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SB 1473: El Dorado County Fighting California Green Building Legislation

In the aftermath of last year’s AHRI et al. v. City of Albuquerque litigation, there has been an increased level of discussion with respect to how municipalities and states should craft green building policy and legislation. Although I have not been following what’s been taking place in California all that closely, a recent article in the Sacramento Bee noting one California county’s reaction to a newly enacted piece of state-level green building legislation caught my eye. California’s Senate Bill 1473 took effect on January 1 and requires cities and counties in California to collect, on behalf of California’s Building Standards Commission, a building permit application fee. The fee is based on the building’s valuation as determined by the pertinent local building official and is assessed at $1.00 for every $25,000.00 of value. Cities and counties are entitled to keep up to 10 percent of the fee in order to cover their own administrative and enforcement costs; the rest of the funds are sent to a special revolving fund established by SB 1473 which the Commission will use to “fund development of statewide building standards, with emphasis on green building standards.”

Officials in El Dorado County (which is about halfway between Sacramento and Lake Tahoe) believe that the fee is illegal, calling it “a tax without calling it a tax.” The distinction is critical because, in California, a special purpose tax (as the county is characterizing the fee) requires approval from two thirds of voters before being enacted. Interestingly, although the Bee reports that real estate developers across the state supported the bill during the course of various legislative hearings prior to September 30, when Governor Schwarzenegger signed SB 1473 into law, El Dorado officials are suggesting that the fee is “another burden” on the struggling construction industry. In late January, the county requested that the state attorney general’s office review the fee and opine on whether it is legal- so far there does not appear to be a decision. In the interim, the county is not collecting the fee as required under SB 1473, despite warnings from counsel that it could be subject to penalties, backcharges, or even a lawsuit if its challenge is unsuccessful.

I think the county’s effort here is important to follow for a couple of reasons, both of which I’ve discussed at GRELJ previously. First, as suggested by AHRI, plaintiffs will not be deterred from attacking green building legislation or policies that increase transaction costs, particularly given the state of the economy and deteriorating construction climate. Second, if the attorney general agrees that the fee is indeed a special purpose tax, legislators will need to regroup and draft a bill that reflects the requirements of California law- likely more than six months after the governor signed the bill back in September. I think this demonstrates how- and why- poorly written policies have the potential to harm green building practices generally if not properly considered and vetted prior to enactment.  Policymakers definitely need to keep these two considerations in mind because poorly drafted legislation will, without question, be challenged here in 2009 even if it purports to address the greater good.

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