BILL ANALYSIS Ó
AB 1229
Page 1
Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1229 (Atkins) - As Introduced: February 22, 2013
SUBJECT : Land use: zoning regulations
SUMMARY : 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.
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.
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
beauty, use of natural resources, and other purposes;
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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; and,
iv) The intensity of land use.
d) Establish requirements for offstreet parking and
loading;
e) Establish and maintain building setback lines; and,
f) Create civic districts around civic centers, public
parks, public buildings, or public grounds, and establish
regulations for those civic districts.
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.
FISCAL EFFECT : None
COMMENTS :
1)This bill 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 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.
This bill is co-sponsored by the Western Center on Law and
Poverty, the California Rural Legal Assistance Foundation, the
San Diego Housing Federation, and the Non-Profit Housing
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Association of Northern California.
2)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 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.
3)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
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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."
4)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, and increases in allowable floor area ratios.
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.
While market-rate housing developers generally do not argue
with 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.
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5)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.
6)Support arguments : The California State Association of
Counties and the League of California Cities argue that this
bill would restore an essential tool for counties and cities
for planning and providing their fair share of the housing
need for lower-income residents in the state, and that
inclusionary housing programs are an important tool in the
production of affordable new homes for working families.
Opposition arguments : Opponents argue that the Palmer
decision was solely about rent control and dealt exclusively
with and interpreted only the Costa-Hawkins Rental Housing Act
and that this bill does much more than establish rent control
in that it expressly applies to owner-occupied homes and
provides a broad authorization for all forms of inclusion
zoning. Additionally, opponents worry that the abrogation of
the holding in Palmer also removes any remedy a developer may
have to challenge a local ordinance that is unworkable, and
will result in a locality enacting any kind of inclusionary
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zoning ordinance it wants without negotiating economic
incentives.
7)This bill was heard by the Housing and Community Development
Committee on May 1, 2013, and passed with a 5-2 vote.
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
Greenbelt Alliance
Housing Leadership Council of San Mateo County
Law Foundation of Silicon Valley
LeadingAge California
Support (continued)
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
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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 : Debbie Michel / L. GOV. / (916)
319-3958