In With the New – Part Three

In Part Three of our “In With the New” series, BBK covers important new legislation related to CEQA, development fees, housing, planning, zoning, public contracts and waste disposal. Within, you will find takeaways and analysis of the following: AB 819, SB 7, AB 602, SB 8, SB 9, SB 10, SB 391, AB 345, AB 1409, AB 846 and SB 619.

California Environmental Quality Act (CEQA)

AB 819
Assembly Bill 819 changes certain notice and filing requirements under CEQA. Specifically, local and state government agencies (lead agencies) are now required to submit electronically specified documents assessing potential environmental impacts  to the governor's Office of Planning and Research. They must also post such documents on their websites or the County Clerk is required to post the notices on its website. (Revised Pub. Resources Code, §§ 21080.4(a), 21082.1(c), 21091(a), 21092(b)(3), 21092.2(d), 21092.3, 21108(d), 21152(c), (d) and 21161.)

In sum, AB 819 modernizes CEQA by increasing electronic availability of CEQA documents to the public and by providing electronic filing options for agencies.

SB 7
Senate Bill 7, known as the Housing and Jobs Expansion and Extension Act, reenacts and expands the AB 900 Environmental Leadership program, which requires expedited judicial review of CEQA challenges to certain types of projects. SB 7 focuses the program on housing projects by creating a new class of projects eligible for its protections, i.e., housing development projects resulting in an investment of $15 million to $100 million with at least 15% low-income housing and no short-term rentals.

To receive the statute’s guarantee of early CEQA resolution, project applicants must also:

• Agree to construction and operational union participation and wage provisions acceptable to the governor
• Meet specified climate criteria, including "net zero" greenhouse gas and other environmental and transportation criteria on terms acceptable to the California Air Resources Board.

SB 7 attempts to expedite CEQA challenges for qualifying projects in an effort to address California’s ongoing housing crisis.

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Development Fees

AB 602
Mitigation Fee Act — Impact Fee Nexus Study Requirements
Assembly Bill 602 requires local agencies to consider additional factors and information when preparing and adopting development impact nexus fee studies. AB 602 requires that local agencies undertake the following analysis:

• The nexus study must identify levels of service, identify proposed new levels and include an explanation of why the new level of service is necessary.
• For housing developments, a study adopted after July 1, 2022 must calculate fees proportionate to the square footage of the units or make findings explaining why that is not an appropriate method.
• Studies must be adopted at a public hearing with 30 days of notice.
• Studies must be updated every eight years, with fee schedules posted on the website.

Agencies undertaking or contemplating undertaking impact fee nexus studies should be familiar with the new requirements of AB 602. Additionally, agencies approving contracts for nexus studies should ensure that their scope contain AB 602 requirements.

Agencies should be aware that some calculation methods suggested by AB 602 may not lend themselves to all fee categories. For example, the requirement that fees for housing be levied in proportion to square footage may not be adaptable to fees for public safety facilities, as public safety needs are typically not calculated on a square foot basis. In other words, building sizes many not correlate directly with public safety demands. As a result, agencies should carefully analyze each fee and alternative metrics to justify that fee. 

It should be noted that AB 602 does not apply to all fees imposed on housing developments. For example, AB 602 does not apply to water or sewer connection and capacity charges, school fees, or Mello-Roos or other taxes. Those fees and charges are subject to different state laws.

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Housing

SB 8
Amendment to the Housing Crisis Act of 2019
Senate Bill 8’s main effect is to extend the duration of the Housing Crisis Act (HCA) from 2025 to 2030. Additionally, the HCA required any decrease to residential capacity in a general plan or zoning to be “concurrently” offset by an increase elsewhere in the city to ensure there was “no net loss” of housing units. SB 8 defines “concurrently,” for purposes of no-net-loss requirements under the HCA, to mean:

• the action is approved at the same meeting; or
• if the action that would result in a net loss of residential capacity is requested by an applicant for a housing development project, then within 180 days; or
• if by local initiative, then that “the action is included in the initiative in a manner that ensures the added residential capacity is effective at the same time as the reduction in residential capacity.”

Additionally, SB 8 purports to clarify existing law by clarifying that a “housing development project” for purposes of certain parts of the HCA “includes, but is not limited to, projects that involve no discretionary approvals and projects that involve both discretionary and nondiscretionary approvals” — as well as “a proposal to construct a single dwelling unit.” This latter bit, the inclusion of a single-unit project, is a significant change from the California Housing and Community Development Department’s interpretation of housing development project in the Housing Accountability Act. As noted, SB 8 adds a “single dwelling unit” to the housing development project definition, thus expanding the application of the term significantly — but only as it is used in Gov Code 66300. SB 8 limits the right to relocation benefits and the right of first refusal during demolitions to the occupants of protected units that are lower-income households, as defined, to the exclusion of short-term renters.

