SB499 - Residential projects: fees and charges.

Senate Bill No. 499 CHAPTER 543 An act to amend Section 66007 of the Government Code, relating to land use. [ Approved by Governor October 10, 2025. Filed with Secretary of State October 10, 2025. ] LEGISLATIVE COUNSEL'S DIGEST SB 499, Stern. Residential projects: fees and charges. Existing law, the Mitigation Fee Act, imposes various requirements with respect to the establishment, increase, or imposition of a fee by a local agency as a condition of approval of a development project. If a local agency imposes any fees or charges on designated residential developments for the construction of public improvements or facilities, existing law imposes various conditions on the fees and charges. Among these conditions, existing law prohibits the local agency from requiring the payment of those fees or charges until the date the first certificate of occupancy or first temporary certificate of occupancy is issued, whichever occurs first, except as specified. Existing law, for designated residential development projects, authorizes the local agency to collect utility service fees related to connections at the time an application for service is received if those fees do not exceed the costs incurred by the utility provider resulting from the connection activities. This bill would additionally authorize a local agency to collect utility service charges related to connections at the time an application is received, as described above. Existing law also authorizes a local agency to require the payment of fees or charges on designated residential developments for the construction of public improvements or facilities earlier than the date the first certificate of occupancy or first temporary certificate of occupancy is issued if the local agency determines that the fees or charges will be collected for public improvements or facilities related to providing water, sewer, or wastewater service to the residential development. This bill would also require the fees or charges to be consistent with an existing provision of law prohibiting a local agency from imposing fees or charges for water or sewer connections that exceed the estimated reasonable cost for providing the service for which the fee or charge is imposed, except as specified. Existing law also authorizes a local agency to require the payment of fees or charges on designated residential developments for the construction of public improvements or facilities earlier than the date the first certificate of occupancy or first temporary certificate of occupancy is issued if the local agency determines that the fees or charges will be collected for public improvements or facilities related to providing fire, public safety, and emergency services to the residential development. This bill would revise that provision to specify that those public improvements or facilities related to providing fire, public safety, and emergency services include parkland and recreational facilities identified in the local agency’s safety element or local hazard mitigation plan for an emergency purpose, as specified. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 66007 of the Government Code, as amended by Section 56 of Chapter 8 of the Statutes of 2025, is amended to read: 66007. (a) Except as otherwise provided in subdivisions (b) and (h), any local agency that imposes any fees or charges on a residential development for the construction of public improvements or facilities shall not require the payment of those fees or charges, notwithstanding any other provision of law, until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first. However, utility service fees related to connections may be collected at the time an application for service is received, provided that those fees do not exceed the costs incurred by the utility provider resulting from the connection activities. If the residential development contains more than one dwelling, the local agency may determine whether the fees or charges shall be paid on a pro rata basis for each dwelling when it receives its final inspection or certificate of occupancy, whichever occurs first; on a pro rata basis when a certain percentage of the dwellings have received their final inspection or certificate of occupancy, whichever occurs first; or on a lump-sum basis when the first dwelling in the development receives its final inspection or certificate of occupancy, whichever occurs first. (b) (1) Notwithstanding subdivision (a), the local agency may require the payment of those fees or charges at an earlier time if (A) the local agency determines that the fees or charges will be collected for public improvements or facilities for which an account has been established and funds appropriated and for which the local agency has adopted a proposed construction schedule or plan before final inspection or issuance of the certificate of occupancy or (B) the fees or charges are to reimburse the local agency for expenditures previously made. “Appropriated,” as used in this subdivision, means authorization by the governing body of the local agency for which the fee is collected to make expenditures and incur obligations for specific purposes. (2) (A) Paragraph (1) does not apply to units reserved for occupancy by lower income households included in a residential development proposed by a housing developer in which at least 49 percent of the total units are reserved for occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined in Section 50053 of the Health and Safety Code. In addition to the contract that may be required under subdivision (d), a city, county, or city and county may require the posting of a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this paragraph. Fees and charges exempted from paragraph (1) under this paragraph shall become immediately due and payable when the residential development no longer meets the requirements of this paragraph. (B) The exception provided in subparagraph (A) does not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 17620) of Part 10.5 of Division 1 of Title 1 of the Education Code. (c) All of the following apply to designated residential development projects: (1) If a local agency imposes any fees or charges on the residential development for the construction of public improvements or facilities, then all of the following conditions apply: (A) (i) Notwithstanding any other law, the local agency shall not require the payment of those fees or charges until the date the first certificate of occupancy or first temporary certificate of occupancy is issued, whichever occurs first. (ii) Notwithstanding clause (i), utility service fees and charges related to connections may be collected at the time an application for service is received, provided that those fees and charges do not exceed the costs incurred by the utility provider resulting from the connection activities. (iii) Clause (i) shall not apply if construction of the residential development does not begin within five years of the date upon which the building permit is issued. (B) The amount of the fees and charges shall be the same