Mitigation Fee Act.

Section 66001 subdivision (h) previously required any fee established, increased, or imposed to be based on the net impact on the need for the public facility, accounting for whether the project removes or replaces an existing use, and mandated a proportionate fee credit in redevelopment scenarios. This broad standard is deleted entirely.

A new subdivision is added to Section 66013 providing that when a change in capacity of an existing water or sewer connection is proposed, the local agency may only calculate the estimated reasonable cost attributable to the change in capacity. If the existing capacity exceeds the proposed capacity, no amount may be refunded, credited, transferred, assigned, or applied to offset any other charge or fee.

The scope of the incremental-impact fee offset narrows from applying to all fees under Section 66001 (the general Mitigation Fee Act) to a specific rule about capacity changes on existing water and sewer connections under Section 66013. The offset provisions already present in both sections for demolition or change of use remain unchanged.

The document changed from an official chaptered legislative format (with page numbers, centered headers, and 'STATE OF CALIFORNIA / AUTHENTICATED' header) to a web page scrape of the same bill from leginfo.legislature.ca.gov, adding website navigation elements such as menus, search fields, version history links, and a 'Date Published' timestamp. All substantive legal text is identical.

Header changed from Senate/Assembly passage certification to 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' with Chapter 54 designation and Governor approval date of June 30, 2026.

Page numbering changed from 'SB 1036' format to 'Ch. 54' format throughout the document.

Line wrapping and indentation adjusted throughout the statutory text to fit the chaptered publication layout; no words were added, removed, or altered in the operative provisions of Sections 66001 or 66013.

Signature block at end changed from a blank approval line to the Governor's authenticated mark.

The bill now amends Section 66013 of the Government Code in addition to Section 66001, extending its reach to water connection fees, sewer connection fees, and capacity charges imposed by local agencies.

Fees and capacity charges under Section 66013 are capped at the estimated reasonable cost of providing the service, unless the excess amount is approved by a two-thirds popular vote of electors voting on the issue.

The bill title and legislative counsel's digest are updated to reflect that the bill now covers both Section 66001 (mitigation fees) and Section 66013 (water/sewer connection fees and capacity charges).

A new offset requirement is added to Section 66001 (new subdivision (h)) stating that if a development project demolishes or changes an existing use, the fee must be offset so it is attributable only to the project's incremental impact on public facilities or services. An offset exceeding the fee amount is not refundable or transferable.

New definitions are added for 'changes an existing use' (no demolition proposed, but the use within an existing structure changes to a new use), 'sewer connection,' 'water connection,' 'capacity charge,' 'fee,' and 'public facilities' in the context of Section 66013.

Section 66013 now requires that capacity charges be deposited in a separate capital facilities fund, not commingled with other local agency moneys (except investments), and expended solely for the purposes for which they were collected. Interest income must also be deposited in the fund.

Local agencies must make annual public reports within 180 days after the end of each fiscal year, disclosing charges deposited, beginning and ending balances, amounts collected, specific improvements funded, anticipated future improvements, and any interfund transfers or loans.

Exemptions from the fund management and reporting requirements apply to: moneys received under construction contracts or reimbursement agreements, charges used to pay existing debt service or subject to bondholder trustee contracts, and charges collected on or before December 31, 1998.