SB 9
Under Senate Bill 9, local agencies must ministerially approve certain subdivisions of one lot into two without discretionary review or a hearing. SB 9 also requires local agencies to ministerially approve a proposed two-unit development project on a lot in a single-family residential zone without discretionary review or a hearing. This applies to building two new units or adding a second one. Qualifying criteria and standards for both by-right “urban lot splits” and two-unit development projects, along with other details, can be seen here.

Local agencies should immediately adopt objective standards for these mandatory, ministerial lot splits and two-unit development projects. In addition, they should note the following nuances:

• Local agencies must prohibit short-term rentals in any dwelling created under SB 9 (whether through the lot split or two-unit development approval, or both).
• SB 9 creates two narrow exceptions from the general requirement that local agencies allow accessory dwelling units and junior accessory dwelling units ministerially: When a lot is both created by an SB 9 lot split and developed with an SB 9 two-unit development, a local agency does not need to allow an ADU or JADU. Also, a local agency does not need to allow an ADU or JADU on a lot if there are already two units of any kind on the lot.
• Because approval under SB 9 is ministerial, CEQA does not apply and the bill creates a new statutory exemption for an ordinance adopted to implement SB 9.
• The Coastal Act does apply, but the local agency is not required to hold a public hearing on a coastal development permit for an SB 9 approval. The Coastal Act applies in full to SB 9 lot splits and two-unit projects, with one exception—the local agency just can’t hold a public hearing on a CDP.
• SB 9 also changes the lifespan of tentative subdivision maps. Local agencies may now extend map expiration by an additional year—up to 2 years generally and up to 4 years for maps that are conditioned on significant public improvement obligations.

SB 10
Senate Bill 10 authorizes cities to provide a streamlined upzoning process in certain areas. SB 10 does not impose any mandatory requirements upon cities; however, it empowers cities to adopt an ordinance allowing for up to 10 dwelling units per parcel provided the parcel is located in either a transit rich area or an urban infill site. The ordinance must set a height limit. When adopting the ordinance, the city must make the finding that the increased density “is consistent with the city or county’s obligation to affirmatively further fair housing pursuant to Section 8899.50.”

It’s important to note that the city may adopt an SB 10 zoning ordinance notwithstanding any other local restrictions on adopting zoning ordinances, including restrictions enacted by local initiative. However, an SB 10 zoning ordinance that supersedes a zoning restriction enacted by local initiative must be adopted by two-thirds of the members of the city council in order to be effective. The ordinance must be adopted before Jan. 1, 2029, though ordinances adopted before that date may have operative dates that extend beyond Jan. 1, 2029.

SB 10 does not apply to a parcel located in a very high fire hazard severity zone — unless the site complies with “fire hazard mitigation measures” in “existing building standards or state fire mitigation measures applicable to the development.”

An SB 10 zoning ordinance cannot reduce the density of any parcel subject thereto. Moreover, once a parcel’s density has been increased pursuant to an SB 10 zoning ordinance, the City cannot subsequently reduce the density of that parcel. Generally, SB 10 creates a new statutory exemption for an SB 10 zoning ordinance, as well as for “any resolution to amend the jurisdiction’s General Plan, ordinance, or other local regulation adopted to be consistent with that zoning ordinance.”

CEQA will still apply to both of the following:

• a residential or mixed-use residential project consisting of more than 10 new residential units on one or more parcels that are zoned pursuant to an SB 10 zoning ordinance, and
• a subsequent ordinance adopted to rezone a parcel zoned under an SB 10 zoning ordinance.

Moreover, a project may not be divided into smaller projects in order to get around these restrictions.

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Land Use

SB 391
Clarifying Local Agencies’ Audit Obligations for Land Use Fees
The Mitigation Fee Act presently requires local agencies imposing or increasing fees relating to development projects to identify the purpose of the fee, and the use to which it is being put. The fees must also be deposited in a separate account from the agency’s other funds, and expended only for the purpose for which they were collected. After each fiscal year, the agency must publicize information about the amount of the fees collected and what they were used for.

Currently, any person can request an audit to determine if the fee collected by the agency exceeds the amount reasonably necessary to cover the purpose it was collected for. If the agency has failed to comply with its legal disclosure requirements with respect to the fees for three consecutive years, the local agency is required to pay the cost of the audit rather than requiring a deposit from the requesting person.

The new law retains all of the above provisions, but adds a requirement that if an agency did not comply with its disclosure requirements for three consecutive years, the agency must include in its audit the data for all of the years it did not make the required disclosures.

