and it's. I'm not an attorney. Right? So I represent Lake Tahoe, and during the drought, we had the billionaires who've kicked out all the millionaires now, and we were trying to regulate water. We had an order from the state to regulate water.

And, you know, they started out fining them so much per gallon or whatever, or 100 gallons and then pretty much, so much a day, and pretty soon it was $10,000 a day, and they were paying it. They didn't care. When they come, they want to play croquet on their giant half-acre lawn, and they don't care what the cost is. At the same time, our regular residents there were conserving water.

And so it was a real problem to try to figure out how to, like, rein these people in. But they're so wealthy, they just don't care. So is that the case here where you have, where you have consumption, where people just are using what they want to use and they're paying for it? They're paying a graduated rate, I should say. And then.

So talk to me a little bit about how the person that's meeting their goal, the lower people and then the wealthier people, are, like, doing something that's outside the box. So I'm not clear on that.

Sure. I'm happy to comment on that. Two different things may be going on here, and unfortunately, I'm not intimately familiar with what happened in Lake Tahoe, but there are two components of that high water use. One element of that might have been penalties, and penalties are sort of outside of Prop 218, which says, take the whole pie.

How much money do you have to spend to provide water to all of your service area in a given year and then divide it up fairly and proportionally among the users according to their use? That is our goal. Right. A fair share process. So if the bill.

Wait, wait. So. But if somebody uses, if 11 customer uses what 30 customers would use, that one customer is not because the whole pie is bigger at that point.

That's correct. Absolutely. There's two major components when we talk about water rates. The first component is what most people think of very simply as well, if I buy a gallon of water, I pay for a gallon of water, right? And if I buy 20 gallons of water, and let's say a gallon of water is $1, if I buy one gallon of water, it should be a dollar. If I buy 20 gallons of water, it should be $20. We generally agree with that. But there's some subtlety.

But what that doesn't necessarily take into account is that when you buy 20 gallons of water, you go from a pipe that needs to be this big to a pipe that needs to be this big. So those costs that are related to the molecules of water are not necessarily the cost of service.

There are also infrastructure costs, for example, and in many of these cases, the issue is, should that higher water user pay for some proportionately higher amount of that pipe, not necessarily the molecule of water. And that's what we're trying to achieve equity on, because if everyone else is using a very small amount, conserving, right, and we would only need a small pipe. But then your billionaires come in with their croquet lawns, and now we have to build a pipe this big. Generally, the legislative process within each of these water districts says, well, if you're going to pay your fair share, then you've got to pay your fair share of that bigger pipe, too, not just the bigger pipe.

So is that what the court case is about?

Correct.

So now explain to me how this bill is going to, what's this bill do? It says you got to pay for the larger pipe if you're the bigger user.

No, sir. In fact, what this says is if, and there's a lot of math that goes into this, we have rate studies that support every one of these rate determinations. And these rate studies are built out by economists and engineers who are trying to fairly allocate these costs of service right to each of the ratepayers. And what's happened is we've seen because low ratepayers don't sue, they don't think they're paying too much. It's high water users.

And they're like, golly, I don't want to pay for that bigger pipe. Let's say you should split the cost of that pipe among all of the users equally. But there have been legislative determinations made by individual, local agencies that might say, well, gosh, we think we should charge a little bit more the people who use more pipe. And that's really what this is about. So then if the court determines that a refund is due because they paid for too much pipe or too much water, then what happens is we don't have any extra dollars. Right?

Right. I get that part.

Right. And so what we would be doing is, and I'll give you the example of Otay. Otay has about $100 million a year budget. They supply 55,000 connections. If the refunds were to take place in this lawsuit, they are looking at, let's say, about $35 million in refunds. So we now, instead of having to raise $100 million next year, we have to raise $135 million next year on ratepayers. And that's going to be spread across because that's now a general fund debt. Everybody's paying.

What happens in the connection fee context and connection fees are when you come into a system and you've got to build a bigger pipe, is the law in government code 66016A says you don't get a refund. What you get is any overage. If we determine there's an overage, goes to pay down the additional costs in the future. So next year, let's say instead we collected different $100 million. Let's say we had $100 million budget, we collected $110 million.

We would take that additional $10 million, which we don't need to spend. We put in reserves for a year, and the next year we would only collect 90 million. Right? So we would create that credited offset and then again, allocate. This is largely an accounting problem, Senator. How do we account for who owes what to make up that $100 million? But what we're saying is if we have to go raise $35 million extra, that's a real burden on everyone in the system, and that's what we're trying to avoid.

So to the Taxpayers Association that says it's not, it's not in line with Prop 218. So the courts are going to, when the courts decide that, you're stuck with what, whatever the courts basically say, if we do this bill, there's gonna be conflict between 218 and this bill.

But I wouldn't agree with that.

How does the bill fix it? That's what I'm trying to get at. If you pass the bill and the courts say this is the law or this is how they interpret 218, what does this bill do?

So what this bill would do is say, instead of going and collecting $35 million, we would say, well, I guess part of this is, where is that extra $35 million? Let me give you another example. We take a pie, we cut it into pieces. If a bunch of people overpaid, that means a whole bunch of people underpaid. Right? Because otherwise, we couldn't have made that $100.0 million up. Where are we going to collect that extra $35 million? We can't go back.

As we refund apparently past ratepayers, how do we go back and collect the under collections from those prior ratepayers? This is a fundamental public revenue problem. And the way it's been solved in the past is through the connection fee approach, which say, well, we're going to have to refund it, credit it moving forward. So what changes is not saying that there wasn't a violation, but from a public policy standpoint, we're not saying that the agency has necessarily done something. It's an accounting issue. Let me just put it that way. It's an accounting issue and no one's getting rich off of this.

I know, but you still have to supply water and you still have to pay your bill.

And if the courts weigh in, you're stuck.

Exactly.

Right. And so the question is, do we want a public policy that says it's okay for us to raise rates on everyone in order to pay back some? Or do we want a situation that says there was an accounting issue here, we're going to fix the accounting issue going forward and we're going to credit the whole rate system in order to do that.

So that's really what happens normally, is that we say, okay, next year we're going to fix these problems the courts told us have occurred, and we will fix them going forward because we have a hard time going back because how do we rebalance that entire accounting?

Yes, Senator.

All right, I need a couple of clarifications. When you're talking about the, are you talking about mainlines or are you talking about the feeder lines that go to the connection fees? Because when you're talking about the infrastructure itself, that's a fixed cost. That fixed cost is whatever it costs to put it in. And then the water usage from then on is the movable cost. Right?

Our fixed cost will change over time because capacity has to be enhanced. So we have to build bigger systems.

