BILL ANALYSIS Ó AB 1103 Page 1 Date of Hearing: May 11, 2011 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair AB 1103 (Huffman) - As Amended: May 4, 2011 SUBJECT : Land use: housing element SUMMARY : Expands the types of units that can be substantially rehabilitated for purposes of meeting housing element and regional housing needs assessment (RHNA) requirements. Specifically, this bill : 1)Allows the following types of units to be substituted for the community's obligation to identify adequate sites for any income category: a) Units on a foreclosed property 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, in specified conditions. b) Units that are second units on a property that will be converted with committed assistance from the city or county from nonaffordable to affordable to very low- or low-income households by the purchase of affordability covenant restrictions, in specified conditions. 2)States that it is the intent of the Legislature to examine whether the "default" densities contained in existing housing element law could be adjusted for some jurisdictions without impeding the attainment of the state housing goals. 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. AB 1103 Page 2 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)Provides that those rehabilitated units shall have long-term affordability covenants and restriction that require the unit to be available to, and occupied by a person of low- or very low-income at affordable housing costs for at least 20 years. 5)Defines "committed assistance" as legally enforceable agreements entered into by the city or county that obligates sufficient available funds to provide the assistance necessary to make the identified units affordable and that requires that the units be made available for occupancy within two years of execution of the agreement. FISCAL EFFECT : None COMMENTS : 1)Under current law, when a city or county 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. One of the requirements for counting units within this 25% cap is that the units have received "committed assistance" from the local jurisdiction, meaning that the city or county must enter into a legally enforceable agreement that obligates sufficient AB 1103 Page 3 available funds to provide the assistance necessary to make the identified units affordable. 2)This bill expands the types of units that can be rehabilitated and thus counted toward the 25% cap under this section of housing element law to include second units (also referred to as granny flats) that are converted from non-affordable to affordable housing. Additionally the bill also allows local governments to include the conversion of foreclosed property, acquired by the local government and converted to low- or very-low income housing with long-term affordability covenants to count as part of the 25% cap. 3)According to the author, AB 1103 provides flexibility for local governments to allow them to meet the housing needs of their residents and workforce. The author notes that this bill allows cities and counties to find creative and innovative ways of providing housing, while ensuring local governments meet their regional housing needs. 4)The Committee may wish to consider the policy this bill establishes in allowing second units, or granny flats, to be converted from non-affordable to affordable and then counted toward the 25% cap. This may create a situation in which the main property on the parcel is a market rate property, but the second unit will, pursuant to the provisions of the bill, have affordability covenants and restrictions for a period of not less than 40 years. The Committee may wish to consider how this affects county assessors and their ability to track deed restrictions on multi-unit parcels. 5)This section of law has been amended several times in the last few years. AB 720 (Caballero), Chapter 467, Statutes of 2009, expanded the amount of time a city or county could provide committed assistance for the rehabilitation of affordable housing units. Other provisions in AB 720 allow a city or county to include weatherization and energy efficiency improvements as part of its efforts to substantially rehabilitate a unit. Additionally, AB 720 allows a jurisdiction to claim credit in their annual report for any units rehabbed, preserved, or acquired that meet the statutory requirements, regardless of whether their housing element included a program to address the alternative adequate sites requirement. AB 1867 (Harkey), Chapter 367, Statutes of 2010, allows units that are located in a multifamily rental housing AB 1103 Page 4 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. 6)Support arguments: This bill provides additional opportunities for cities and counties to find other ways of meeting housing element requirements by allowing different types of units, including granny flats and conversion of foreclosed properties, in specified circumstances. Opposition arguments: This section of law has been amended several times in the last few years. The Committee may wish to consider whether local governments have been using the additional flexibility and whether there is a need to create these additional opportunities. 7)This bill was heard in the Assembly Housing and Community Development Committee on April 27, 2011 and passed out with amendments to narrow the scope of the bill to the current provisions. As amended, the bill passed out on a 7-0 vote. REGISTERED SUPPORT / OPPOSITION : Support Cities of Novato and San Rafael Fireman's Fund Insurance Company Habitat for Humanity Marin County Board of Supervisors Marin County Council of Mayors and Councilmembers Novato Housing Coalition Town of Corte Madera San Marin Compatible Housing Coalition Opposition None on file Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 AB 1103 Page 5