Amended in Senate August 2, 2016

Amended in Senate July 16, 2015

Amended in Senate June 23, 2015

Amended in Assembly April 30, 2015

Amended in Assembly April 16, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 723

Introduced by Assembly Member begin delete Rendon end delete begin insert Chiu end insert

February 25, 2015

An act to amend Sections begin delete 1101.4 and 1101.5 end delete begin insert 50833, 51335, and 51340 end insert of the begin delete Civil end delete begin insert Health and Safety end insert Code, relating to begin delete water conservation. end delete begin insert housing, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 723, as amended, begin delete Rendon end delete   begin insert Chiu end insert . begin delete Rental property: plumbing fixtures: replacement. end delete begin insert Housing: finance. end insert

begin insert

(1) Existing law requires the Department of Housing and Community Development to allocate funds under the federal Community Development Block Grant Program to cities and counties. Existing law requires the department to determine and announce, in the applicable Notice of Funding Availability, the maximum amount of grant funds that may be used for economic development projects and programs, housing for persons and families of low or moderate income or for purposes directly related to the provision or improvement of housing opportunities for these persons and families, and for cities and counties that apply on behalf of certain Indian tribes. Existing law requires the department to develop and use certain eligibility criteria and requirements for certain economic development fund applications.

end insert begin insert

This bill would authorize the Department of Housing and Community Development to issue a Notice of Funding Availability under which the director of the department could determine that an applicant previously awarded funds is eligible to apply for, and receive, additional funds pursuant to the Community Development Block Grant Program, without regard to whether the applicant has expended at least a certain percentage of funds previously awarded.

end insert begin insert

(2) Existing law authorizes the Housing Finance Agency to issue revenue bonds for the purpose of financing the acquisition, construction, rehabilitation, refinancing, or development of multifamily rental housing and for the provision of capital improvements in connection with, and determined necessary to, that multifamily rental housing. Existing law requires no less than 20%, or 15% for those multifamily rental housing developments located in a target area, as defined, of the total number of units in a multifamily rental housing development, financed or for which financing has been extended or committed from the proceeds of sale of each bond issuance of the agency, to be for occupancy on a priority basis by lower income households. Existing law further requires that not less than 1⁄2 of the units required for occupancy on a priority basis by lower income households be for occupancy on a priority basis for very low income households.

end insert begin insert

This bill would repeal the requirement that at least 15% of the total number of units in a target area development be for occupancy on a priority basis for lower income households. The bill would additionally repeal the requirement that not less than 1⁄2 of the units required for occupancy on a priority basis by lower income households be for occupancy on a priority basis for very low income households. The bill would make conforming changes.

end insert begin insert

Existing law prohibits rental payments on units required for occupancy by very low income households paid by persons occupying the units from exceeding 30% of 50% of the area median income, and sets forth occupancy assumptions for adjusting rents for household size, as specified.

end insert begin insert

This bill would instead prohibit rental payment on units required for occupancy by lower income households paid by persons occupying the units from exceeding 30% of 80% of the area median income, and would authorize the agency to also utilize occupancy assumptions that it has determined are appropriate and commercially reasonable for financing pursuant to these provisions.

end insert begin insert

Existing law provides that the authorization to issue revenue bonds for these purposes constitutes an alternative method to issue bonds for making construction loans and mortgage loans for multifamily rental housing.

end insert begin insert

This bill would instead provide that the authorization to issue revenue bonds for these purposes constitutes an alternative method to finance construction loans and mortgage loans for multifamily rental housing.

end insert begin insert

(3) This bill would declare that it is to take effect immediately as an urgency statute.

end insert begin delete

Existing law requires, on and after January 1, 2017, replacement by the property owner of noncompliant plumbing fixtures in any single-family residential real property. Existing law requires, on and after January 1, 2019, replacement of noncompliant plumbing fixtures in multifamily residential real property and commercial real property, as specified.

end delete begin delete

This bill would require the lease or rental agreement of a single-family residential real property or any portion of a multifamily residential real property or commercial real property that is entered into, renewed, or amended after July 1, 2016, or January 1, 2017, respectively, to be accompanied by a written disclosure stating the property owner’s responsibility to replace all noncompliant plumbing fixtures with water-conserving plumbing fixtures on or before January 1, 2017, or January 1, 2019, respectively.

end delete

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 50833 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

50833.  