So that's what I wanted to get at. So what you're saying is the question is about the mainline system that you had to upgrade because the feeder lines were being put in that were too big for these larger users. Because if I'm going to be a larger user and I have to get water from the main line, well, usually the main lines have been designed around what is going to be in the future.

Yes, sir.

So we put mainlines down some streets in Murrieta that were way larger than people thought we needed because in the future we would need it. And then you take your feeder lines and your feeder lines are based on what size property and what kind of usage you're going to have. Which ones are you trying to have them pay for? Because the feeder lines were always absorbed by the developer and the person that is going to be using that property.

Absolutely, Senator, you're right. And that's part of what capacity fees pay for. Is that larger sizing in addition to the larger sizing, though, we constantly have to build larger sizing because there's incremental growth over time. Right? We use more water as a system, as the systems get bigger. But we also have capital costs that relate to operating and maintaining those lines.

So I would, one other example is if you go from a line that's this big to a line that's this big, it's not just the cost of the steel and the dirt to build that line. It's also the ongoing cost of operation and maintenance. So the ongoing cost of electricity to pump water through that line.

And so there are additional costs that, again, aren't related necessarily to the molecules of water, but that are related to the capital or the infrastructure costs to operate and maintain that system. And so, again, it's a question, usually a legislative question for each individual agency, of how much do we allocate the cost of that infrastructure, whether it's making it bigger or maintaining what's bigger to the user.

So just to jump in here, Senator, for example, those bigger lines that you put in for the neighborhood have been distributed already to residents who don't benefit from those bigger lines. In other words, it's part of the cost of doing business. And so the challenge is then you add onto that the fact that the state has said you should conserve water, and so you better figure out a way to get your residents to conserve so that everybody reduces their consumption.

And that's what it really is, an accounting area error issue, because you've already charged those people who aren't using the bigger pipes for the bigger pipes because that's part of the system. And so I think the challenge here is that some people are saying we need to wind out the water costs because I shouldn't have to pay more, despite the fact that I'm prolifically using it. But it's not just the water costs. It's all of the infrastructure and maintenance and, and costs associated with it.

Right. And the infrastructure costs, especially for water and things like that. Those are all designed in the beginning for ultimate capacity of what you're doing. Yes, there will be some older cities that wind up having to retro go retrofit. And those do wind up being absorbed in the cost by everybody because everybody does benefit from the delivery of water, whether they're getting it in a small pipe or a larger pipe. The amount of water they use is different.

And that's where my next question kind of focuses on is, okay, so you have the larger, larger water users that have sued, apparently, and because they feel like they're being overcharged. And that answer will come in the form of whatever the judge decides.

Correct.

Right. What about the smaller ones? What about the people that have been affected by tiered rate structures? And they find errors in those tiered rate structures, like a fluctuating amount of days that the billing days, because that has pushed people in. I've seen this. Unfortunately, not very many people can sit there and decipher a bill right down to the units and how much units, how many units are in the allocation that you get a month for the amount of people that are in your home.

But I've done that math. And one year, in one year, they overcharged my tenants $1,000, $1,000 by having longer billing cycles and pushing them up into higher rates. So those people are entitled to a refund. How do they get it? Versus how do these large, are they caught in that net?

And that's a great question. One section of this bill actually says that for billing errors, billing errors are exempt from this bill. So if the agency applies the wrong standard or applies the wrong land use, applies the wrong number of days, those are accepted out from this because we believe that those are fair and reasonable claims about that specific land use. The bill is intended instead, however, to deal with the overall structure of the rate, not an individual's payment, for example, that month. They would still be entitled to petition the water agency for a refund of a billing error.

And what happens if the larger land user that has been put on this extended plan for payback moves?

Well, here, if it's a refund, the refund would go directly to that owner. They would have to make a claim within the required period of time. If this was part of the structure, then the idea is that it would go to offset the future costs of the system. That's the credit approach as opposed to the refund approach. But again, billing errors would be refunded.

I'm kind of feeling like I'm landing on the court case needs to be adjudicated and settled. And then if there are leftover things to clean up, that's when we would clean up via whatever legislation needs to be done to clean it up. I'm really concerned, you know, these rate structures, tiered rate structures, the sub-metering, all of that stuff has created kind of a quagmire for people that are.

All they do is pay their water bill at the end of the month, and when they're paying $130, when they should be paying 80, and that's not an error. That's because that's the way they decided that they would do the tiered rate structure and their billing. You know, the number of days that they're billing for instead of making that adjustment every month, they just didn't.

And so when they should have, because people that were being conservative were being charged for the amounts that unconservating, you know, people that weren't being conservative were being charged for. And at the end of the day, when they said there was no problem, at the end of the day, they fixed it. And there's never been another water bill above $80. So obviously there was a problem.

And that's, I don't want those people stuck in this system where they can't get a refund because people that are renters or people that own a house, they move more than the big, large water users. So somehow they need to be able to get their money in the form of a refund. So it has to be a refund or a credit in order for them to be able to take advantage or be able to get the money they're owed regardless of the system that's set up. So anyway, that's just kind of my thoughts on that.

Thank you. Any other questions or comments by the committee? Hearing none. Senator Caballrto, would you like to close?

Yes. On behalf of Senator Padilla, I respectfully ask for your aye vote. And remember that when we're in the middle of a drought, we ask everybody to conserve. And if you can't get cooperation, we got to figure out a way to force it. And one of the ways to force it is to pay more. That's what this is all about, is that we asked the water agencies to set up a system, and most of them chose a tiered water system.

And it was rationally related to a limited natural resources that we had at that time to ensure that we have enough water for everybody when they open their tap. This is not a perfect solution, but I think it gives direction to the court, and I respectfully ask for your aye vote.

Thank you. We have a motion on this bill, please. Moved by Senator Skinner. Assistant, please call the roll.

[Roll Call]

We'll leave that open for more votes. Okay, Senator Caballero, do you want to move onto your bill? I think this will be a little bit easier.

They're none of us.

I'm going to tell Senator. You owe me, Senator. So thank you, Madam Chair and Members of the Committee, for the opportunity to present SB 1134. Last year, the Legislature made significant changes to the Surplus Land Act through SB 747, a bill that I authored and its partner, AB 480 by Assemblymember Ting.

These two bills struck a balance to provide necessary clarity to ensure local governments disposing of land were doing so correctly under the provisions of the Surplus Land Act.

And the reason this became really important is because the Surplus Land Act has oversight by the Department of Housing and Community Development, and it's important to have real clarity exactly on what HCD can penalize cities and counties and special districts for.

After passing these two bills, the Department of Housing and Community Development proposed draft revisions to their Surplus Land Act guidelines.

