County modifies policies for lien contract releases

The County of San Diego's policies on releases of lien contracts and reversion of property to acreage will be modified.

A 5-0 San Diego County Board of Supervisors vote Oct. 28 approved the introduction and first reading of the ordinance amendments and also found the action to be categorically exempt from California Environmental Quality Act review.

The second reading and adoption was approved on a 5-0 vote Nov. 18. An ordinance amendment (other than a Zoning Ordinance change or an urgency adoption) takes effect 30 days after the second reading and adoption, so the official revision will occur Dec. 18.

A tentative parcel map becomes a final map after all conditions of the tentative map, other than those for which permits cannot be issued until a final map is recorded, are fulfilled.

A final map is required for grading and building permits. The conditions of a final map include secured agreements to ensure that the infrastructure will be built and that payment for labor and materials used to build the infrastructure will be made.

The security agreement covers completion of road, water, sewer, and other infrastructure improvements but does not require completion of the homes or other lot improvements themselves.

The secured agreement may be a security bond. The bond company charges a fee, and if the bond is renewed, so is the fee (which may be changed by the bond company).

Some developers thus prefer the use of a lien contract, in which the property is transferred to a holding company. A lien contract prohibits the construction of any improvements, the selling of any lots in the subdivision, or the issuance of permits before the lien contract is replaced by a security bond.

The county may release a lien contract only after the property owner provides a substitute security. The security bond will cover 150% of the costs of the estimated security at the time the lien contract is replaced with the bonds.

The county's Subdivision Ordinance provides options for the full release of a lien contract but had not previously addressed a partial release of the lien contract in which the lien contract is removed for some of the development while remaining in effect for the rest of the property.

A partial replacement of the lien contract allows for construction on lots in that area as well as the sale of lots.

Under the revised ordinance, adequate security must be provided for the area of the property for which the lien contract is released. The area released from a lien contract must be able to function as an independent unit.

The improvements required to construct the portion of the subdivision released from the lien contract must be shown in the improvement plans and may require additional agreements if the county deems those new agreements to be necessary.

The ordinance amendments also provide for reversion to acreage for the remaining property if the terms of a lien contract are breached.

Reversion to acreage means that the previous parcel map no longer exists and the entire parcel is the sole legal lot. Reversion to acreage may occur when a subdivision is in default of its deadlines or other conditions.

Reversion to acreage may also occur if the property owner considers the entire original parcel to be more valuable than the separate lots, in which case those lots are re-merged with the reversion to acreage. Reversion to acreage also eliminates road improvement requirements and other conditions.

The Subdivision Ordinance had previously included stipulations for reversion to acreage for subdivisions of five or more lots but not for parcel maps of four or fewer contiguous lots under the same ownership.

The revised ordinance clarifies that the reversion to acreage process also applies to the smaller parcel maps. In the event of a reversion to acreage all lots including remainder parcels will be included.

The clarifications also formalize the requirement of a deposit for the reversion to acreage process to ensure that the costs for county staff time and other services are recovered.