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01-21-2020 - AGENDA ITEM 10 CONSIDERATION OF LEGISLATIVE MATTERS - SENATE BILL (SB) 50 (WEINER) PLANNING AND ZONING: HOUSING DEVELOPMENT: STREAMLINED APPROVAL11/16/2020 Print Staff Report AGENDA ITEM NO. 10 DATE: January 21, 2020 TO: Mayor and City Council FROM: David Carmany City Manager AGENDA STAFF REPORT City of West Covina I Office of the City Manager SUBJECT: CONSIDERATION OF LEGISLATIVE MATTERS - SENATE BILL (SB) 50 (WEINER) PLANNING AND ZONING: HOUSING DEVELOPMENT: STREAMLINED APPROVAL: INCENTIVES AND SB 266 (LEYVA) - PUBLIC EMPLOYEES' RETIREMENT SYSTEM: DISALLOWED COMPENSATION; BENEFIT ADJUSTMENTS RECOMMENDATION: That the City Council authorize the Mayor to sign letters of opposition to SB 50 and SB 266. BACKGROUND: On September 3, 2019, the City Council adopted a legislative platform and requested that legislative matters be agendized for discussion before a position letter is sent on behalf of the City. More recently there has been discussion about the priorities and role of the City's lobbyist, Jason A. Gonsalves & Son (Gonsalves). The Gonsalves contract is paid through the Successor Agency administrative cost allowance and they have been diligently pursuing the redevelopment wind -down issues. They have been highly effective recently and the City has had favorable determinations made by the California Department of Finance as a result of their involvement. Over the past six months Gonsalves has been also been engaged in efforts to oppose SB 50 and SB 266 at the City's request. DISCUSSION: The League of California Cities - which West Covina is a member of - has a team of legislative analysts that reviews legislation moving through the State capitol. The League builds consensus from its member agencies through an extensive legislative review process. Staff believes that the League's positions are generally aligned with the interests of the City. Two bills of particular concern to the City are SB 50 and SB 266. SB 50 (Weiner) is an effort to boost housing production by overriding local zoning controls. The ideas behind SB 50 started in January 2018 with the introduction of SB 827 by Senator Weiner. After SB 827 failed the Senator stated the ideas would be reintroduced as part of new legislation. The bill overrides local control by allowing transit agencies and housing developers to determine housing densities and parking ratios in "transit - rich" areas (generally within one -quarter mile of a major transit stop). There are other issues identified in the opposition letter to SB 50 (attached). The bill was most recently amended on January 6, 2020 and the League issued a new opposition letter on January 15, 2020. Unfortunately the Senator has been unwilling to address many of the concerns raised. https://destinyhosted.com/print_ag_memo.cfm?seq=652&rev_num=0&mode=Extemal&reloaded=true&id=93762 1/2 11/16/2020 Print Staff Report SB 266 (Leyva) would require public agencies to directly pay retirees retirement benefits that are negotiated but later deemed to be disallowed by CaIPERS. The issue that SB 266 is trying to address largely stems from the pension reforms that were instituted under the 2012 Public Employees' Pension Reform Act (PEPRA). After the legislation passed some agencies negotiated contracts that were later deemed as "disallowed benefits." SB 266 proposes to remedy this issue by making individual public agencies responsible for assuring that the benefits that are granted are lawful and fully comply with Ca1PERS rules. Thus removing any accountability from Ca1PERS to ensure that benefits are reviewed, calculated and administered correctly. As the plan administrator Ca1PERS should be responsible for proper and lawful administration. Further, SB 266 would require that individual public agencies pay the retiree, or their estate, the pension benefit that is deemed disallowed. However, payment of ineligible pension benefits is a gift of public funds, which agencies cannot do. Staff believes these bills are detrimental to West Covina and should be opposed. If the letters are approved to be signed copies will also be sent to Gonsalves so they can advocate for the City's position. In response to Council's request, Gonsalves firm staff is anxious to calendar a meeting with City Council members. They suggested the meeting occur late spring/early summer when the Legislature is in recess. OPTIONS: The City Council has the option of authorizing the Mayor to sign the attached letters of opposition or: 1. Take no position of the pending legislation. 