Residential projects: fees and charges.

Senator Stern’s measure reframes how residential-development fees and charges are collected by expanding the Mitigation Fee Act’s timing and scope, prioritizing earlier funding for a broader set of public improvements while maintaining a safety-oriented, cost-conscious framework. The core change preserves the default rule that most public-improvement fees are payable at final inspection or occupancy, but it adds authority for local agencies to collect utility connection fees when service is requested and to broaden the range of projects eligible for earlier collection, including parkland and recreational facilities identified in safety or hazard-mitigation planning.

The proposal creates new triggers for early payment and requires that any upfront amounts align with what would have been collected prior to building permits. It allows early collection if a construction schedule or plan has been adopted or funds have been appropriated, or if the agency is reimbursing expenditures already incurred. For projects with lower-income units, an exception to the early-collection rule exists only if a performance bond or letter of credit is posted; otherwise, unpaid fees may be pursued through a prescribed process after occupancy. The scope of eligible improvements expands to cover water and sewer service costs, fire and public-safety services (including parkland and recreational facilities tied to emergency purposes), transportation-related facilities, and school facilities subject to approved five-year master plans.

Enforcement and financing tools are strengthened: local agencies may require payment before occupancy via contracts that are enforceable as liens on the property, recorded with the county and potentially enforceable through escrow instructions or sale for delinquency. Occupancy certificates may be withheld until payment is received, and agencies must post a model contract on their websites. The changes also introduce a framework for deferring payment up to escrow, with specific exclusions for certain Education Code-based charges. The measure broadens the definition of designated residential development, encompassing density-bonus projects and other scenarios that qualify under specified planning or housing provisions, while preserving a consistent cost baseline for water and sewer connections.

Contextual considerations center on administrative capacity and coordination: local agencies must align new early-collection authorities with capital-improvement planning and five-year school facilities planning, ensure compliance with cost-reasonableness constraints for utility charges, and manage the expanded ecosystem of bonds or credits for affordable-housing projects. The provisions connect upfront funding to concrete capital needs—water, sewer, fire and emergency services, parkland, roads, and school facilities—within a framework that still anchors payment timing to occupancy milestones, pending the final enacted language and operative dates.