(a) The department shall determine and announce in
the applicable NOFA the percentage of the total amount of the
State Block Grant Program funds set aside for economic
development that shall be allocated to make economic development
planning and technical assistance grants to eligible small cities or
counties for business attraction, retention, and expansion programs
for the development of local economic development strategies,
predevelopment grant feasibility studies, and downtown
revitalization programs. Eligible small cities or counties may
contract with public agencies or nonprofit economic development
corporations and other eligible subgrantees or for-profit
corporations or entities to provide these services. Each applicant
shall be required to provide a cash match of up to 25 percent of
the total amount requested. A technical assistance grant received
under this set-aside is in addition to the city or county ceiling,
under Section 50832, or its ability to apply under the economic
development or general program set-asides. The department shall
determine and announce in the applicable NOFA the maximum
per year grant amount. Each applicant shall not receive more than
two grants per year and shall be eligible to apply each year,
although no applicant shall receive grants in excess of the
maximum amount determined by the department and announced
in the applicable NOFA in any one year. Funds not applied for or
allocated under this section may be used for other economic
development purposes under Sections 50832 and 50832.1.

(b) The department shall determine and announce in the
applicable NOFA the percentage of the total amount of the State
Block Grant Program funds not used for economic development
that shall be set aside to make technical assistance grants to eligible
small cities or counties for purposes including, but not limited to:
inventory of housing needing rehabilitation in the district, income
surveys of area residents, and any general studies of housing needs
in the district. Each applicant shall be required to provide a cash
match of up to 25 percent of the total amount requested. A technical
assistance grant received under this set-aside is in addition to the
city or county ceiling or its ability to apply under the economic
development or general program set-asides. Unexpended funds
allocated under this section shall revert to the general program,
but not to the economic development set-aside. The department
shall determine and announce in the applicable NOFA the
maximum grant amount per application. Each applicant shall not
receive more than two grants per year and shall be eligible to apply
each year, although no applicant shall receive grants in excess of
the maximum amount determined by the department and announced
in the applicable NOFA in any one year.

(c) If, under federal law, the economic development planning
and technical assistance grants and the general allocation planning
and assistance grants are considered to be administrative
expenditures, the department may reduce the percentages of the
set-asides by up to the amount necessary to remain within the
allowable limits for administrative expenditures.

(d) Two or more jurisdictions may pool their funds and make
a joint application for the same project.

(e) General administrative activity planning studies shall not be
counted against allocations under this section.

begin insert

(f) The department may issue a NOFA under which the director
may determine that an applicant with one or more current
Community Development Block Grant agreements signed in 2012
or later, for which the expenditure deadline established in the
grant agreement or agreements has not yet passed, is eligible to
apply for and receive an award of, funds pursuant to this chapter,
without regard to whether the applicant has expended at least 50
percent of Community Development Block Grant Funds awarded
in 2012 or thereafter. For any applicant that is so determined, the
director shall include in the application file a written confirmation
of eligibility and any award of funds. An application made pursuant
to the director’s determination under this section may be evaluated
solely on the basis of eligibility, need, benefit, or readiness, without
regard to any specific rating criteria provided by Section 7078 of
the California Code of Regulations. The awarding of funds to an
applicant pursuant to the director’s determination under this
section does not exempt those funds from consideration under any
expenditure requirement under law.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 51335 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51335.  

(a)  (1)  Not less than 20 percent of the total number
of units in a multifamily rental housing development financed, or
for which financing has been extended or committed, pursuant to
this chapter begin delete from the proceeds of sale of each bond issuance of the
agency end delete shall be for occupancy on a priority basis by lower income
households. begin delete If a multifamily rental housing development is located
within a targeted area, as defined by Section 143(j) of Title 26 of
the United States Code, not less than 15 percent of the total number
of units financed, or for which financing has been extended or
committed pursuant to this chapter, shall be for occupancy on a
priority basis by lower income households. Not less than one-half
of the units required for occupancy on a priority basis by lower
income households shall be for occupancy on a priority basis for
very low income households. end delete

The rental payments on the units required for occupancy by begin delete very
low end delete begin insert lower end insert income households paid by the persons occupying the
units (excluding any supplemental rental assistance from the state,
the federal government, or any other public agency to those persons
or on behalf of those units) shall not exceed 30 percent of begin delete 50 end delete begin insert 80 end insert
percent of area median income. If the sponsor elects to establish
a base rent for all or part of the units for lower income begin delete households
and very low income end delete households, the base rents shall be adjusted
for household size. In adjusting rents for household size, the agency
shall begin insert either end insert assume that one person will occupy a studio unit, two
persons will occupy a one-bedroom unit, three persons will occupy
a two-bedroom unit, four persons will occupy a three-bedroom
unit, and five persons will occupy a four-bedroom begin delete unit. end delete begin insert unit, or
utilize end insert begin insert occupancy assumptions that it determines to be appropriate
and commercially reasonable for financing extended pursuant to
this chapter. end insert

(2)  The local agency issuing permits for the development of
the multifamily rental housing development shall consider
opportunities to contribute to the economic feasibility of the units
and to the provision of units for very low income households
through concessions and inducements such as the following:

(A)  Reductions in construction and design requirements.