amount as would have been paid had the fees and charges been paid prior to the issuance of building permits, and the local agency shall not charge interest or other fees on any amount deferred pursuant to this paragraph. (C) If the development contains more than one dwelling, the local agency may determine whether the fees or charges described shall be paid on a pro rata basis for each dwelling when it receives its certificate of occupancy, on a pro rata basis when a certain percentage of the dwellings have received their certificate of occupancy, or on a lump-sum basis when all the dwellings in the development receive their certificate of occupancy. (D) Notwithstanding any other law, the local agency may withhold a certificate of occupancy or a temporary certificate of occupancy until payment of those fees or charges is received. (2) (A) Notwithstanding paragraph (1), the local agency may require the payment of those fees or charges at an earlier time if either of the following conditions is met: (i) The fees or charges are to reimburse the local agency for expenditures previously made to the extent those expenditures have not been paid or reimbursed by another party. (ii) The local agency determines both of the following: (I) The fees or charges will be collected for any of the following public improvements or facilities: (ia) Public improvements or facilities related to providing water service to the residential development consistent with Section 66013. (ib) Public improvements or facilities related to providing sewer or wastewater service to the residential development consistent with Section 66013. (ic) Public improvements or facilities related to providing fire, public safety, and emergency services to the residential development, including parkland and recreational facilities identified in its safety element or local hazard mitigation plan, provided the parkland and recreational facilities are identified for an emergency purpose beyond general recreational or aesthetic use. (id) Roads, sidewalks, or other public improvements or facilities for the transportation of people that serve the development, including the acquisition of all property, easements, and rights-of-way that may be required to carry out the improvements or facilities. (ie) Construction and rehabilitation of school facilities, if the school district governing board has approved a five-year school facilities master plan pursuant to subdivision (a) of Section 17070.54 of the Education Code. For purposes of this section, if the school district does not intend to participate in the school facilities program pursuant to Chapter 12.5 (commencing with Section 17070.10) of Part 10 of Division 1 of Title 1 of the Education Code, the school district is not required to submit the five-year school facilities master plan to the Department of General Services and the five-year school facilities master plan is not required to include information specific to the school facilities program pursuant to Chapter 12.5 (commencing with Section 17070.10) of Part 10 of Division 1 of Title 1 of the Education Code. (II) An account has been established and funds appropriated for the public improvements or facilities described in subclause (I). “Appropriated,” as used in this subclause, means authorization by the governing body of the local agency for which the fee is collected to make expenditures and incur obligations for specific purposes. (B) (i) Subparagraph (A) does not apply to units reserved for occupancy by lower income households included in a residential development proposed by a housing developer in which at least 49 percent of the total units are reserved for occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined in Section 50053 of the Health and Safety Code. Fees and charges exempted from subparagraph (A) under this subparagraph shall become immediately due and payable when the residential development no longer meets the requirements of this subparagraph. (ii) The exception provided in clause (i) does not apply to fees and charges levied pursuant to Chapter 6 (commencing with Section 17620) of Part 10.5 of Division 1 of Title 1 of the Education Code. (iii) (I) The developer may elect to post a performance bond or a letter of credit from a federally insured, recognized depository institution to guarantee payment of any fees or charges that are subject to this subparagraph. (II) If the developer does not post a performance bond or letter of credit pursuant to subclause (I), the city, county, or city and county may collect any fees and charges subject to this subparagraph that are not paid at the time the first certificate of occupancy or first temporary certificate of occupancy is issued, whichever occurs first, in accordance with the following procedure: (ia) On or before August 10 of each year, the building official of the local agency shall furnish in writing to the county auditor a description of each parcel of land for which a performance bond or letter of credit has not been posted within the local agency’s jurisdiction upon which fees or charges are unpaid and the amount of the unpaid fees or charges. (ib) The amount of the unpaid fees or charges shall constitute a lien upon the land for which the fees or charges are unpaid. (ic) The unpaid fees or charges shall be collected in the same manner and at the same time as county ad valorem taxes. (id) The unpaid fees or charges shall be subject to the same penalties, lien priority, and procedure and sale in case of delinquency that apply to county ad valorem taxes. (ie) All laws applicable to the levy, collection, and enforcement of county ad valorem taxes shall be applicable to the unpaid fees and charges. (iv) Clause (iii) does not apply to projects that dedicate 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, and have a recorded regulatory agreement with the California Tax Credit Allocation Committee, the California Debt Limit Allocation Committee, or the Department of Housing and Community Development. (3) If the local agency does not issue certificates of occupancy for the type of residential developments described in this subdivision, the final inspection shall serve as the certificate of occupancy. (4) For purposes of this subdivision, “designated residential development project” means a residential development project that meets any of the following conditions: (A) The project 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) The project meets the requirements described in Section 65662. (C) The project 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) The project meets the requirements described in subdivision (a) of Section 65913.4. (E) The project meets the criteria described in subdivision (c) of Section 65913.16. (F) The project is entitled to a density bonus pursuant to subdivision (b) of Section 65915. (G) The project includes 10 or fewer units. (d) (1) If any fee or charge specified in subdivision (a) or (c) is not fully paid prior to issuance of a building permit for construction of any portion of the residential development e [Text truncated for display. Full text available on Congress.gov.]