BILL ANALYSIS Ó
AB 1229
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 1229 (Atkins) - As Introduced: February 22, 2013
SUBJECT : Land use: zoning regulations.
SUMMARY : Expressly authorizes the legislative body of a city
or county to establish inclusionary housing requirements as a
condition of development. Specifically, this bill :
1)Authorizes the legislative body of a city or county to
establish, as a condition of development, inclusionary housing
requirements, which may require the provision of residential
units affordable to and occupied by lower-income, very
low-income, or extremely low-income owners or tenants.
2)States the Legislature's intent to supersede any holding or
dicta in Palmer/Sixth Street Properties, L.P. v. City of Los
Angeles (2009) 175 Cal.App.4th 1396, to the extent that the
opinion in that case conflicts with the authority of local
governments to adopt inclusionary housing requirements, and
specifies that the bill does not otherwise enlarge or diminish
the authority of a jurisdiction beyond those powers that
existed as of July 21, 2009.
EXISTING LAW
1)Grants cities and counties the power to make and enforce
within their limits all local, police, sanitary, and other
ordinances and regulations not in conflict with general laws
(California Constitution, Article XI, Section 7).
2)Declares the Legislature's intent to provide only a minimum of
limitation with respect to zoning in order that counties and
cities may exercise the maximum degree of control over local
zoning matters (Government Code Section 65800).
3)Specifically authorizes the legislative body of any county or
city to adopt ordinances that do any of the following:
a) Regulate the use of buildings, structures, and land as
between industry, business, residences, open space,
including agriculture, recreation, enjoyment of scenic
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beauty, use of natural resources, and other purposes.
b) Regulate signs and billboards.
c) Regulate all of the following:
i) The location, height, bulk, number of stories, and
size of buildings and structures.
ii) The size and use of lots, yards, courts, and other
open spaces.
iii) The percentage of a lot that may be occupied by a
building or structure.
iv) The intensity of land use.
d) Establish requirements for offstreet parking and
loading.
e) Establish and maintain building setback lines.
f) Create civic districts around civic centers, public
parks, public buildings, or public grounds, and establish
regulations for those civic districts.
(Government Code Section 65850)
4)Pursuant to the Costa-Hawkins Rental Housing Act, limits the
permissible scope of local rent control ordinances and
generally gives the owner of residential real property the
right to establish the initial rental rate for a dwelling or
unit (Civil Code Section 1954.50, et seq.).
FISCAL EFFECT : None
COMMENTS :
Background
Article XI, Section 7 of the California Constitution grants each
city and county the power "to make and enforce within its limits
all local, police, sanitary, and other ordinances and
regulations not in conflict with general laws." This is
generally referred to as the police power of local governments.
The Planning and Zoning Law within state statute is a general
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law that sets forth minimum standards for cities and counties to
follow in land use regulation, but the law also establishes the
Legislature's clear intent to "provide only a minimum of
limitation in order that counties and cities may exercise the
maximum degree of control over local zoning matters."
Using this police power, many cities and counties have adopted
ordinances, commonly called "inclusionary zoning" or
"inclusionary housing" ordinances, that require developers to
ensure that a certain percentage of housing units in a new
development be affordable to lower-income households. According
to the California Rural Housing Coalition's database, 140
jurisdictions in California currently have mandatory
inclusionary zoning ordinances. These ordinances vary widely in
the percentage of affordable units required, the depth of
affordability required, and the options through which a
developer may choose to comply. Most if not all such ordinances
apply to both rental and ownership housing.
In 2009, in the case of Palmer v. City of Los Angeles, the
Second District California Court of Appeal opined that the
city's affordable housing requirements associated with a
particular specific plan (which was similar to an inclusionary
zoning ordinance), as it applied to rental housing, conflicted
with and was preempted by a state statute known as the
Costa-Hawkins Rental Housing Act. The Costa-Hawkins Act limits
the permissible scope of local rent control ordinances. Among
its various provisions is the right for a rental housing owner
generally to set the initial rent level at the start of a
tenancy, even if the local rent control ordinance would
otherwise limit rent levels across tenancies. This provision is
known as vacancy decontrol because the rent level is temporarily
decontrolled after a voluntary vacancy. The act also gives
rental housing owners the right to set the initial and all
subsequent rental rates for a unit built after February 1, 1995.
The court opined that "forcing Palmer to provide affordable
housing units at regulated rents in order to obtain project
approval is clearly hostile to the right afforded under the
Costa-Hawkins Act to establish the initial rental rate for a
dwelling or unit."
Purpose of the bill: AB 1229 expressly authorizes cities and
counties to establish inclusionary housing requirements as a
condition of development, which may require the provision of
affordable residential units for low-, very low-, or extremely
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low-income owners or tenants. The bill further declares the
intent of the Legislature to supersede any holding or dicta in
Palmer v. City of Los Angeles that conflicts with this
authority.
The inclusionary zoning debate : The purposes of inclusionary
zoning ordinances are twofold. First, inclusionary zoning
ordinances are intended to increase the production of affordable
housing by leveraging additional resources and opportunities.
