The Mitigation Fee Act (Act) regulates fees for development projects, fees for specific purposes (e.g., water and sewer connection fees), fees for solar energy systems, and other fees. More specifically, the Act addresses the timings of fee or charge payments imposed by local agencies on residential developments for the construction of public improvements or facilities.
The Act prohibits local agencies from collecting the fees or charges from a residential development for the construction of public improvements or facilities until the date of the final inspection or the date the certificate of occupancy is issued, whichever occurs first. However, local agencies are allowed to collect utility service fees at the time an application for utility service is received.
Senate Bill 937 (SB 937) limits the utility service fees that the local agencies may charge to only utility service fees related to connections (e.g., water and sewer connections). SB 937 also caps the utility service fees that the local agency may charge to the costs incurred by the utility provider resulting from the connection activities.
The Act authorizes the local agency to charge these fees prior to the final inspection or the date the certificate of occupancy is issued in specified instances. Currently, units in a residential development project proposed by a nonprofit housing developer are exempt from paying the fees earlier if the housing development meets certain conditions. SB 937 extends this exemption for residential development units proposed by a nonprofit housing developer to residential development units proposed by all housing developers that meet certain conditions.
SB 937 defines a “Designated Residential Development Project” as a project that: (A) dedicates 100 percent of units, exclusive of a manager’s unit or units, to lower income households, as defined by section 50079.5 of the Health and Safety Code; (B) meets the Low Barrier Navigation Center development requirements described in section 65662; (C) is approved by a local government pursuant to Article 2 (commencing with section 65912.110) or Article 3 (commencing with section 65912.120) of Chapter 4.1; (D) meets the requirements described in subdivision (a) of section 65913.4; (E) meets the criteria described in subdivision (c) of section 65913.16; (F) is entitled to a density bonus pursuant to subdivision (b) of section 65915; (G) includes 10 or fewer units.
SB 937 prohibits the local agencies from collecting the fees or charges from a Designated Residential Development Project for the construction of public improvements or facilities until the first occupancy certificate or first temporary certificate of occupancy is issued. The local agency may collect utility service fees at the time of application for service. It may charge the fees prior to the certificate of occupancy if construction does not begin within five years of the date the building permit is issued. The local agency may require the payment of these fees or charges at an earlier time if the conditions specified in the code are met.
SB 937 also allows developers of a Designated Residential Development Project to choose to secure fees or charges by posting a performance bond or letter of credit; if not, the local agency can collect the fees through a process specified in the code.
SB 927 provides that the fees and charges that the local agencies charge must be the same amount as the fees that it would have been charged had the fees and charges been paid prior to the issuance of building permits. The local agency it prohibited from charging interest or other fees on any amount deferred pursuant to this paragraph.
SB 937 provides how a local agency may charge when there is more than one dwelling on the Designated Residential Development Project.
The Act authorizes the local agency issuing the building permit to require the property owner to execute a contract to pay the fee or charge as a condition of issuance of the building permit if any fee or charge described above is not fully paid prior to issuance of a building permit. SB 937 extends this authority to designated residential development project and authorizes local agencies to allow staff to approve fee-related contracts. Local agencies must post a model contract for online public access, if it maintains a website, prior to requiring these contracts.
(SB 937 amends Government Code section 66007)