BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1537
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          Date of Hearing:   April 30, 2014

               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
                                   Ed Chau, Chair
                    AB 1537 (Levine) - As Amended:  April 21, 2014
           
          SUBJECT  :   Land use: housing element: default densities.

          SUMMARY  :   Creates a pilot program for Marin County to utilize a  
          "suburban" default density standard for accommodating its share  
          of affordable housing.   Specifically, this bill:

           1)Specifies that, for purposes of determining a jurisdiction's  
            "default density" for accommodating affordable housing, if a  
            county that is in the San Francisco-Oakland-Fremont,  
            California Metropolitan Statistical Area (MSA) has a  
            population of less than 400,000, that county is considered  
            suburban. If this county includes an incorporated city that  
            has a population of less than 100,000, this city is also  
            considered suburban.

          2)Provides that this classification shall apply to a housing  
            element revision cycle that is in effect from July 1, 2014, to  
            December 31, 2023, inclusive.

          3)Requires that all jurisdictions affected by this legislation  
            report to the Assembly Committee on Housing and Community  
            Development, the Senate Committee on Transportation and  
            Housing, and the Department of Housing and Community  
            Development (HCD) regarding its progress in developing low-  
            and very low-income housing.  The report must be provided  
            twice, once, on or before December 31, 2019, and a second  
            time, on or before December 31, 2023.  The report is comprised  
            of information that is already required as part of all local  
            governments' annual Housing Element Progress Report to HCD. 

           EXISTING LAW:  
          
          1)Requires every city and county to prepare and adopt a general  
            plan containing seven mandatory elements, including a housing  
            element.  (Government Code Sections 65300 and 65302)

          2)Requires a jurisdiction's housing element to identify and  
            analyze existing and projected housing needs, identify  
            adequate sites with appropriate zoning to meet the housing  








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            needs of all income segments of the community, and ensure that  
            regulatory systems provide opportunities for, and do not  
            unduly constrain, housing development.  (Government Code  
            Section 65583)

          3)Requires cities and counties located within the territory of a  
            metropolitan planning organization (MPO) to revise their  
            housing elements every eight years following the adoption of  
            every other regional transportation plan.  Cities and counties  
            in rural non-MPO regions must revise their housing elements  
            every five years.  (Government Code 65588)

          4)Requires, prior to each housing element revision, that each  
            council of governments (COG), in conjunction with HCD, prepare  
            a regional housing needs assessment (RHNA) and allocate to  
            each jurisdiction in the region its fair share of the housing  
            need for all income categories.  Where a COG does not exist,  
            HCD determines the local share of the region's housing need.   
            (Government Code Sections 65584-65584.09) 

          5)Divides the RHNA into the following income categories:

             a)   Very low-income (50% or lower of area median income);

             b)   Low-income (80% or lower of area median income);

             c)   Moderate-income (between 80% and 120% of area median  
               income); and

             d)   Above moderate-income (exceeding 120% area median  
               income).

            (Government Code Section 65584)


          6)Requires housing elements to include an inventory of land  
            suitable for residential development that identifies enough  
            sites that can be developed for housing within the planning  
            period to accommodate the jurisdiction's entire share of the  
            RHNA.  (Government Code Sections 65583 and 65583.2)


          7)Allows a jurisdiction to do either of the following in order  
            to show that a site is adequate to accommodate some portion of  
            its share of the RHNA for lower-income households:








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             a)   Provide an analysis demonstrating that the site is  
               adequate to support lower-income housing development at its  
               zoned density level, and requires the analysis to include,  
               but not be limited to, factors such as market demand,  
               financial feasibility, or information based on development  
               project experience within a zone or zones that provide  
               housing for lower income households; or

             b)   Zone the site at the jurisdiction's "default" density  
               level.

            (Government Code Section 65583.2)


          8)Establishes the following "default" density levels for  
            purposes of establishing a site's adequacy for supporting  
            lower-income housing development:


               a)     30 units per acre for metropolitan jurisdictions,  
                 generally defined as any city or county (except for  
                 jurisdictions of less than 25,000 persons) in an MSA with  
                 a population of 2 million persons or greater and any city  
                 or county over 100,000 persons in any size MSA.

               b)     20 units per acre for suburban jurisdictions,  
                 generally defined as cities and counties in an MSA of  
                 less than 2 million persons (except for jurisdictions  
                 over 100,000 persons) and jurisdictions under 25,000  
                 persons in larger MSAs. 

               c)     15 units per acre for incorporated cities within  
                 non-metropolitan counties and for non-metropolitan  
                 counties that have micropolitan areas (i.e., Del Norte,  
                 Humboldt, Lake, Mendocino, Nevada, Tehama, and Tuolumne  
                 Counties).

               d)     10 units per acre for unincorporated areas in all  
                 non-metropolitan counties.