(B)  Reductions in setback and square footage requirements and
the ratio of vehicular parking spaces that would otherwise be
required.

(C)  Granting density bonuses.

(D)  Providing expedited processing of permits.

(E)  Modifying zoning code requirements to allow mixed use
zoning.

(F)  Reducing or eliminating fees and charges for filing and
processing applications, petitions, permits, planning services, water
and sewer connections, and other fees and charges.

(G)  Reducing or eliminating requirements relating to monetary
exactions, dedications, reservations of land, or construction of
public facilities.

(H)  Other financial incentives or concessions for the
multifamily rental housing development which result in identifiable
cost reductions, as determined by the agency. The agency shall
ensure that the local agency issuing permits for the development
considers its responsibilities under this section and makes a good
faith effort to enhance the feasibility of the project and to provide
housing for lower income households and very low income
households.

(3)  The agency shall not permit a selection criteria to be applied
to certificate holders under Section 8 of the United States Housing
Act of 1937 (42 U.S.C. Sec. 1437f) that is any more burdensome
than the criteria applied to all other prospective tenants.

(4)  It is the intent of the Legislature that the agency finance
projects that assist in meeting the urgent need for providing shelter
for lower income households, very low income households, and
persons and families of low or moderate income. To that end, the
quality of materials and the amenities provided should not be
excessive so as to hinder the prospect of achieving the stated goal.
The Legislature finds and declares that the design standards utilized
by the agency in the past including, but not limited to, the design
requirements adopted to govern the new construction program
under Section 8 of the United States Housing Act of 1937 (42
U.S.C. Sec. 1437f), are substantially in excess of those required
for a decent, healthy, and safe residential unit and intends, by the
amendment adding this paragraph to this section by the Statutes
of 1985, that the agency finance multifamily rental developments
with substantially less costly design requirements than those
required by the agency prior to January 1, 1986.

(5)  It is the intent of the Legislature that the agency finance
projects that assist in meeting the urgent need for providing shelter
for families. To that end, developments with three- and
four-bedroom units affordable to larger families shall have priority
over competing developments.

(b)  As a condition of financing pursuant to this chapter, the
housing sponsor shall enter into a regulatory agreement with the
agency providing that units reserved for occupancy by lower
income households remain available on a priority basis for
occupancy until the bonds are retired. The regulatory agreement
shall contain a provision making the covenants and conditions of
the agreement binding upon successors in interest of the housing
sponsor and, notwithstanding any other provision of law, these
burdens of the regulatory agreement shall run with the land. The
regulatory agreement shall be recorded in the office of the county
recorder of the county in which the multifamily rental housing
development is located. The regulatory agreement shall be recorded
in the grantor-grantee index to the name of the property owner as
grantor and to the name of the agency as grantee.

(c)  The agency shall ensure that units occupied by lower income
households are of comparable quality and offer a range of sizes
and number of bedrooms comparable to those units which are
available to other tenants.

(d)  (1)  The agency shall give priority to processing
construction loans and mortgage loans or may take other steps
such as reducing loan fees for multifamily rental housing
developments which incorporate innovative and energy-efficient
techniques which reduce development or operating costs and which
have the lowest feasible per unit cost, as determined by the agency,
based on efficiency of design, the elimination of improvements
that are not required by applicable building standards, or a
reduction in the amount of local fees imposed on the development.

(2)  The agency shall give equal priority to processing
construction loans and mortgage loans or may take other steps
such as reducing loan fees on multifamily rental housing
developments which do any of the following:

(A)  Utilize federal housing or development assistance.

(B)  Utilize redevelopment funds or other local financial
assistance, including, but not limited to, contributions of land, or
for which local fees have been reduced.

(C)  Are sponsored by a nonprofit housing organization.

(D)  Provide a significant number of housing units, as
determined by the agency, as part of a coordinated jobs and housing
plan adopted by a local government.

(E)  Exceed a ratio whereby 20 percent of the units are reserved
for occupancy by lower income begin delete households, or whereby 10 percent
of the units are reserved for occupancy by very low income
households, or which provide units for lower income households
or very low income end delete households for the longest period of time
beyond the minimum number of years.

(e)  (1)  New and existing rental housing developments may
be syndicated after prior written approval of the agency. The
agency shall grant that approval only after the agency determines
that the terms and conditions of the syndication comply with this
section.

(2)  The terms and conditions of the syndication shall not reduce
or limit any of the requirements of this chapter or regulations
adopted or documents executed pursuant to this chapter. No
requirements of the state shall be subordinated to the syndication
agreement. A syndication shall not result in the provision of fewer
assisted units, or the reduction of any benefits or services, than
were in existence prior to the syndication agreement.

begin delete

(f)  At the option of the agency, the amendments to this section
made by Chapter 907 of the Statutes of 1983 may be made
applicable to any multifamily rental housing development financed
by the issuance, on or after September 3, 1982, of bonds authorized
by this chapter.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 51340 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51340.  