This bill codifies a simple clarifying change proposed in the draft guidelines to ensure local government have clear guidance when disposing of separate and distinct contiguous parcels to a singular entity. In this case, separate parcels that are adjoined and sold to one entity are considered a single parcel for purposes of meeting the requirements under the Surplus Land Act for disposal. This clarity helps to streamline the disposal process for local agencies.

However, the draft guidelines in many ways are a significant departure from what was contemplated and ultimately agreed to by the Legislature, which the staff articulates clearly on page four of the analysis.

Over the fall, I met with HCD to discuss this concern that the guidelines were not reflected of legislative intent and based on the current state of the draft guidelines, I fear HCD will continue to put forward guidelines that are counter to the agreements that we made here in the Legislature last year.

This bill serves as a vehicle to monitor the final guidelines proposed by HCD and ensure the agreements reach between the respective policy Committees Members and stakeholders are faithfully adopted. One of the reasons I believe this happened is because we had a disagreement on whether HCD had to follow the process for adopting guidelines that everyone has to follow, and now I'm drawing a blank on what it's called.

But the point is they have authority under previous legislation to do emergency regulations, which don't give much opportunity for public input, and revisions that you get to see, and that's part of the challenge.

As was done last year, any changes proposed by this Bill, once the final guidelines are public, will be thoroughly vetted with all interested stakeholders, and I commit to bring the bill back before the committees should any significant changes be made. And so with that, I would respectfully ask for your aye vote.

Thank you, Senator. Do you have any.

I do not. This is, this is my bill, so.

Okay. Are there any, anyone want to speak in support? Okay. Seeing none, are there any opposition would like to speak?

Good morning, Madam Chair. Brian Augusta, on behalf of the Public Interest Law Project, we are not in opposition. We're in that tweener category. But I did just want to take the opportunity to put on the record that we have worked closely with the Senator in the past on all of the questions that she's raising about the guidelines and the law and the implementation of the SLA, which, as we'll probably talk about later in this hearing, is a continuing subject of conversation.

But wanted to note for today that we are neutral on this bill, but as the Senator just mentioned, should it become a vehicle for further changes, obviously, we're going to want to engage on that and have a conversation about how it interacts with the guidelines. But just wanted to note that for today, we are neutral on what's before you. Thank you.

Thank you. Anyone else wishing to speak in opposition or tweener? No? Okay. We'll bring it back to the Committee.

Move the Bill.

Okay, the bill has been moved by Senator Dahle. Any comments or questions? Yes, Senator Skinner. Thank you.

Senator Caballero, thank you for digging into this. It's, I'll call it a wonky bill for the moment and appreciate the Committee's analysis. It was a little confusing to me. It does seem apparent that some entities have felt that the process has been slowed down. Meaning, you know, obviously our current statute around Surplus Land Act does give preference to a nonprofit affordable housing developers.

But it would appear, but it does not prohibit the sale of these lands for other purposes. But it would appear that the way it's being implemented and you're addressing enforced is causing either confusion or slowing it.

So I just wanted to make sure, and I'm going to assume from the Committee's analysis that by adopting these clarifications that you have recommended that we are not. Given that I'm housing chair, I want to make sure that we're not encroaching on the Surplus Lands Act preference, the revisions that were made that did give preference or priority to affordable housing bids first.

So I couldn't, I don't mean I couldn't. It does not appear that that in any way affects it, but I just wanted to make sure. So wanted to put it on the record.

Thank you for that. And it does not in any way impact that this is the internal workings. It really is wonky. It's the internal workings of how the system operates.

And what we were trying to do when we worked on the SLA, the two bills, was to establish a system where you got decisions quickly, where it was clear to cities and counties and special districts what property was surplus and what wasn't, and then if they exercised some action, that there was a process that HCD should look at as part of that, and so it does not affect the housing at all.

Okay, great. All right. Okay, great.

Okay. Thank you, Senator Scanner. Yeah. Thank you very much, Senator Caballero. And with that clarification that if there are significant changes that could be made that this Committee will hear them.

Okay. And again, just how important the Surplus Land Act is to carrying out our goal statewide for affordable housing. We all know and appreciate all your work on that. So I look forward to this. Senator, anything you want to close?

Absolutely.

Respectfully ask for your aye vote.

Okay, great call the roll.

Motion is to pass to the Senate Floor. [Roll Call] Four to zero.

Okay, we'll leave that. We'll leave it open.

Thank you for the votes.

Thank you, Senator. We have Senator man.

Senator Min just walked in. Go ahead, Senator Min.

Thank you, Madam Chair, Committee Members. Before I begin, I want to thank you and your staff for working with my office on this measure. And I will note that I am accepting the Committee's proposed amendments. SB 1174 would ensure that local governments cannot implement voter identification laws in local elections. Recent claims of voter fraud have been massively overblown. I will just note that the city that prompted this Huntington Beach has, to my knowledge, not presented or accumulated any evidence of voter fraud in any circumstances.

And I have asked the City Council Members who are supporting this measure repeatedly, several times, for evidence to that effect. And so this seems like it is just another of their unfortunate attempts to try to engage in culture wars. There is an overwhelming body of evidence showing that voter ID laws serve to disenfranchise people of color, making it harder for seniors and voters with disabilities to cast their vote. We already have strong protections against voter fraud in this state.

To register to vote, Californians must provide their driver's licenses, California ID number, or the last four digits of their Social Security number. On top of this, as we know, California has a robust signature verification check, mandatory partial recounts, and at a time when voter fraud conspiracies, like the Big Lie that the 2020 election was, quote unquote "stolen", attempt to cast undue doubts on our election processes, California should not be allowing local governments to limit voter participation.

Look, at the end of the day, we are trying to balance two competing principles, vote integrity, election integrity and the franchise. And we know that in a vibrant democracy, it is critical that we have broad participation in our elections. At this point, I have not seen any evidence that there are problems in California with voter fraud. And again, as I note, we have not seen any evidence from Orange County or Huntington Beach.

I will just note that our Orange County District Attorney, who is pretty well known for being tough on crime, what you might call very conservative on these issues, Todd Spitzer has said on several occasions that he has not found any evidence of voter fraud in Orange County, and he has investigated every claim, his office has investigated every claim that has come before him.

So this makes very clear the principle that state, the State of California should be the body that deals with voter ID. And I think that's already very clear when it comes to any elections and voter ID requirements that might impact county, state or federal elections. And so on a whole, the Huntington Beach measure, that is one of the measures that would be affected by this Bill, is already very clearly illegal.

In my reading of the law, and my staff's reading of the law, there is some ambiguity as to whether a charter city could impose their own voter ID requirements if they were to hold their own elections at a time and place that is unique to other elections in a way that did not impact those other elections. That is an open question. I believe it's ambiguous. I will note the Secretary of State and the Attorney General have taken the position that that would be legal as well.