          9)Requires each local government to prepare an annual Housing  
            Element Progress Report using forms and definitions adopted by  








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            HCD.  This includes reporting on the local government's  
            progress in meeting its share of the RHNA. (Government Code  
            Section 65400)

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   

           Background:

           Every local government is required to prepare a housing element  
          as part of its general plan.  The housing element process starts  
          when HCD determines the number of new housing units a region is  
          projected to need at all income levels (very low-, low-,  
          moderate-, and above-moderate income) over the course of the  
          next housing element planning period to accommodate population  
          growth and overcome existing deficiencies in the housing supply.  
           This number is known as the regional housing needs assessment  
          (RHNA).  The COG for the region, or HCD for areas with no COG,  
          then assigns a share of the RHNA number to every city and county  
          in the region based on a variety of factors.

          In preparing its housing element, a city or county must show how  
          it plans to accommodate its share of the RHNA.  The housing  
          element must include an inventory of sites already zoned for  
          housing.  If a community does not have enough sites within its  
          existing inventory of residentially zoned land to accommodate  
          its entire RHNA, then the community must adopt a program to  
          rezone land within the first three years of the planning period.  


          Cities and counties are required to demonstrate that sites are  
          adequate to accommodate housing for each income group based on  
          the zoning after taking into consideration individual site  
          factors such as property size, existing uses, environmental  
          constraints, and economic constraints.  With respect to the  
          zoning, density can be used as a proxy for affordability.   
          Jurisdictions may establish the adequacy of a site for very low-  
          or low-income housing by showing that it is zoned at the  
          "default" density (also referred to as the Mullin density).  
          These densities range from 10 to 30 units per acre depending on  
          the type of jurisdiction.  Jurisdictions may also include sites  
          zoned at lower densities by providing an analysis of how the  
          lower density can accommodate the need for affordable housing.  
           








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          Arguments in Support:

           Supporters of the bill argue that the default density standards  
          are in need of refinement due to inconsistent outcomes.  They  
          explain that certain cities and counties within larger  
          multi-county MSAs are considered "metropolitan" under the  
          current default density standards despite being suburban or  
          rural in character.  Specifically, supporters point to the fact  
          that unincorporated Sonoma County, which is in a less populous  
          MSA, is considered "suburban" despite having a higher population  
          than unincorporated Marin County.  Supporters also point to the  
          fact that Marin has the same default density standard as San  
          Francisco due to its inclusion in the same MSA.

          Supporters contend that Marin County has difficulty zoning for a  
          default density of 30 units per acre, which impacts their  
          ability to promote affordable housing.   In this view, reducing  
          the default density would create momentum for more affordable  
          housing projects by addressing local concerns about high-density  
          housing.  Supporters argue that the bill would allow specific  
          communities more flexibility to zone land suitable for  
          affordable housing in a way that fits within the communities'  
          individual circumstances.   
           
          Arguments in Opposition:

           Opponents of the bill point to the fact that default densities  
          are not mandatory.  In establishing the adequacy of sites for  
          affordable housing, local governments can either zone the site  
          at the default density or provide HCD with an analysis  
          demonstrating that the site is adequate to support lower-income  
          housing development at its zoned density level, including  
          factors such as market demand, financial feasibility, or  
          information based on development project experience within a  
          zone or zones that provide housing for lower-income households.

          Opponents also point to the issue that default density standards  
          were instituted after a lengthy working group process involving  
          a diverse group of stakeholders.  In opponents' view, the bill  
          is a result of local opposition to affordable housing, and  
          legislating to accommodate this narrow opposition is the wrong  
          direction.  Opponents point to the current lack of availability  
          of affordable housing for low- and moderate-income individuals  
          and families, and contend that AB 1537 will have the effect of  
          making it even more costly to develop affordable housing in the  








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          areas affected by the bill.
               
           Purpose of the Bill:

           According to the author, AB 1537 will refine the default density  
          housing formula to allow for suburban designations for the lower  
          population county of Marin.  The bill is intended to help create  
          momentum for more affordable housing development in areas that  
          have had challenges in getting projects off the ground due to  
          concerns about high density development.

