BILL ANALYSIS Ó AB 1537 Page 1 Date of Hearing: April 30, 2014 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT K.H. "Katcho" Achadjian, Chair AB 1537 (Levine) - As Amended: April 21, 2014 SUBJECT : General plan housing element: regional housing need. SUMMARY : Creates an exception from existing law for Marin County, and cities within Marin County, for purposes of determining a jurisdiction's "default density" for accommodating affordable housing. Specifically, this bill : 1)Creates an exception, for purposes of determining a jurisdiction's "default density" for accommodating affordable housing, as follows: a) Requires a county that is in the San Francisco-Oakland-Fremont, California Metropolitan Statistical Area (MSA) that has a population of less than 400,000, to be considered suburban; and, b) Requires, if this county includes an incorporated city that has a population of less than 10,000, this city to be considered suburban. 2)Allows the exceptions specified in 1), above, to apply to a housing element revision cycle that is in effect from July 1, 2014, to December 31, 2023. 3)Requires a jurisdiction that is classified as suburban pursuant to 1), above, to 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 consistent with the requirements of existing law. 4)Requires the report to be provided twice, once, on or before December 31, 2019, which shall address the initial four years of the housing element cycle, and a second time, on or before December 31, 2023, to address the subsequent four years of the housing element cycle and the cycle as a whole. 5)Requires the report to be consistent with the requirements of AB 1537 Page 2 existing law related to reports submitted to the Legislature. 6)Repeals, on December 31, 2023, items 1), above, through 5), above, inclusive. EXISTING LAW : 1)Requires every city and county to prepare and adopt a general plan containing seven mandatory elements, including a housing element. 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 needs of all income segments of the community, and ensure that regulatory systems provide opportunities for, and do not unduly constrain, housing development. 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. 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. 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). AB 1537 Page 3 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. 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: 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. 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 a Metropolitan Statistical Area (MSA) with a population of two 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 two 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). AB 1537 Page 4 d) 10 units per acre for unincorporated areas in all non-metropolitan counties. FISCAL EFFECT : This bill is keyed fiscal. COMMENTS : 1)Purpose of this bill . This bill would require, until December 31, 2023, a county that is in the San Francisco-Oakland-Fremont, California MSA that has a population of less than 400,000 to be considered suburban for purposes of determining the densities appropriate to accommodate housing for lower-income households. The bill also requires a city that has a population of less than 100,000 and is incorporated within that county to be considered suburban, for the same purposes of determining the densities appropriate to accommodate housing for lower-income households. The practical application of this bill would affect the unincorporated area of Marin County, as well as two cities in Marin - Novato and San Rafael. This bill is author-sponsored. 2)Housing element requirements . 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. 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. AB 1537 Page 5 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. 3)Default density in statute . In 2003, HCD convened a Housing Element Working Group (HEWG), after several lengthy and divisive legislative battles over changes to housing element law. The broad-based group included representatives from local government, COGs, the for-profit and non-profit development community, and affordable housing advocacy groups. 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. One of these bills, AB 2348 (Mullin), Chapter 724, Statutes of 2004, 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. 4)Author's statement . According to the author, "AB 1537 seeks to designate Marin as suburban for purposes of its housing element default density in the next housing element cycle. With a population of 250,000 it is an anomaly that Marin is designated as metropolitan. This designation will be a more appropriate reflection of the existing character of the county and will help focus the discussions over affordable housing AB 1537 Page 6 development to the most relevant issues. It is important to note that affordable housing developers and the Association of Bay Area Governments (ABAG) support AB 1537. The bill would not change in any way the number of units the county must zone for, would only apply for the next housing element cycle, and there will be reporting to the Legislature as well as the Department of Housing and Community Development." 5)Marin designations . Marin County is rural and suburban in nature with an aggregate population of about 252,000, and is separated from San Francisco by a body of water and includes thousands of acres of land in open space preserves. It is included in the San Francisco MSA and is considered metropolitan with a default density of 30 dwelling units per acre. In addition, unlike cities in suburban counties that are also considered suburban if under 100,000 in population, cities in metropolitan counties are only considered suburban if under 25,000 in population. Marin County and its cities with a population greater than 25,000 have the same default density as downtown San Francisco or Sacramento. The nine incorporated cities with a population of less than 25,000 have a default density of 20 dwelling units per acre, but the unincorporated county areas around these incorporated cities are designated metropolitan with a default density of 30 dwelling units per acre. 6)Related legislation . The introduced version of AB 2508 (Caballero), Chapter 390, Statutes of 2010, allowed a local agency to petition HCD for a jurisdiction reclassification if its classification under Housing Element Law jeopardizes the agency's ability to meet threshold requirements for funding programs promoting infill development. AB 2508 was sponsored by the City of Salinas, which at the time had a population just under 150,000, and was classified as a metropolitan jurisdiction under the Mullin Densities formula. As such, an infill project in Salinas would have to be built at 30 units per acre or more in order to be eligible under the infill program. The author and sponsor argued that Salinas lacked the overall infrastructure to develop at a density above 30 units per acre, and that Salinas should not be designated as a metropolitan jurisdiction because it was not a central city or an urban core. Salinas was unable to compete in the first two funding AB 1537 Page 7 rounds under Infill Incentive Grants Program because it did not have any projects that met the density requirements. The introduced version of AB 745 (Levine, 2013) would have authorized a city or county to request the appropriate council of governments to adjust a density to be deemed appropriate if it is inconsistent with the city's or county's existing density. The bill was subsequently amended to deal with a different topic. 7)Arguments in support . Supporters argue that this bill allows these suburban and rural communities in Marin the flexibility to zone land suitable for housing in a way that fits within the communities' individual circumstances while still promoting affordable development. 8)Arguments in opposition . Opponents argue that reduction of the default density without mitigation that will help ensure that affordable housing will be developed at the lower densities will make it difficult or impossible to build housing for lower-income families in need. 9)Double-referral . This bill is double-referred to the Committees on Housing and Community Development Committee and will be heard in that Committee on April 30, 2014. REGISTERED SUPPORT / OPPOSITION : Support Association of Bay Area Governments BRIDGE Housing Corporation California State Association of Counties Center for Sustainable Neighborhoods Eden Housing Marin County Board of Supervisors Marin County Council of Mayors and Council Members Non-Profit Housing Association of Northern California Domus Development EAH Housing Opposition Western Center on Law and Poverty California Rural Legal Assistance Foundation AB 1537 Page 8 Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958