They may be right, but that matter, I think, is not settled under case law at the moment. So what this Bill would basically do is to close any ambiguity here to make very clear that even under that scenario, charter cities cannot impose their own voter verification requirements, that that is in the province of the state. But with that here to testify in support of the Bill, I have Brittany Stonesifer, legislative attorney with the ACLU, and Joey Flegel-Mishlove, I always mispronounce your name. Sorry about that.

Political action apprentice at AFSCME California.

Okay, thank you.

All right, go ahead.

Good morning, Madam Chair and Committee Members. I'm Brittany Stonesifer from ACLU California Action. I'm pleased to testify in support of SB 1174. This Bill would one, reaffirm the voting rights and election integrity, including voter verification, are matters of statewide concern and two, make clear that charter cities are prohibited from enacting voter ID requirements for municipal elections. Voter ID laws perpetuate the myth of voter fraud and do nothing to improve election integrity.

Elections officials, studies, experts and courts have repeatedly confirmed that instances of voter fraud are exceedingly rare and that California elections in particular are more secure than ever before in history. At the same time, numerous studies and data show that voter ID requirements impose severe, disparate and unnecessary burdens on voters, particularly voters of color. The California Legislature has long understood the harms of voter ID requirements, and state law does not impose a voter ID requirement at the ballot box.

The Secretary of State and county elections officials already verify voter eligibility and ensure election integrity for local, state and federal elections in a manner that is minimally burdensome on voters and supports a strong democracy in our state. Despite California's carefully balanced system, Huntington Beach's City Council placed a voter ID measure on the ballot in March, and the city attorney erroneously argued that Huntington Beach is permitted to impose voter ID requirements because it's a charter city.

Huntington Beach's position ignores case law that makes voter ID requirements invalid because voter rights and election integrity are matters of statewide concern and the measure unnecessarily burdens voting rights. Huntington Beach's measure has already been rightly challenged in court. In the meantime, SB 1174 will stop any other cities from attempting to pass similar measures to spread misinformation about integrity of our elections. We urge you to support this Bill to prevent chipping away of our democracy in our state. Thank you.

Good morning, Madam Chair and Committee Members. Thank you for your time this morning. My name is Joey Flegel-Mishlove, and I'm here on behalf of the more than 200,000 working people who make up the American Federation of State, County and Municipal Employees here in California. AFSCME Members work at all levels of state and local government.

We work in our state hospitals, at our UC's, we maintain water and utility districts, and we operate almost every function of city and county governments across California, and that includes many counties where our Members work in our elections offices to ensure that our elections are fair, honest and equally accessible to all every year.

And so, AFSCME Members are all deeply invested in our state's electoral apparatus because it is their job to carry out the plans and policies that elected officials create, and so our Members know that they are best able to serve their communities when the elected officials they work for are truly representative of those communities.

Right now, we recognize that California is a national leader in designing election systems that are fair and are just, but that our state is not immune to national currents that pull our electoral process towards one that is more arduous and ultimately more exclusive of working people. Cities implementing voter ID laws could take a major step backwards by enforcing policies that actually make it more difficult to vote and specifically have been shown to exclude Black, Latino, and Indigenous community Members from our electoral system.

Furthermore, Members of our union who are long term care workers attending to people with disabilities and our elderly communities, have pointed to many studies showing that voter ID laws have a disproportionate impact on those communities as well. And so we know that these laws are a real threat to a thriving democracy and would allow our electoral process to misrepresent or ignore communities that our Members live in, work in, and are part of.

And this step backwards, represented by voter ID laws cannot be justified by claims of voter fraud which have been shown time and time again to be overblown and to be dog whistles that serve to exclude targeted populations from the voting process. So, to prevent this trend of disenfranchisement extending into our communities, AFSCME strongly and respectfully recommends an aye vote on SB 1174 so we can continue to protect fair, honest and equitable voting systems in California.

Okay, do we have any further witnesses and support?

Eric Harris with Disability Rights California in support.

Thank you.

Chynell Freeman with the League of Women Voters of California and strong support.

Thank you.

Good morning, Alyssa Silhi, on behalf of the City of Rancho Cucamonga in support. Thank you.

Thank you. Seeing no more witnesses in support. Do we have any witnesses in opposition? Seeing none. Bring it back to the Committee Members. Any questions or comments? Bill has been moved by Senator Skinner. Senator? Yes.

Thank you. In the case of Huntington Beach, was that an election that's already happened or is that something that's on the ballot for next time?

Are you directing that to my witness or to me?

I would imagine the witness, she seemed to know that. Or I could also. I'm sorry.

No, no. I just want to respect the chair's protocol here. I'm happy to answer, but if you'd like to answer. So it has not, it's not supposed to get enacted till, I believe, 2026. Right?

But it's been voted on?

It has been voted on, yes.

Okay. And what was the outcome of that?

It did pass.

I don't know the outcome. Do you know?

By what?

Seven points.

Seven points. Okay. What is the disenfranchisement as far as somebody, a senior citizen like myself, going to vote and having to show my ID? I have to show it when I go to Bevmo. I have to show it when I go to Kaiser. I have to show it when I go to all these things. What's the disenfranchisement?

Madam Chair, is it okay if my witness responds to that question?

Yes. Sorry. Yes.

So a number of people do not have driver's licenses in particular, or state identification cards, and that's disproportionately older people, people of color, lower income people, people with disabilities, and that number goes considerably up. So on average, about 10% of people don't have a driver's license or state ID. So if that's required in order to vote, we are depriving people of a fundamental right.

Isn't it required, period, to have an ID? And if you're a California resident, you need either an ID or not necessarily a driver's license, but at least an ID. Everybody can get one.

I'm not aware of a law that mandates having a state ID.

I don't think we have. You have to inform me. I don't think there's a safe law. Let me just also add that in Arizona, where they passed a similar voter ID law to the one that was passed in Huntington Beach, and in previous times in California, including in Orange County, what we saw was with voter ID requirements that people would come up vigilante, so to speak, and harass voters. And obviously they target certain types of voters.

They would demand to see ID, act as if they were authorities. In one case in Orange County, I think was back in the 1990s, you had people dress up as police officers and approach voters-

And that's called election interference and they should be arrested.

Sure. But the voter ID laws, I think, end up propagating this type of behavior. So it's not. It is. The disenfranchisement is additional barrier. And then of course, the culture of this type of act passing tends to lead to that type of harassment.

And I'd just add again, for me, the principle is simple. If there was evidence of voter fraud, we should be acting on that. I have not seen any evidence. An Orange County registrar is actually very well known for upholding the best types of elections with the highest integrity. And you've heard from the Orange County DA, Todd Spitzer, who said he's never found an example of this. It is up to the state to decide that that is not up to local cities.

