BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1103
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          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.








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          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 








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            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 








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            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 












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