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Planning & Zoning

AB 345
Assembly Bill 345 builds off of Assembly Bill 587 by adding new requirements and making its provisions mandatory. With AB 345 now in effect, local agencies should note the following:

• Mandatory Requirement: Local agencies are now required to allow accessory dwelling units (ADUs) to be sold or conveyed separately from the primary dwelling if the conditions provided in Government Code Section 65852.26 are satisfied. (See list of prominent conditions here.)
• Limited Applicability: The impact of AB 345 may be limited, as it only applies to properties built by qualified nonprofits that are then purchased and occupied by qualified low-income buyers.
• Not Applicable to JADUs: AB 345 does not apply to or permit the separate sale or conveyance of junior accessory dwelling units (JADUs). In accordance with Government Code Section 65852.22, a local agency’s ordinance must prohibit JADUs from being sold or conveyed separately from the primary dwelling.
• ADU Ordinance Update: ADU ordinances generally include language providing that the separate sale or conveyance of an ADU is not allowed. As a nod to AB 345’s changes to this landscape, local agencies should consider qualifying this portion of their ADU ordinance to include something to the effect of: “Except as otherwise provided in Government Code Section 65852.26, no ADU may be sold or otherwise conveyed separately from the lot and the primary dwelling.”

The provisions of AB 345 apply only when numerous detailed conditions are satisfied. Thus, to assist staff and the public with implementing this new law, local agencies may want to consider coordinating with legal counsel to create a checklist that tracks AB 345’s requirements. Done right, such a checklist would provide staff and the public with a digestible and straightforward method for determining whether the property in question satisfies the requirements of AB 345.

AB 1409
General Plan: Safety Element
Assembly Bill 1409 requires local agencies to consider additional factors and information when revising the safety element of the jurisdiction’s general plan.

AB 1409 will require local agencies to amend the safety element of the general plan to identify evacuation locations, in addition to evacuation routes, for identified fire and seismic hazards within the jurisdiction.

The additional information required for the Safety Element must be completed:

• Upon the next revision of a local hazard mitigation plan on or after Jan. 1, 2022; or
• Beginning on or before Jan. 1, 2022, if a local jurisdiction has not adopted a local hazard mitigation plan.

Local planning departments should begin evaluating sites for potential evacuation locations as part of any revision to the general plan safety element.

AB 1409 provides no guidance for determining appropriate evacuation sites. As a result, local planning departments will need to consider various factors when evaluating their appropriateness, including accessibility to evacuation routes, capacity, suitability, proximity to emergency services and short- and long-term appropriateness.

General plans are required to be internally consistent. Local planning departments should be mindful of the AB 1409 requirements and how the identification of evacuation sites affects the compatibility and consistency between the safety element and other elements of the general plan.

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Public Contracts

AB 846
Local Agency Public Construction Act: Job Order Contracting
The Local Agency Public Construction Act permits school districts and community college districts to utilize job order contracting as a project delivery method.

Assembly Bill 846 extends the repeal date for this authorization from Jan. 1, 2022 to Jan. 1, 2027. It also imposes a requirement that a contractor awarded a job order contract greater than $25,000 must provide an enforceable commitment that the contractor and all subcontractors will use a skilled and trained workforce for all work performed that involves an apprenticable occupation in the building and construction trades. This requirement would not apply if the job order contract is already subject to a project labor agreement that already imposes this requirement.

Districts issuing upcoming requests for bids for job order contracts should ensure that their bid documents require bidders to provide an enforceable commitment that a skilled and trained workforce will be used. Moreover, the contract should state that it is subject to skilled and trained workforce requirements and outline those requirements.

The enforceable commitment requirement is not an uncommon requirement for California public agencies using alternative project delivery methods, such as design-build. Public Contract Code §§ 2600 et seq. establishes the requirements and procedures for contracts subject to skilled and trained workforce requirements. Those requirements will now apply to most job order contracts issued by school districts and community college districts.

Accordingly, school districts and community college districts may continue to use job order contracting as a project delivery method through 2026 so long as their contractors comply with the skilled and trained workforce requirements.

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Waste Disposal

SB 619
Under Senate Bill 619, cities, counties and special districts that failed to adopt enforceable mechanisms to divert organic waste from landfills in accordance with SB 1383 regulations before Jan. 1, 2022 may seek relief from administrative civil penalties. In order to qualify for relief from penalties for minor, moderate and major violations as defined in 14 CCR § 18997.3 for the 2022 calendar year, a local jurisdiction must submit a notification of its intent to comply with the SB 1383 regulations to CalRecycle before March 1, 2022.

SB 619 gives jurisdictions more time to adopt ordinances and approve franchise agreements to locally implement SB 1383 regulations before fines may be imposed. However, this still requires the local jurisdiction to work towards adopting the enforceable mechanisms, or else CalRecycle can demand retroactive payment of penalties for non-performance.

For more information about the SB 1383 regulations, read BBK’s detailed summaries here and here.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.