We don't want 100 different cities coming up with their own rules that will impact voter ID. That's what this Bill is about at the end of the day. If we see evidence of rampant voter fraud, we should act on it. But again, it's about those competing principles of trying to ensure better access to our democracy. The franchise versus election integrity.

Yeah, I understand you're angst against the voter fraud stuff out there, and I don't buy into all of that.

But what I do buy into is, is ensuring that whatever system we do have, that people have confidence in it. Because that's what leads to people not having confidence in the system and therefore claims of voter fraud or things like that. And the more we can do to make them confident that there is none, I don't see the harm in that. I'd like to see the real.

And I'll look, I'll go and follow up on those studies that have been done and why they are the way they are. What's causing people not to have access to voting if they need an ID. Because like I said, we use IDs for everything. And a lot of people question why all of a sudden for that. For that official act you don't need an ID, but every other official act you do. So are we disenfranchising people from going to Bevmo? No. Are we? Anybody?

So if that wasn't a rhetorical question. Drinking alcohol is not a fundamental right.

I just want to get this straight. Did you have a question before, or do you want to respond?

No, I'm not responding. I have a whole different question.

Okay, go ahead.

Just a quick response.

Voting is a fundamental right, and drinking alcohol is not. But also, it's unnecessary. We already verify people's identity when they've registered to vote, and it's unnecessary to do it again, especially when doing so may disenfranchise people who are already underrepresented.

They use their security numbers, correct?

Yeah.

Yes, I think so. Thanks.

So I just have a question about, so say somebody across the border. We have a lot of people coming into our country across the border. They don't need any identification, and they go register to vote and can vote, and they're not a citizen of California. Is that election fraud or not? So you can't identify either way because they don't have to have any identification that they're an American citizen or a citizen of California, so they can just go vote. So is that fraud or not?

That is incorrect. They cannot just go and vote. As I mentioned, you have to verify your identification when you're registered to vote,-

Which is with what?

Social Security number. If someone has a Social Security number, it's also verified with your driver's license or state ID, if you have one. And if you don't present either of those, then you are required to show, under federal law, an ID the first time you vote in a federal election.

And I might just add to that, I find it very implausible that an undocumented immigrant would decide to illegally register to vote, to vote in an election illegally and risk their status here. I just. I don't think it happens.

That is a good point. It is also multiple types of crime under state and federal law to do so.

Okay. Yes, of course.

Yeah. I support this Bill, and thank you for bringing it. I'm really sorry that you had to use a Bill vehicle to deal with this bad actor city, which has been a bad actor city in a number of respects. We've seen on housing. Huntington Beach has repeatedly decided that proclaim that it's exempt from state housing laws. The Attorney General has had to file a lawsuit against Huntington Beach.

And now we have to use even more state resources from the Attorney General to deal with this bad actor city, and now we have to use legislative resources to deal with this bad actor city, which should simply follow the law. And it's just honestly outrageous. So I'll be supporting the Bill today.

Thank you. I'm going to have a whole lot. More charter seats, please.

Okay. Any more questions or comments from the Committee? Hearing none. Would you like to close Senator?

I respectfully ask for your aye vote.

Thank you. Okay. We. Roll call. Motion is. Oh, sorry. Oh. Motion was made by Senator Skinner. The motion is do pass, as amended, to the Senate Floor.

[Roll Call]

We leave it open for more, for more votes. Okay. Thank you very much. Thank you to the witnesses as well. Oh, we need a motion for the consent move by Senator Dahle, please. Roll call.

Motion is adopt a consent calendar. [Roll Call]

On call. Okay. Thank you. We are now moving to SB 1439. I understand that we have. Senator Atkins. Good morning, Senator Atkins.

Good morning, Madam Chair, colleagues. Thank you for allowing me the opportunity. I'm here to present SB 1439, the Surplus Land act, on behalf of Senator Ashby.

This Bill has some support by my mayor Todd Gloria in San Diego, Scripps Health in San Diego, Sutter Health in Sacramento, Planned Parenthood, and many other community partners, one of which you'll hear from as a key witness. SB 1439 proposes an exemption in the Surplus Land Act, allowing for the development of health care facilities on unused public land.

The Surplus Land Act's regulatory framework can create uncertainty and lengthen the process of disposing of surplus land while impeding the development of much needed medical infrastructure. While the development of affordable housing is and must be a priority in California, we're also facing a health care provider shortage and a crisis in access to medical services.

In addition to the proposition that recently passed, where we hope to create 10,000 behavioral health beds in the state, and we certainly need those sooner, not later, and that's a direct nexus to housing, in my opinion.

There are an estimated 7 million Californians living in provider shortage areas, and only about half of the state's primary care needs are met in 2022. In California, the average wait time to see a physician can be up to 24 days, leading to potentially life threatening delays in diagnosis and treatment.

Accessible and well equipped medical facilities are important infrastructure in our state and can help reduce overall healthcare costs by providing preventative care, early diagnosis, and timely treatment for patients.

By accommodating more patients and offering a broad range of medical services, health care facilities can contribute to a better health outcomes and overall community well being. I look forward to your comments. Madam Chair, with me today are two principal witnesses.

With your permission, let me just mention Keri Thomas on behalf of Sutter Health, and Jonathan Portis, the CEO of Wellspace Health. Thank you.

Thank you. You have two witnesses. Two minutes each.

Thank you. Madam Chair and Committee Members, my name is Keri Thomas with Sutter Health, and I'm here as the sponsor of 1439. Sutter Health currently serves more than 3.2 million Californians and just last year had more than 200,000 inpatient admissions in our acute care hospitals.

With state of the art facilities across Northern California and along the Central coast, we work day in and day out to meet the needs of those looking for routine care along with those facing serious illnesses.

Throughout the last year, we have initiated plans to open more than two dozen ambulatory care settings, have begun to work to add more than 160 acute hospital beds, and have hired more than 700 new physician and advanced practice clinicians.

With an eye toward increasing clinical staff, Sutter is on pace to become the largest community based healthcare training institution in Northern California. With all of this growth and investment in community, the healthcare delivery system is literally bursting at the seams of our existing space.

In order to meet the growing demands of Californians needing access to healthcare, we simply must be able to grow our physical footprint to allow for the patient care facilities required to adequately serve communities across our footprint.

Sutter Health, along with other health systems, are working to train and retain more physicians, nurses, and healthcare workers to ensure that these practitioners stay in California and care for patients. However, without a place to learn or practice clinically, we fear many of these top tier providers will leave California.

Senate Bill 1439 will help alleviate this issue by creating a streamlined process specifically for surplus land designed for healthcare facilities. Recognizing the importance of such developments for public health and well being. This bill will allow agencies the flexibility to expedite the disposal process for surplus land when intended for health facility development, enabling a smoother transfer of surplus land to support the construction or expansion of critical healthcare infrastructure.

