BILL ANALYSIS AB 1867 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1867 (Harkey) As Amended August 2, 2010 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |74-0 |(May 6, 2010) |SENATE: |34-0 |(August 9, | | | | | | |2010) | ----------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY : Changes, for local governments, the eligibility requirements for the substantial rehabilitation of units for purposes of meeting housing element and regional housing needs assessment (RHNA) requirements. The Senate amendments specify, for units located in multifamily ownership housing complexes with three or more units, that at least an equal number of new-construction multifamily rental units affordable to lower-income households have been constructed in the city or county within the same planning period as the number of ownership units to be converted. EXISTING LAW : 1)Requires each city, county, or city and county to prepare and adopt a general plan for its jurisdiction that contains certain mandatory elements, including a housing element. 2)Provides that the housing element shall consist of an identification and analysis of existing and projected housing needs and a statement of goals, policies, quantified objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing. 3)Specifies that the Department of Housing and Community Development (HCD) may allow a city or county to substitute the provision of units for up to 25% of the community's obligation to identify adequate sites for any income category in its housing element, for units that meet specified substantial rehabilitation, conversion or preservation requirements. 4)Requires, for purposes of counting substantially rehabilitated units toward meeting housing element requirements, that a unit AB 1867 Page 2 is not eligible to be "substantially rehabilitated" unless all of the following requirements are met, at the time the unit is identified for substantial rehabilitation: a) The local government has determined that the unit is at imminent risk of loss to the housing stock; b) The local government has committed to provide relocation assistance to any occupants temporarily or permanently displaced by the rehabilitation or code enforcement activity, or the relocation is otherwise provided prior to displacement either as a condition of receivership, or provided by the property owner or the local government, provided the assistance includes not less than the equivalent of four months' rent and moving expenses and comparable replacement housing; c) The local government requires that any displaced occupants will have the right to reoccupy the rehabilitated units; and, d) The unit has been found by the local government or a court to be "unfit for human habitation" due to the existence of at least four violations of the conditions listed in the Violations section of the Health and Safety Code that provides for regulation of buildings used for human habitation. 5)Provides that units that are located in a multifamily rental housing complex of four or more units that are converted with committed assistance from the city or county from nonaffordable to affordable by acquisition of the unit or the purchase of affordability covenants and restrictions for the unit, will constitute a net increase in the community's stock of housing affordable to low- and very-low income households. 6)Provides that the rehabilitated unit will have long-term affordability covenants and restrictions. 7)Provides that prior to initial occupancy after rehabilitation, the local code enforcement agency shall issue a certificate of occupancy indicating compliance with all applicable state and local building code and health and safety code requirements. 8)Provides that a unit is not converted by acquisition of the AB 1867 Page 3 purchase of affordability covenants unless all of the following occur: a) The unit is made available at a cost affordable to low- or very-low income households; and, b) At the time the unit is identified for acquisition, the unit is not available at an affordable housing cost to either of the following: i) Low-income households, if the unit will be made affordable to low-income households; or, ii) Very-low income households, if the unit will be made affordable to very-low income households. AS PASSED BY THE ASSEMBLY , this bill: 1)Reduced the number of units located in a multifamily rental housing complex that have newly been made affordable with affordability covenants, from four units to three units, in order to qualify with respect to counting the rehabbed units toward a local government's RHNA obligation. 2)Allowed the existing market-rate units to be either rental or ownership housing prior to conversion. 3)Specified that converted units must be rental housing. FISCAL EFFECT : Unknown COMMENTS : Under current law, when a city updates its housing element, it must generally show sufficient vacant land to accommodate the projected housing need for the time period covered by the element. This requirement ensures an adequate supply of land for the construction of new housing. Current law also allows a very limited exception to this requirement that allows a local government to substitute a portion of these real, available sites for a promise to rehabilitate existing units in the future. This exception was put into place by AB 438 (Torlakson), Chapter 796, Statutes of 1998, and allows local jurisdictions to fulfill up to 25% of their region's affordable housing needs by providing substantially rehabilitated units whose long-term affordability is assured through covenants and restrictions, through the provision of "committed assistance" as provided by the city or county. AB 1867 Page 4 This bill makes several changes to the section of law that allows a city or county to substitute the provision of units for up to 25% of the community's obligation to identify adequate sites. This bill allows units that are located in a multifamily rental housing complex of three or more units that have newly been made affordable with affordability covenants to qualify, with respect to counting the rehabbed units toward a local government's RHNA obligation. Current law specifies that this only applies to a complex of four or more units [AB 2348 (Mullin), Chapter 725, Statutes of 2004]. Prior to 2004, this requirement was for a multifamily rental housing complex of sixteen or more units. Amendments taken in the Senate require that a city or county that seeks to get RHNA credit for conversion of ownership units must commit at least an equal amount of financial assistance to the new construction of affordable rental housing for lower-income households. Support arguments: The sponsor, the City of San Juan Capistrano, argues that this bill seeks to make minor changes to current law in order to give local governments additional autonomy, to provide increased opportunities to create additional affordable units, and to implement methods of addressing the needs of low-income individuals who are currently housed in sub-standard dwelling units. Opposition arguments: AB 720 (Caballero), Chapter 467, Statutes of 2009, updated this section of law to increase flexibility for local governments in meeting housing requirements by expanding the amount of time a city or county can provide committed assistance for the rehabilitation of affordable housing units, and allows a city or county to include weatherization and energy efficiency improvements as part of its efforts to rehabilitate a unit. In light of these recent changes, the Legislature may wish to ask whether it is necessary to amend this statute when local governments have had little chance to use the expanded provisions of AB 720 that took effect on January 1, 2010. Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0005343 AB 1867 Page 5