BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1867
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 1867 (Harkey)
          As Amended  August 2, 2010
          Majority vote
           
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          |ASSEMBLY:  |74-0 |(May 6, 2010)   |SENATE: |34-0 |(August 9,     |
          |           |     |                |        |     |2010)          |
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           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  








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            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  








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            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.








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          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 








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