California has made great, incredible progress in ensuring patients have access to care, but in order to fulfill these goals, we must create the space for these patients to be seen, ensuring timely access to care and talent retention of the top tier providers we have invested in. With that, we respectfully ask for your aye vote, and with me today is my colleague Joe Greg Richard to help with questions.

But we are by far the biggest server of the uninsured and the Low income persons in this region. We have a medically underserved area around here that's federally designated with 10 of our 22 community health centres in that medically underserved area. And the main medical system we turn to for specialty and acute care access is typically Sutter health. I'm also the chair of the continuum of care advisory board, and the Chair of Sac steps forward. Our homeless convener here.

And so it's kind of odd that I would be here asking for an exemption, but I'll tell you why it's really critical to me. Firstly, most of the people who are unsheltered in this region come to me for care. I'm here speaking for those vulnerable persons. I'm here speaking for the people who I serve, who die, on average, 25 years younger than other people because of their lack of access to care. And part of that is due to fragmentation.

Family members need to get people to care. My claim, case managers need to get people to care, my clients need to get to care. But when they enter a fragmented system, it's very hard for them to access it, and they are the most likely to lose their continuity of care. Continuity of care is achieved. The coordination of their care is achieved by bringing services into one place rather than across the geography. And that's why it's critical for me.

So many of my clients and patients go to Sutter health for the kind of care that they're proposing. This extension. If they can't go to one place, they're very unlikely to keep going to multiple sites. It's very concerning to me, having worked in lots of health settings, I can see when people have to travel that we lose them to care. Having it all integrated in one place will help the people I serve.

Thank you. Are there any other witnesses in support? Please come up.

Tara Gamboa-Eastman with the Steinberg Institute in support.

Vanessa Gonzalez with the California Hospital Association here in support, and also here today, on behalf of the Association of California Healthcare Districts in support.

Keith Dunn, on behalf of the State Building Construction Trades Council, in support.

Michael Ault, Executive Director of the Downtown Partnership, the business district in Downtown Sacramento, here to support.

Thank you.

Madam Chair and Senators, Doug Subers, on behalf of the California Professional Firefighters in support.

Goodmorning, Moira Top, on behalf of Mayor Todd Gloria and the City of San Diego and strong support.

Madam Chair Member Scott Witcher. On behalf of the California State Association of Electrical Workers, the California State Pipe Trades Council, and the Western States Council of Sheet Metal Workers, in support.

Good morning. Grace Copeland, on behalf of Providence, in support.

Good morning. Symphony Barbee. On behalf of Planned Parenthood Affiliates of California, in support.

Good morning. Dion Dwyer, on behalf of the Sacramento Metropolitan Chamber of Commerce, representing six counties and 22 cities, strong support.

Brandon Marsh with the California Medical Association in support.

Okay, no more witnesses in support. Any witnesses in opposition, please? Yes. Come forward and you'll have up to two minutes.

Thank you. Madam Chair and Members Brian Augusta, on behalf of the Public Interest Law Project, part of a coalition of organizations who both are in opposition to the current version of the Bill and have worked closely with this Committee, with Senator Caballero, the previous chair, and this Legislature over the last several years to refine the SLA and make it, as Senator Skinner mentioned earlier, an important tool for the production of affordable housing.

And though it's unpleasant to be at the table with our friends at Willspace who do excellent work, there's nothing in what's been described so far to me that indicates that we need to create a wholesale exemption in the SLA to achieve all of the great work that they're doing. The SLA creates a preference for affordable housing. It gives affordable housing developers an opportunity to get access to surplus land, but it is hardly a barrier to the other use of that land.

In fact, only 10% of the dispositions, according to the State Department of Housing, have resulted in affordable housing, meaning 90% have gone through the process and then been made available for some other use. So there's no evidence that the law right now precludes Sutter health from obtaining a piece of land to expand their facilities and do all the great work that they're doing.

What it would do is create a broad new exemption that not as just putting health facilities on equal footing with affordable housing, which we would also think would be a broad conversation need to have, but it creates an exemption, meaning affordable housing advocates or affordable housing developers would not get access to that land. So it creates a huge exemption that is not, we think, necessary or appropriate, given the purpose of the SLA.

I'd also note that transit agencies, the property that's a part of this conversation, is owned by a local transit agency, have a current process in which they can use their land as an exemption to the SLA. If they make a certain citywide plan to develop housing and to use a portion of their land for affordable housing, then they can dispose of agency-owned land outside of the SLA. What we're chiefly concerned about, and I know my time is up, is that this is a slippery slope.

If we move this Bill and we hear great stories about the work that some at the table are doing, we will have an exemption Bill every year. Every project that is purported to be on equal footing with the goal of the SLA, which is to produce affordable housing, will come forward with an exemption. We've just been through a very long process to make the SLA a workable law, flexible. That's an ongoing conversation.

But to create this exemption is not only unnecessary, we think, at this point, but we'll invite future exemptions that will eventually erode the SLA to the point that it no longer benefits the production of affordable housing, housing, which is a critical need in the state. And so for those reasons, we remain opposed to this Bill.

Thank you very much. Anyone else here in opposition, please come forward. Thank you.

Catherine Charles, on behalf of Housing California in opposition.

Good morning Chair and Members Carolyn Shelby, on behalf of the nonprofit Housing Association of Northern California, respectful opposition. Thank you.

Thank you.

And Mark Stivers with the California Housing Partnership, also in opposition. Thank you.

Thank you. Okay, come back to the Committee. Any comments, questions? Senator Wiener?

Thank you very much, Madam Chair. So I've always been a supporter of the surplus Lands act and its goals. I've also supported having some flexibility in the SLA, authored a Bill last year that opens up, up to 170,000 acres in California for affordable housing as before. So I'm definitely a big believer in trying to open up a lot of land for affordable housing development in this situation.

This Bill right now, as I've expressed to the author and the sponsor, the Bill that's in print right now, is extremely broad. It elevates all health facilities, no matter what they are, nonprofit, for profit, et cetera, et cetera, et cetera, to the level of the current SLA priority of affordable housing. So I think the Bill is way, way, way too broad.

I'm open to supporting something that is narrower, and it could be even site specific to the project that I know that Senator Ashby is looking to enable. We know that we do have a shortage of, in terms of hospital capacity in many of our cities. And so I'm open to supporting a significantly narrower version of this Bill. So I just wanted to put that out there as we consider the Bill today. I do think the Bill in print, and I think, I agree with the, I don't want to impute anything to the chair, but the analysis, that is extremely broad right now.