While developers often do not build the mandated affordable
units themselves or pay their full cost, inclusionary zoning
ordinances generally place the burden on the developer to ensure
construction of the affordable units. To fulfill this
obligation, developers often donate land or make a financial
contribution, or both, towards development costs. Many
ordinances also allow a developer to fulfill his or her
obligation by paying an in-lieu fee, which the city or county
uses to help finance its own development. In exchange,
developers generally receive various concessions and incentives
from the local government, such as the ability to build more
densely, fast-track permit processing, increases in allowable
floor area ratios, and other
The second purpose of inclusionary zoning ordinances is to
achieve "inclusion" in new neighborhoods. Over the past few
decades, development in California has generally resulted in
single-product neighborhoods, often single-family home
subdivisions. In many cases, the prices of these new homes are
affordable only to the upper end of the market. Because
inclusionary zoning results in some homes being sold at
below-market rates or in a greater mix of housing products
(duplexes, townhomes, condos, apartments) that come at a greater
variety of prices, it increases economic diversity within
neighborhoods and meets a greater range of the community's
housing needs.
In summing up the inclusionary zoning experience in California
in a 2007 report, the California Coalition for Rural Housing
states, "The single most important conclusion is that
inclusionary programs are putting roofs over the heads of tens
of thousands of Californians. These homes, in turn, are building
mixed-income neighborhoods where houses considered 'affordable'
are often indistinguishable from those at market-rate."
While market-rate housing developers generally do not argue with
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the "inclusionary" aspect of inclusionary zoning, they often do
take issue with having to contribute their resources for a
societal benefit. They believe that if a jurisdiction wants to
promote greater affordable housing, it should spend public
resources for this purpose rather than require a private entity
to do so. Developers also point out that theirs is one of the
few industries that is asked to provide its product at
below-market prices to some of those who cannot afford the full
price.
History of the Costa-Hawkins Act : The Legislature enacted the
Costa-Hawkins Rental Housing Act in 1995 with the passage of AB
1164 (Hawkins), Chapter 331. The various analyses for this bill
and its predecessor, SB 1257 (Costa), exclusively discuss local
rent control ordinances and do not once mention inclusionary
zoning ordinances, of which approximately 64 existed in the
state at that time. The Assembly concurrence analysis of AB
1164, which is very similarly to the other analyses, states that
the bill "establishes a comprehensive scheme to regulate local
residential rent control." The analysis includes a table of
jurisdictions that would be affected by the bill, and the table
exclusively includes cities with rent control ordinances and
does not include any cities that had inclusionary zoning
ordinances affecting rental housing. The analysis also states,
"Proponents view this bill as a moderate approach to overturn
extreme vacancy control ordinances which unduly and unfairly
interfere into the free market." The analysis further describes
strict rent control ordinances as those that impose vacancy
control and states, "Proponents contend that a statewide new
construction exemption is necessary to encourage construction of
much needed housing units, which is discouraged by strict local
rent controls." This legislative history provides no indication
that the Legislature intended to affect local inclusionary
zoning ordinances with the passage of AB 1164.
Arguments in support : According to the sponsors, local
inclusionary housing programs have proven to be one of the most
effective tools for producing new homes affordable to working
families and creating strong, diverse neighborhoods with a range
of housing choices. Inclusionary ordinances have provided
quality affordable housing to over 80,000 Californians,
including the production of an estimated 30,000 units in the
last decade alone. While many of these local programs have been
in place for decades, the recent Palmer decision has created
uncertainty and confusion for local governments and housing
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advocates regarding the future viability of this important local
land use tool. According to the author, this bill resolves a
conflict between local inclusionary zoning ordinances and the
state's Costa-Hawkins Rental Housing Act, thereby restoring the
ability of local governments to use one of the most effective
tools at their disposal to promote the production of both
ownership and rental homes that are affordable to California's
lower income working families.
Arguments in opposition : Opponents argue that inclusionary
zoning is akin to rent control and that this bill therefore
allows local governments to enact and enforce rent control on
newly constructed rental housing units by pre-empting the
Costa-Hawkins Act. They believe that the Costa-Hawkins
protections for new construction are appropriate and should be
maintained. Moreover, they believe that the bill will seriously
hurt the construction industry. They additionally argue that
inclusionary units are difficult to own and manage because
landlords do not set the tenant qualification standards.
Double referred : If AB 1229 passes this committee, the bill
will be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation (co-sponsor)
Non-Profit Housing Association of Northern California
(co-sponsor)
San Diego Housing Federation (co-sponsor)
Western Center on Law and Poverty (co-sponsor)
American Planning Association, California Chapter
BRIDGE Housing
Cabrillo Economic Development Corporation
California State Association of Counties
Cities Association of Santa Clara County
Cities of Burbank, Chico, Cloverdale, Danville, Davis,
Emeryville, Fort Bragg, Lathrop, Pasadena, San Jose, San
Mateo, Santa Monica, and Wasco
City and County of San Francisco
Council of Community Housing Organizations
EAH Housing
East Bay Housing Organizations
First Place for Youth
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Greenbelt Alliance
Housing Leadership Council of San Mateo County
Law Foundation of Silicon Valley
LeadingAge California
League of California Cities
League of Women Voters of California
League of Women Voters of Marin County
Los Angeles County Division, League of California Cities
Marin Partnership to End Homelessness
Marin Workforce Housing Trust
MidPen Housing
Mercy Housing
Move LA
Sacramento Housing Alliance
One individual letter
Opposition
Apartment Association, California Southern Cities
Apartment Association of Greater Los Angeles
Apartment Association of Orange County
California Association of Realtors
California Building Industry Association
East Bay Rental Housing Association
GH Palmer Associates
NorCal Rental Property Association
San Diego County Apartment Association
San Francisco Association of Realtors
Santa Barbara Rental Property Association
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085