New Housing & Land Use, Local Government and Public Contracting Laws

Best Best & Krieger LLP

Part 2: California Laws Impacting Public Agencies for 2020

How do the laws passed last year by California lawmakers impact how public agencies do business in the new year? In this annual Legal Alert series, Best Best & Krieger LLP brings you summaries of some of the most critical legislation that agencies need to know about to stay in compliance and best serve their communities. All laws went into effect Jan. 1, unless otherwise noted.

Housing and Land Use

In a six-part Legal Alert series, Best Best &Krieger surveyed 15 bills that seek to increase housing development by relaxing regulations and streamlining development procedures:

In addition to the above, AB 1743 is also of interest. This bill exempts certain properties used for affordable housing from locally-imposed Mello-Roos special taxes. The Mello-Roos Act enables cities and other local agencies to form Communities Facilities Districts to finance infrastructure improvements and certain other public services. Properties in the CFD pay a special tax that is used to service the debt for constructing the infrastructure or to pay for the ongoing services. The special tax is in addition to the ad valorem property tax, which applies to all property in the state unless there is an exemption. The “welfare exemption” provides that real property used for charitable purposes – including affordable housing – is not subject to ad valorem property taxes. Previously, such properties were still required to pay Mello-Roos taxes. This bill extends the welfare exemption to also include Mello-Roos taxes.

Local Government

AB 116 Local government
After the Legislature ended redevelopment, it created several “redevelopment-lite” tools for local agencies. In 2014, the Legislature authorized local agencies to create Enhanced Infrastructure Financing Districts to finance a variety of projects using future tax increment. The EIFD law originally required voter approval to issue bonds secured by tax increment. This new bill removes the voter approval requirement and instead requires that the forming agency hold three public hearings for the enhanced infrastructure financing plan and provide information about the bonds in the resolution issuing bonds. Since 2014, EIFDs have not been widely utilized. This new law aims to facilitate the use of EIFDs to finance needed projects.

AB 485 Local government: economic development subsidies
In the Legal Alert New Economic Development Subsidy Requirements, this new law, which imposes public reporting requirements on local agencies that subsidize warehouse distribution centers in an effort to hold warehouse companies accountable, is discussed in depth.

AB 857 Public banks
Previously, the law required a local agency to deposit all money into a state or national bank, and prohibited a county from giving or loaning its credit to a person or corporation. This measure allows a local agency, or a joint powers authority composed of local agencies, to establish a public bank with the approval of the Department of Business Oversight and the Federal Deposit Insurance Corporation. The new law limits the DBO Commissioner to issuing two public bank licenses and authorizing 10 public banks in a calendar year. Before submitting an application, a local agency is required to conduct a study, approve the viability of the bank, and obtain voter approval if the agency is not a charter city. The new law allows the governing board of the bank to meet in closed session in some instances, and gives an exemption from the Public Records Act for certain information and records. While there may be advantages to using a public bank, including the possibility that a public bank could respond to the needs of the community at a lower cost than the private sector, the feasibility of the measure remains to be seen. On the one hand, the County Treasurers Association has questioned the legality of depositing county funds into a public bank. On the other hand, the use of a joint powers authority as model for local agencies to own a bank may give wings to the measure.

AB 931 Local boards and commissions: representation: appointments
Existing law requires local agencies to maintain a list of appointments to local boards and commissions. The list is available to the public. This measure addresses the gender equality of commissions and boards of cities with a population of 50,000 or more. After Jan. 1, 2030, the new law prohibits appointment of an individual with the same gender identity as 60 percent of the current membership of the board or commission. Similarly, smaller boards and commissions may not consist solely of members with the same gender identity. The measure encourages boards and commissions to consider gender identity when conducting outreach to fill vacancies in local government and seeks to establish a diverse appointment list. Certain state-mandated costs related to this bill will be reimbursed to the local agency.

AB 945 Local government: financial affairs: surplus funds
California law limits the manner in which local agencies may invest their surplus funds, including by placing a cap on the percentage of an agencies surplus that may be placed in certain investments. This bill provides a temporary increase, from 30 to 50 percent of an agency’s surplus funds, that the agency may invest in depository institutions that use a private sector entity to assist in the placement of deposits. The limitations differ for pooled funds. The intent of the bill is to, in theory, enable more local government funds to be invested with community banks and credit unions.

Public Contracts

AB 747 Planning and zoning: general plan: safety element
This bill requires each city and county to revise the safety element of its general plan to include evacuation routes for fire and geological hazards. This new law arises out of the devastating impact of wildfire on the town of Paradise, where 85 civilians died, due in part to an insufficient evacuation of the area. Each city and county was previously required to adopt a local hazard mitigation plan every 5 years to qualify for federal disaster funding. Under the new law, changes to the safety element must occur in the next revision of the LHMP or after Jan. 1, 2022, or if a local jurisdiction has not adopted an LHMP, by Jan. 1, 2022.

Also in this Series:

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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