Senator Seyarto

So I have a question for the witnesses here from the hospital. Go ahead, folks. When you're citing a hospital or thing, is there an importance to where it gets cited? In other words, is your, are you kind of limited in your ability to figure out where to put a. Yeah.

We need a campus model, and so we want to do a cancer center and a neuro center and potentially another bed tower. Those services have to be in close proximity to existing hospital because physicians and patients need to move. So if we don't get land when we're landlocked, we wouldn't build those services. They would not go somewhere else.

Okay, I have a question for our gentleman from representing the housing folks. You know this. The SLA has been in, has got changed, and it's been in for a few years. It's been enacted. Do we have any statistics showing where we're at as far as the land that's been acquired privately versus the land that's been acquired publicly in the world of affordable housing? In other words, how much is this actually contributing to the amount of land that is being used by affordable housing folks?

Yeah. Thank you for the question, Senator. So if your question is, do we know how, what percentage do I have at my fingertips? What percentage of the units that have been produced were produced on SLA land versus privately acquired land? I don't, but the analysis from last year's bills indicated, as I referenced earlier, that among dispositions that go through the SLA, the vast majority go for something other than housing.

But it has been a useful tool because it has to help to produce, since those changes that were made in recent times, that you referenced over 1800 units of affordable housing. So it's been useful to the witness's prior comment, understanding that Sutra is landlocked. It's not clear to me that the only solution to that is that we create an exemption to the SLA because it's just anomalous that there happens to be a piece of publicly owned land adjacent to their campus.

So if that weren't the case, what would be the solution? The solution to us is not to create a broad exemption in SLA that would apply statewide.

Generally, hospitals, I think in community development they're really important, and those are things that cities take into consideration. And so I think it's important that, and this is the problem I've had with SLA all along, is are we getting what we wanted out of it, or are we, what are the economic costs to doing what we're doing?

And is it working to the scale that we thought it would, or is it actually causing economic damage and also making it so that people aren't able to get the ancillary services that they need when they're living in an affordable housing community? Because we have communities going up that don't have any services around them, including hospital services. And so for me, there's an element of communities that need to plan these as well.

And some of those involve land that they have owned and want to do either a public private partnership or anything like that to enable their community to develop with the amenities that it needs to serve all of the population, including the targeted population, where we would have affordable housing built. I see a lot of housing being built out there, a lot of multifamily housing and affordable housing.

And in my district, there's more land that's privately available than publicly available, and the public's not letting it go because that's just not the area where they had envisioned being able to do that. And then, so, you know, these exemptions, they're going to keep coming. Somebody commented every year they bring another exemption. Well, that's the reason, because every year we keep finding more and more issues that should be addressed, but we're not addressing them.

We're just kind of saying, zero, that, you know, we don't want to create a blanket exemptions. Well, we need to do something so that important facilities like this, when you're talking about mental health facilities, it's a big deal. People don't have access to. There's either the really wealthy ones or the ones that serve little smaller communities and those, you know, people don't have access and communities need to respond to that. And this is creating an issue where they can't. So I'll be supporting this Bill today.

I would like us to do a lot more work. I would like some answers to where we're at from the, you know, whoever supports SLA, let's find out where we're at so that we can answer these questions and decide whether the approach that we're taking is appropriate or whether it's doing more harm than good and how else we can do the good part without creating the economic hardships and damage that we're doing to some of our communities.

Thank you, Senator Skinner.

Thank you. So I don't have a specific question. I think I shared with the supporters my concerns. We, the Legislature only revised the SLA and gave it what its current shape is in 2020. So just four years ago, where the Legislature deemed to make this priority for affordable housing and to give the first right to the nonprofit of housing developers. And clearly, as we all know, affordable housing is a statewide need. We're in a crisis.

Now, I'm also very aware that there are clearly first, Low income access to health facilities is a crisis. Statewide access to health facilities is we have a shortage of doctors. We have a shortage of nurses. So that affects everybody. But if we look at where hospitals are located, there are areas of the state that are not. So that are, again, who wants to debate whether anybody's adequately served?

But in other words, there are certain regions of the state and certain areas where there would appear, in terms of indicators from national data, adequate hospital facilities. But in our lower income areas of the state, there are not.

So when we begin to talk about, given that the Legislature has moved in the direction of trying to give a preference in surplus lands for a purpose that serves our lower income communities responding to it, lower income residents responding to a crisis and the lack of affordable housing, then it seems to me if we're going to do a similar type of change, and I'm not advocating that we do yet, that we would similarly think about how to address who is most impacted by the shortage on health facility.

So that kind of speaks to the, well, your clinic's needs, but that's not how the Bill is currently designed. And I can imagine, I don't want to speak for our chair, but, you know, when you're a Committee chair and you're trying to figure out these kinds of, you know, juggling in all these types of issues, you know, it's hard to then in one Committee process, say, revamp a Bill for what?

For what might reflect something that is sort of a statewide need, but especially because this is the local government Committee. So this Bill wasn't referred to the Housing Committee. And if it had been referred to the Housing Committee, you know, there would have been some prized strong feelings. But, and the change to the Surplus Lands act that created the housing preference was done by the Housing Committee. So that's just one issue.

But the other issue is it might be the Health Committee that should also be weighing in, even though, again, whose real jurisdiction is this. Yes, the surplus Land act. You know, all of the surplus lands are not just whatever, they're more than just, say, a local government agencies. So on the health question, it is possible that we should really be engaging the Health Committee.

So I guess I'm saying all that in that there's an important conversation to be had that's been raised so far by the comments, by the comments by my colleague from San Francisco, by the presenter of the Bill in terms of these health needs, by our witnesses. But it's very hard in this Committee's jurisdiction alone to try to figure out how to address all of those.

And also in the Bill as constructed, it would as our, I don't know if Senator Wiener made this point, but at least the analysis does, and so did the witness in opposition, that it would then give the health facilities of any sort a preference over the affordable housing.

And so in that breadth, I cannot support the Bill as written, but I'm certainly open to having conversations about whether we, you know, whether there should be some adjustments to the surplus lands to address other critical needs the state might have. But that's a very broad, I don't mean that's a very, it's a hard one to have just in, within the context of the Bill before us. So I understand that there might be a discussion on how to narrow this one. I'm interested in hearing what that might be, but in its broad form, I wouldn't be able to support.

Thank you, Senator Skinner. Senator Dahle.

Just real quick, I'm going to make a comment. This is what happens when we do statewide bills to drive what we think needs to happen. For example, housing and locals used to make these decisions all the time. And in this case, Healthcare is a priority as well in California. And so since we have taken the locals out of the game, I'll be supporting the Bill. And I think we need to have some balance here with health care along with housing at the same time.