2. Provide staff alternative direction. Prepared by: Mark Persico, Assistant City Manager Additional David Carmany, City Manager Approval: Attachments Attachment No. 1 - Opposition Letter SB 50 Attachment No. 2 - Opposition Letter SB 266 CITY Enhance the City Image and Effectiveness COUNCIL Engage in Proactive Economic Development GOALS & OBJECTIVES: https://destinyhosted.com/print_ag_memo.cfm?seq=652&rev_num=0&mode=Extemal&reloaded=true&id=93762 2/2 ATTACHMENT NO. 1 Office of the Mayor January 21, 2020 The Honorable Scott Wiener Senator, California State Senate State Capitol Building, Room 5100 Sacramento, CA 95814 RE: SB 50 (Wiener) Planning and Zoning. Housing Development Incentives Oppose Unless Amended (as amended 0110612020) Dear Senator Wiener: The City of West Covina must continue to oppose SB 50 unless the measure is further amended to address our key concerns. The amendments taken on January 6, 2020 do not take into account our primary objections to SB 50. However, the City of West Covina is pleased to see that recent amendments attempt to create an alternative planning process for jurisdictions to develop a "local flexibility plan" that, if approved by the California Department of Housing and Community Development (HCD), would exempt cities from nearly all aspects of SB 50 with the exception of requiring fourplexes in single-family zones. Unfortunately, we can't evaluate whether the "local flexibility plan" is a viable alternative because the amendments do not clearly identify the elements of the plan. Specific Concerns with the January 6, 2020 Amendments It appears that the intent of the amendments is to provide local governments with an opportunity to develop their own plan to meet the goals and obj ectives of SB 50. Although the goal of increased density around transit is clear; the goal of the bill regarding a jobs -rich housing project is not. The amendments, as drafted, raise the following concerns: • Without clearly identified criteria, we are unable to evaluate whether the "local flexibility plan" is actually a viable alternative planning option. Office of Planning and Research (OPR) and HCD are tasked with developing "rules, regulations, or guidelines" for the submission and approval of a local flexibility plan" without sufficient direction from the Legislature. This rulemaking process is exempt from the Administrative Procedures Act, thus allowing the OPR and HCD to craft rules, regulations, or guidelines with little to no public input or oversight. The elements of the plan are not clear: Further Legislative direction is required. o "Achieve a standard of transportation efficiency as great or greater than if the local government were to grant equitable communities' incentives." SB 50 does not contain any language regarding "transportation efficiency." Therefore, it is not 1444 West Garvey Avenue • West Covina • CA 91790 • Phone (626) 939-8401 • Fax (626) 939-8406 possible to determine how HCD, OPR, or a local government will determine how to meet this standard or how a "local flexibility plan" is expected to comply with this standard. "Increase overall feasible housing capacity for households of lower, moderate, and above moderate incomes, considering economic factors such as cost of likely construction types, affordable housing requirements, and the impact of local development fees." The override provisions of SB 50 do not contain any language regarding "feasible housing capacity for households of lower, moderate, and above moderate incomes," nor does it address "economic factors such as cost of likely construction types, affordable housing requirements, and the impact of local development fees." Therefore, it is not possible to determine how HCD, OPR or a local government will determine how to meet this standard or how a "local flexibility plan" is expected to comply with this standard. SB 50's "community plan" for sensitive communities provides a much clearer alternative and should be considered as a possible alternative planning process for all jurisdictions. Remaining Objections to SB 50 If a city elects not to develop a "local flexibility plan" or if HCD does not approve a submitted "local flexibility plan" by January 1, 2023, a city is required to give a developer an "equitable communities' incentive", which overrides locally developed and adopted height limitations, housing densities, and parking requirements. Many statewide standards, enacted by the Legislature, are included in the State's Planning law. Standards should be established by the Legislature, not by individual developers. Developers of certain housing projects should not be allowed to override locally developed (and HCD-approved) housing elements which identify adequate sites with sufficient density to accommodate a city's share of the regional housing need. Specifically, the League has significant concerns with the following: • Wasting time and money. SB 50 would greatly undermine locally adopted General Plans, Housing Elements (which are certified by the HCD, and Sustainable Community Strategies (SCS). By allowing developers to override state approved housing plans, SB 50 seriously calls to question the need for cities to develop these community -based plans and the justification for spending millions of state and local funds on the planning process. HCD spends a significant amount of money and staff time to review and certify housing elements for 482 cities. In 2019 alone, HCD allocated nearly $130 million to local governments to update their housing plans and approval processes. The 2019/2020 State Budget allocated an additional $250 million on local plans. Why would the Legislature pass a bill that encourages developers to defy these plans and essentially waste millions of taxpayer dollars? • Gives housing developers and transit agencies, who are unaccountable to local voters, the power to determine housing densities, heights up to 55 feet, parking requirements, and design review standards for "transit -rich housing projects" within one-half mile of a major transit stop. For those "transit -rich housing projects" within one -quarter mile radius of a stop on a high -quality bus corridor, developers would be able to determine housing density, and parking requirements above .5 spots per unit. • What is the full scope of SB 50? As presently drafted, it is very difficult to determine what constitutes a 'jobs -rich area" since the Department of Housing and Community Development and the Office of Planning and Research are largely tasked with making that determination. It is hard to understand why the Legislature would want the Executive Branch to define essential terms that have broad implications for how SB 50 would be implemented. Additionally, by not defining "jobs -rich area" in statute, there is no way of knowing if SB 50 will accomplish its stated goal. • Greater density but no public transit? SB 50 would require cities to allow greater density in communities that are high opportunity and jobs rich, but may lack access to public transit. This seems at odds with many state policies that encourage and incentivize more dense housing near transit so that individuals may become less dependent on automobiles. It's only been a few years since the Legislature determined that the impact on the transportation environment from a housing project should be measured in vehicle miles traveled. • Two -tiered process that exempts cities with a population of less than 50,000 that are in a county with a population of less than 600,000, from the most extreme provisions of the measure. It is unclear why these cities should be treated differently than a similar size city in a county with a population over 600,000. Instead of arbitrarily establishing a population metric, it would be much more appropriate to consider the full range of community characteristics when determining which areas of the state SB 50 should apply. For these reasons, the City of West Covina oppose SB 50 unless amended. Sincerely, Tony Wu Mayor City of West Covina CC. The Honorable Scott Wiener The Honorable Susan Rubio The Honorable Ling Ling Chang The Honorable Blanca Rubio The Honorable Phillip Chen Kristine Guerrero, League of California Cities Jason Gonsalves, Joe A. Gonsalves & Son, gonsalves ,eonsalvi.com League of California Cities, cityletters@cacities.org ATTACHMENT NO.2 Office of the Mayor January 21, 2020 The Honorable Anthony Portantino Chair, Senate Appropriations Committee State Capitol Building, Room 3086 Sacramento, CA 95814 RE: SB 266 (Leyva) Public Employees' Retirement System: disallowed compensation: benefit adjustments. Notice of Opposition Dear Senator Portantino, The City of West Covina must respectfully oppose SB 266, to directly pay retirees for disallowed retirement benefits. which would require public agencies In 2012, the California State Legislature passed significant public pension reform legislation known as the Public Employees' Pension Reform Act (PEPRA) which took effect January 1, 2013. While the reforms were significant, they led to some confusion as to what may lawfully be offered as employee pension benefits. As a result, some public agencies and their represented employee organizations came to agreements on benefit packages and submitted to CaIPERS for approval. Only after these agreements were approved and administered did Ca1PERS determine that these forms of compensation were unlawful. Those future retirement benefits, which were being paid for by employers and employees into pension systems such as the California Public Employees Retirement System (CalPERS), were at some point determined to violate the law and were terminated. Terminated benefits that violate PEPRA are considered "disallowed benefits." Under current law, once a benefit is determined to be disallowed, both the employer and the employee cease making future payments on that benefit, past contributions from the employee are returned to the employee, while past contributions from the employer are applied towards future payment. Unfortunately, in the case of a retiree that received the disallowed benefit, the pension system must recoup the overpaid benefit from the retiree. The pension system must recoup that overpayment from the retiree because it is unlawful to pay out a benefit that is not legally allowable or earned. Public agencies cannot continue to make payments to retirees as proposed by SB 266 for the same legal basis that requires pension systems to recoup their disallowed retirement benefit payments to retirees. Continued payment of a disallowed benefit to a retiree would constitute a gift of public funds, in violation of Section 6, Article 16 of the California Constitution. Again, it is unfortunate that after an agency and their bargaining unit came to an agreement on benefits and those benefits had been paid for any amount of time for the benefit to be taken from the 1444 West Garvey Avenue • West Covina • CA 91790 • Phone (626) 939-8401 • Fax (626) 939-8406 retiree. Public agencies simply cannot continue to make payments directly to a retiree for an unlawful benefit. For these reasons, the City of West Covina opposes SB 266 (Leyva). Sincerely, Tony Wu Mayor City of West Covina cc: The Honorable Connie Leyva The Honorable Susan Rubio The Honorable Ling Ling Chang The Honorable Blanca Rubio The Honorable Phillip Chen Kristine Guerrero, League of California Cities Jason Gonsalves, Joe A. Gonsalves & Son, Qonsalves()eonsalvi.com League of California Cities, citvlettersna.cacities.ore