Bill aims to close Mello-Roos loophole that let some parcels avoid infrastructure fees

Senate Bill 390 would amend provisions of the Mello-Roos Community Facilities Act to address what the author described as an unintended gap that allowed fully developed commercial properties subject to partial conservation easements to avoid paying into community facilities district (CFD) financing for infrastructure.

"This bill addresses an unintended gap in the Mello Roos Act that allows fully developed commercial properties with partial conservation easements to opt out of contributing to infrastructure funding," the bill's author told the Assembly Local Government subcommittee on June 19, 2025. The author said the issue was highlighted by a 2019 court ruling affecting a CFD in South San Francisco.

Supporters said the bill is narrowly crafted to apply to properties within the regional shoreline of San Mateo County and would not remove conservation easements or cancel environmental protections. James Coleman, a councilmember for the City of South San Francisco, described the area east of U.S. 101 as a major biotechnology employment cluster and said growth and project approvals have driven planned infrastructure investments.

"This bill does not remove conservation easements or cancel protections," the author said. "It still requires formation of a CFD to meet the two-thirds voter approval threshold and ensures local control while resolving a technical obstacle to infrastructure investment."

Sponsors argued the measure would ensure all properties that benefit from public improvements such as roads, water and sewers pay their fair share, rather than shifting costs to other taxpayers. No formal opposition was recorded in the hearing transcript.

When the committee later voted, SB 390 was reported out of the subcommittee with a roll call recorded as yes: 9, no: 0 and sent forward (the committee record shows the motion was reported to the floor).