We can have them both, but this case for Sutter, or there's a hospital land close by. First right of refusal goes to housing. And this Bill, it allows us to have our healthcare, too. So I'll be supporting the Bill today.

Okay. I just make a few comments and then, Senator Atkins, you can close. Do you want to do a quick. Recess, though, after your comments? Yeah.

Sure. Before your final comments, can I just. Are we, I mean, I think there's, I don't know if maybe you were going to propose something. Okay, great. Thank you.

Hold your horses there.

I just wanted to make sure it didn't go right up for a vote.

Yeah. Before we get, you know, any further in terms of voting, I just want to make clear where I'm coming from, and I think most of us are coming from that. You know, we care about Californians. We care about housing. And the north Star for the strip was land act is affordable housing. It's not just housing. It's affordable housing. We're in a housing crisis. We're in a housing crisis. Everybody knows it here in California. We get criticized from around the country because of our housing crisis.

And this Bill reduces the priority for affordable housing that this Legislature established. The proposed exemption is for well intended purposes. There's no doubt about it. Several of my colleagues have said that. But the next Bill will also be with well intended purposes. Who's to say? And that's because we have many needs. There is not just the housing need. There's not just the healthcare access need. We have many needs.

So who's going to dare say that an expanded hospital is less important than affordable housing and we should not be put in that situation because we need both. There are people here today saying this Bill is critical because it expands healthcare access. But the Tripolis Land act does not prevent these sites from going to healthcare facilities.

As the opposition witness said, affordable housing developers get the first shot, but after 90 days, if they don't pay the fair market value, the land then goes to the highest bidder or others that the local agency chooses. Local governments want healthcare facilities. Rarely do we see the same clamor to locate affordable housing in somebody's neighborhood, which is why the surplus Land act exists, to give affordable housing developers a fair shot.

So I'm grateful to the Committee, who has worked really hard, put in many hours meeting with the proponents, with our opposition and working on this Bill. So we have some ideas, and I'd like to take a recess here.

Madam could I make, can I respond to some of this? I am supportive of the recommendations for amendments. We've been heading in that direction. But if I could just make a couple of comments on the record, because it's important to me personally. I spent 30 years working on housing, so the surplus Land act, making housing the first priority, is near and dear to my heart. So I want to make sure that's on the record for all of the housing people here.

I am here on behalf of Senator Ashby. I also run community clinics, and we have hospitals in San Diego that UCSD is expanding, and they're including housing, by the way. Communities don't necessarily like any development, whether it's, you know, it depends. You know, I would just say a couple of things and then I anxiously want to talk about how we narrow this to meet the concerns because this dialogue is very important.

I think it is relevant and it is important, and I'm sorry that this was not put in a fashion that people could focus in a little clearer. I know that this Committee tried, and I appreciate that. I just want to say a couple of things. You know, government incentivizes all kinds of things. And thankfully, after decades of trying to get movement on housing, the SLA prioritized affordable housing. But I also think through the comment of slippery slope, I don't agree.

It's our job to legislate and adjust based on the environments and environs and situation on the ground. Right now we are in dire needle of behavioral health beds. We are in dire need of other critical services. So I do think it's important that we negotiate how to make this more palatable so that we're surgical, given the discussion, and relevant to what we need to do.

But I think that housing, health, local government are going to continue to look at these issues as things on the ground change in our communities and have to provide some sort of incentivization. And I do think it is a cumbersome process by design and probably for reasons. So I do know that the author of this Bill is prepared to accept amendments and I look forward to what you present. I believe I have a copy and look forward to what you decide and am happy to respond at the appropriate time.

We'll take a recess. How long is this recession? Probably 5-10 minutes. I'm sorry, comedy is back in session. Sorry we took more than 10 minutes, but it was all for the good Senator Skinner.

Madam Chair, we have before us, and clearly you could read them out if you like, but we've been distributed now a set of amendments that would address the. I think the author obviously has a larger concern, which many of us share, but at least in terms of today, the amendments would allow the project that she's specifically concerned about within her district. It would narrow the what we are approving to those parcels.

And I am comfortable with what your staff has distributed, what the Committee staff has distributed to us, and happy to have you either read them specifically, but based on these, I am happy to move the Bill with those amendments.

Thank you. Let me read out the amendments. First, narrow to specific parcels within Sacramento. Two is prohibit application to a parcel if they are identified in the site's inventory. In the housing element for lower income households. Three, require that the facility be a disproportionate share hospital or participate in the 340 B program. Next, require deed restriction that the facility remain a disproportionate share or participate in the 340 B program. That it be that facility for 55 years.

And last, specify that if during that period, it is not a disproportionate share hospital, it would be a violation of the SLA or 340 B, subject to the fines in the SLA. However, if there is a large fiscal impact, then this could be removed. Those are the amendments to the Committee? Yes. Senator Dahle?

What does 340 B mean?

340 B is a federal program for hospitals that serve disproportionate communities, such as MediCal Programs. And so it's a way to ensure that we are serving underserved communities.

Any more questions? Comments? Thank you all. I want to thank everybody, especially the staff, for working with everyone to come up with these specific amendments. And, Senator Atkins, you could close.

Thank you, Madam Chair. Thank you, colleagues. And I also want to thank the staff. Staff for working through these amendments. And I, on behalf of Senator Ashby, accept these amendments and respectfully ask for your aye vote.

Okay, motion is to pass this amended to the Senate Floor. [Roll Call]

Okay, close the roll on this bill, and we're going to go back. We're going to go back one more time for the previous bills. Okay, we will be calling the roll on items two, three, and five. First is item two, SB 1072. Do pass to the Senate Floor.

Motion is to pass to the Senate Floor. Current vote is two to one, with Chair voting aye. Vice Chair voting no. [Roll Call] 4-1.

Okay, close the rolls. Second. Next is item three, SB 1134. It's a do pass to the Senate Floor.

Current vote is four to zero, with Chair and Vice Chair voting aye. [Roll Call] 6-0.

Okay, close the rolls. And finally, file item five, SB 1174. Do pass as amended to the Senate Floor.

Current vote is three to two, with Chair voting aye. Vice Chair voting no. [Roll Call] 4-2.

Okay, that's it. We want to close a roll on that bill, and I think we're done. We want to. We did. Okay. We did okay. We did okay. Fine. I'm sorry. One more vote, and that's on the consent.

Current vote is 5-0. [Roll Call] 6-0.

Okay, now we're done for the bills for today. Thank you to all the individuals who participated in public testimony. If you were not able to testify, please submit your comments or suggestions in writing to the Senate Local Government Committee.

Your comments and suggestions are very important to us to include in the official hearing records. Thank you for your patience. The Senate Committee on Local Government is adjourned. And thank you to our staff. Yay.