BILL ANALYSIS AB 1867 Page 1 Date of Hearing: April 28, 2010 ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Norma Torres, Chair AB 1867 (Harkey) - As Amended: April 26, 2010 SUBJECT : Land use: local planning: housing element program. SUMMARY : Makes minor changes to the statute that allows a local government to meet up to 25 percent of its regional housing needs obligation through the conversion of certain existing market-rate units to low- and very low-income units. Specifically, this bill : 1)Allows the existing market-rate units to be either rental or ownership housing prior to conversion. 2)Reduces from four units to three units the minimum size of a multifamily complex that is eligible for conversion. 3)Specifies that converted units must be rental housing. EXISTING LAW 1)Requires every city and county to prepare and adopt a general plan containing seven mandatory elements, including a housing element (Government Code Sections 65300 and 65302). 2)Requires a jurisdiction's housing element to identify and analyze existing and projected housing needs, identify adequate sites with appropriate zoning to meet the housing needs of all income segments of the community, and ensure that regulatory systems provide opportunities for, and do not unduly constrain, housing development (Government Code Section 65583). 3)Requires most cities and counties to revise their housing elements every eight years based on a staggered statutory schedule (Government Code Section 65588). 4)Requires, prior to each housing element revision, that each council of governments (COG), in conjunction with the Department of Housing and Community Development (HCD), prepare a regional housing needs assessment (RHNA) and allocate to each jurisdiction in the region its fair share of the housing AB 1867 Page 2 need for all income categories (Government Code Sections 65584-65584.09). 5)Requires each local government to make sites available during the first three years of the housing element planning period with appropriate zoning and development standards and with services and facilities to accommodate the city's or county's share of the regional housing need (Government Code Section 65583). 6)Allows a city or county to meet up to 25% of its share of the regional housing need through a program committing the local government to make certain existing housing units affordable to low- and very low-income households. The program is limited to the following categories of units: a) Units that are to be substantially rehabilitated and that will have long-term affordability covenants and restriction that require them to be available to, and occupied by, a person of low- or very low income at affordable housing costs for at least 20 years; b) Units that are located in a multifamily rental housing complex of four or more units, will be converted from nonaffordable to affordable, and will have long-term affordability covenants and restrictions that require the unit to be affordable to persons of low- or very low-income for at least 55 years; and c) Units in an assisted housing development at risk of conversion to market rate housing or another use that will be preserved at an affordable housing cost to persons or families of low or very low incomes for at least 40 years. (Government Code Section 65583.1) FISCAL EFFECT : None COMMENTS : Every local government is required to prepare a housing element as part of its general plan. The housing element process starts when HCD determines the number of new housing units a region is projected to need at all income levels (very low-, lower-, moderate-, and above-moderate income) over the course of the AB 1867 Page 3 next housing element planning period to accommodate population growth and overcome existing deficiencies in the housing supply. This number is often referred to as the "RHNA" number (short for regional housing needs assessment). The COG for the region, or HCD for areas with no COG, then assigns a share of the RHNA number to every city and county in the region based on a variety of factors. In preparing its housing element, a city or county must show how it plans to accommodate its share of the RHNA. The housing element must include an inventory of sites already zoned for housing. If the existing inventory of residentially zoned land cannot accommodate the jurisdiction's entire RHNA share, the city or county must rezone enough sites during the first three years of the housing element planning period. Existing law allows jurisdictions to meet up to 25% of their zoning obligation by instead adopting a program to make certain existing housing units affordable to low- and very low-income households during the planning period. Eligible units include units that are to be substantially rehabilitated, units in multifamily rental complexes that are to be converted from market-rate to low- and very-low income housing, and units in an assisted housing development (such as public housing) that are at risk of conversion to market rate or to another use. In all cases, the units must have affordability covenants and restrictions that will keep them affordable to low- and very-low income households for 20 to 55 years depending on the type of unit. The City of San Juan Capistrano would like to make use of the provision that allows a city to convert existing market-rate units to low- and very low-income units, but current law requires such units to currently be rental housing and be in complexes with four or more units. The units the city wants to use are currently not rentals and are in triplexes. AB 1867 makes minor changes to the law to allow a city to count towards its RHNA market-rate units that are currently not rentals that are converted into affordable rental housing and units located in triplexes. Double referred : The Assembly Committee on Rules referred AB 1867 to the Committee on Local Government and Housing Community and Development. The bill passed the Committee on Local Government on April 21, 2010 by a vote of 6 to 2. AB 1867 Page 4 REGISTERED SUPPORT / OPPOSITION : Support City of San Juan Capistrano (sponsor) California State Association of Counties Cities of Buena Park, Laguna Hills, Mission Viejo, and San Clemente Opposition None on file. Analysis Prepared by : Anya Lawler / H. & C.D. / (916) 319-2085