While Gov. Schwarzenegger signed the high-profile SB 375, he vetoed nearly every other land use bill of consequence this year. Legislation regarding financing, fire safety, school fees, the California Environmental Quality Act and other matters all failed to escape the governor's red pen.

A substantial number of the bills received the following veto message: "The historic delay in passing the 2008-2009 state budget has forced me to prioritize the bills sent to my desk at the end of the year's legislative session. Given the delay, I am only signing bills that are the highest priority for California.  This bill does not meet that standard and I cannot sign it at this time."

The curt message – some call it petulant – has not exactly won friends among bill sponsors, lawmakers, staff members and lobbyists who put hundreds of hours into pieces of legislation.  

Several bills that the governor vetoed – whatever the reason – deserve highlighting.

I thought that AB 2173 (Caballero) was the sleeper bill of the two-year legislative session. The measure was complicated, but essentially it would have eliminated a number of prerequisites for school districts that want to charge "Level II" development impact fees. The Coalition for Adequate School Housing sponsored the bill, and the California Building Industry Association did not oppose it, which was shocking because Level II fees are often two to three times the amount of the state-established Level I fees (now at $2.97 per square feet for new residential construction).

At a time when everyone wants to encourage construction, passage of this bill seemed odd. Maybe the CBIA knew the governor would not sign AB 2173. And he didn't. It was one of those bills that was not the highest priority for California.

The governor vetoed two finance bills that would have had important, although indirect, implications for land use. Senate Bill 1293 (Negrete McLeod) and SB 1221 (Kuehl) were basically sunshine bills. The former would have imposed specific transparency and accountability requirements on joint powers authorities (JPAs) that provide tax-exempt "conduit financing" for private development projects. The latter bill would have changed various requirements that now cause hospitals and health systems in need of money for new facilities to bypass the California Health Facilities Financing Authority (a state agency) in favor of the JPAs that lack equivalent oversight. There was no stated opposition to either bill.

Still, the governor deemed SB 1293 not a priority, and said SB 1221 would burden nonprofit health facilities. The vetoes set off State Treasurer Bill Lockyer, who had endorsed both measures. Lockyer concluded an angry three-page letter to Schwarzenegger by saying he was "more than usually displeased and downright angry with what has become of two very important public policy reforms as a result of action by you and your staff."

Also failing to survive was AB 2594 (Mullin), which would have authorized redevelopment agencies to use non-housing tax increment revenue to refinance or assume subprime loans at risk of default, and to acquire vacant and foreclosed homes. You might recall that when the year began, everyone was demanding that lawmakers "do something" about housing foreclosures. The California Redevelopment Association offered to play a role, but the use of housing set-aside funds was rejected by lawmakers. Still, AB 2594 permitted redevelopment agencies to get involved in foreclosures if they really wanted to.

Schwarzenegger vetoed the bill, saying it would permit redevelopment agencies to reduce the amount of tax increment available for the state to take to help balance this year's budget. Really, that's what the veto message says. It's brazen – and I also think it's bogus because I don't see how implementation of AB 2594 would have reduced the state's grab of local revenues. (See this month's Capitol Update.)

Other bills that received vetoes:

• AB 842 (Jones). Would have change criteria for infill incentive and transit-oriented development grant funding to favor plans that reduce the growth in vehicle miles traveled. Schwarzenegger called the bill "pointless" and "duplicative."

• AB 1129 (Arambula). Would have changed state grant criteria so that housing trust funds in counties of less than 425,000 people could better compete for funding. The governor said the bill would permit local governments to spend state monies without a local match.

• AB 1221 (Ma). Would have permitted local officials to use property tax increment to finance bonds for infrastructure within transit village development districts.

• AB1366 (Portantio). Would have required cities and counties to submit annual housing element progress reports to the Department of Housing and Community Development to remain eligible for certain housing funding. 

• AB 1709 (Hancock). Would have authorized the use of Mello-Roos financing for energy efficiency and renewable energy improvements. The governor said he could not support this "fundamental shift in the purpose of Mello-Roos taxes."

• AB 2000 (Mendoza). Would have allowed a city or county that exceeds production of its fair-share housing allocation to count the excess against subsequent fair-share requirements. The governor said the bill would reduce the amount of land available for residential development. While disappointing some cities, the veto pleased affordable housing advocates and the building industry.  

• AB 2097 (Coto). Would have permitted Santa Clara County to use 5% of redevelopment housing set-aside funds for supportive services for extremely low-income households.

• AB 2447 (Jones). Would have prohibited a county from approving a subdivision in a "very high fire hazard severity zone" or in an area where the state provides fire protection unless the county and responsible fire agency could make specific findings about fire safety and emergency services. Schwarzenegger said the bill would give the California Department of Forestry and Fire Protection an inappropriate role in local land use decisions. The veto pleased real estate interests, builders and rural counties.

• AB 2939 (Hancock). Would have authorized cities and counties to adopt green building standards that exceed state standards. Schwarzenegger said the bil was "unnecessary" and went too far. 

• AB 2970 (Eng). Would have required the Department of Water Resources to prepare a "delivery reliability report" for the State Water Project.

• SB 68 (Kuehl). Would have made clear that a developer whose project gets approved is a "real party in interest" in CEQA litigation.

• SB 974 (Lowenthal). Would have imposed a fee on cargo containers going through ports in Long Beach, Los Angeles and Oakland to fund infrastructure and mitigate air pollution. This was perhaps the top bill for public health advocates, who note that studies have determined diesel pollution from California's ports are responsible for 3,700 premature deaths a year. Long Beach Democratic Senator Alan Lowenthal, who represents the area most impacted by port pollution, had a similar bill vetoed two years but took another run this year. Still, the governor found multiple reasons to reject the measure: It would increase costs on business; Proposition 1B already provides $4 billion for improving infrastructure and mitigating ports' impacts; the bill does little for the San Joaquin Valley, through which many cargo containers are trucked. Among those who urged a veto was Alaska Governor Sarah Palin, who complained the bill would raise the cost of goods shipped to her state.

• SB 1689 (Lowenthal). Would have required the Department of Housing and Community Development to submit its redevelopment audits and investigations to the attorney general and state controller for potential enforcement action.

 

- Paul Shigley