           Staff Comments:

           AB 1537 will impact reforms to housing element law that came out  
          of the Housing Element Working Group (HEWG). The group, which  
          was convened by HCD in 2003, was a broad-based group that  
          included representatives from local government, COGs, the  
          for-profit and non-profit development community, and affordable  
          housing advocacy groups.  HCD proposed the group after several  
          lengthy and divisive Legislative battles over changes to housing  
          element law.

          The HEWG met from June through November of 2003 and reached  
          consensus on reform proposals in three major areas:  the  
          regional housing needs allocation process, increasing housing  
          development certainty, and the identification of adequate sites.  
          The bills that implemented the reform proposals represented a  
          consensus agreement and received broad bi-partisan support  
          throughout the legislative process. No "no" votes were cast  
          against the bills.  One of these bills, AB 2348 (Mullin) amended  
          housing element law by clarifying the land inventory  
          requirements to provide local governments more certainty about  
          the statutory requirements.  Amongst other things, AB 2348  
          established the default densities, also known as "Mullin"  
          densities, for affordable housing sites.  

          In establishing the adequacy of sites for affordable housing,  
          current law allows a city or county to either zone the site at  
          the default density or provide an analysis demonstrating that  
          the site is adequate to support lower-income housing development  
          at its zoned density level.  The default density is not  
          mandatory, but was intended to provide an option for local  
          governments to streamline the housing element approval process.   
          If a local government can show that affordable housing can be  
          developed within the jurisdiction at lower densities, then the  








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          law allows these lower density sites to count towards meeting a  
          share of the jurisdiction's RHNA for lower-income households.  

          AB 1537 was introduced in response to concerns arising out of  
          Marin County.  Marin County is included in an MSA of 2 million  
          persons or greater. Several cities within the County have  
          populations of less than 25,000, and are already considered  
          "suburban" under the default density standards.  This bill would  
          reduce the default density from 30 units per acre to 20 units  
          per acre in the cities of Novato and San Rafael, and in  
          unincorporated Marin County for one housing element cycle.  It  
          is unclear why this bill is needed for the city of San Rafael,  
          which currently utilizes densities between 43 and 72 units per  
          acre toward its lower income need, which is well above the  
          current default density.  The city of Novato currently utilizes  
          a density of 23 units per acre toward its lower income need  
          after working with HCD to zone at a lower density.   
          Unincorporated Marin County currently zones at its default  
          density of 30 units per acre, although nothing is precluding  
          them from utilizing the existing process with HCD to zone at a  
          lower density.  

          While this bill requires the affected jurisdictions to report  
          back twice on their progress in developing affordable housing,  
          this report is comprised of information that is already required  
          as part of all local governments' annual reports to HCD.  The  
          Committee may wish to consider additional reporting requirements  
          to better evaluate the effectiveness of this pilot project.  
          There is no provision in the bill for an outside evaluation of  
          Marin County's progress in developing affordable housing at the  
          reduced default density level.  Additionally, there is no  
          mechanism for terminating the pilot project if the first four  
          years show no positive outcomes.  It will be difficult to  
          measure the effectiveness of this legislation without additional  
          reporting and evaluation requirements. 

          Reducing default density levels may have the effect of  
          increasing the price of affordable housing development and  
          thereby making it a less attractive option for developers.  In a  
          county such as Marin, with one of the least affordable housing  
          markets in the nation and nearly 60% of its workforce commuting  
          into the county from other areas, sufficient affordable housing  
          development is something that should be promoted.  While there  
          may certainly be legitimate concerns about the default density  
          standards, and nothing precludes the Legislature from revisiting  








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          this issue, it may not be a prudent course of action to take a  
          piecemeal approach.  It is also likely that other jurisdictions,  
          as a result of this legislation, will request similar reductions  
          in default density.

           Double referred:  If AB 1537 passes this committee, the bill will  
          be referred to the Committee on Local Government.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Bridge Housing
          California State Association of Counties
          Center for Sustainable Neighborhoods
          County of Marin
          Domus Development
          EAH Housing
          Eden Housing
          El Dorado County
          League of California Cities
          Marin County Council of Mayors and Council members
          Non-Profit Housing Association of Northern California (NPH)
          Transportation Authority of Marin

           Opposition 
           
          Western Center on Law and Poverty
          California Rural Legal Assistance Foundation


           
          Analysis Prepared by  :    Rebecca Rabovsky / H. & C.D. / (916)  
          319-2085