This chapter constitutes an alternative method to begin delete issue
bonds for making end delete begin insert finance end insert construction loans and mortgage loans
for multifamily rental housing pursuant to the provisions of this
chapter.

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

The lack of availability of affordable housing is of vital statewide
importance and must be addressed as quickly as possible, and
therefore this act must take immediate effect.

end insert

begin delete

SECTION 1.  

Section 1101.4 of the Civil Code is amended to
read:

1101.4.  

(a) On and after January 1, 2014, for all building
alterations or improvements to single-family residential real
property, as a condition for issuance of a certificate of final
completion and occupancy or final permit approval by the local
building department, the permit applicant shall replace all
noncompliant plumbing fixtures with water-conserving plumbing
fixtures.

(b) On or before January 1, 2017, noncompliant plumbing
fixtures in any single-family residential real property shall be
replaced by the property owner with water-conserving plumbing
fixtures.

(c) On and after January 1, 2017, a seller or transferor of
single-family residential real property shall disclose in writing to
the prospective purchaser or transferee the requirements of
subdivision (b) and whether the real property includes any
noncompliant plumbing fixtures.

(d) The lease or rental agreement of any single-family residential
real property that is entered into, renewed, or amended on or after
July 1, 2016, shall be accompanied by a written disclosure stating
the property owner’s responsibility to replace all noncompliant
plumbing fixtures with water-conserving plumbing fixtures on or
before January 1, 2017.

(e) The following provision is deemed adequate to satisfy the
notice requirement prescribed by subdivision (d):

 

“Section 1101.4 of the Civil Code requires all single-family
residences to be equipped with water-conserving plumbing fixtures
on or after January 1, 2017. Section 1101.5 of the Civil Code
requires all multifamily residential real property and all commercial
real property to be equipped with water-conserving plumbing
fixtures on or after January 1, 2019. Fixtures in this dwelling,
multifamily residential real property, or commercial property may
not comply with Sections 1101.4 and 1101.5 of the Civil Code.
The property owner is responsible for equipping this property with
water-conserving plumbing fixtures by January 1, 2017, or January
1, 2019.”

 

(f) Single-family residential real properties in compliance with
subdivision (a) or (b) shall not be required to comply with the
notice requirement prescribed by subdivision (d).

SEC. 2.  

Section 1101.5 of the Civil Code is amended to read:

1101.5.  

(a) On or before January 1, 2019, all noncompliant
plumbing fixtures in any multifamily residential real property and
in any commercial real property shall be replaced with
water-conserving plumbing fixtures.

(b) An owner or the owner’s agent may enter the owner’s
property for the purpose of installing, repairing, testing, and
maintaining water-conserving plumbing fixtures required by this
section, consistent with notice requirements of Section 1954.

(c) On and after January 1, 2019, the water-conserving plumbing
fixtures required by this section shall be operating at the
manufacturer’s rated water consumption at the time that the tenant
takes possession. A tenant shall be responsible for notifying the
owner or owner’s agent if the tenant becomes aware that a
water-conserving plumbing fixture within his or her unit is not
operating at the manufacturer’s rated water consumption. The
owner or owner’s agent shall correct an inoperability in a
water-conserving plumbing fixture upon notice by the tenant or if
detected by the owner or the owner’s agent.

(d) (1) On and after January 1, 2014, all noncompliant plumbing
fixtures in any multifamily residential real property and any
commercial real property shall be replaced with water-conserving
plumbing fixtures in the following circumstances:

(A) For building additions in which the sum of concurrent
building permits by the same permit applicant would increase the
floor area of the space in a building by more than 10 percent, the
building permit applicant shall replace all noncompliant plumbing
fixtures in the building.

(B) For building alterations or improvements in which the total
construction cost estimated in the building permit is greater than
one hundred fifty thousand dollars ($150,000), the building permit
applicant shall replace all noncompliant plumbing fixtures that
service the specific area of the improvement.

(C) Notwithstanding subparagraph (A) or (B), for any alterations
or improvements to a room in a building that require a building
permit and that room contains any noncompliant plumbing fixtures,
the building permit applicant shall replace all noncompliant
plumbing fixtures in that room.

(2) Replacement of all noncompliant plumbing fixtures with
water-conserving plumbing fixtures, as described in paragraph (1),
shall be a condition for issuance of a certificate of final completion
and occupancy or final permit approval by the local building
department.

(e) On and after January 1, 2019, a seller or transferor of
multifamily residential real property or of commercial real property
shall disclose to the prospective purchaser or transferee, in writing,
the requirements of subdivision (a) and whether the property
includes any noncompliant plumbing fixtures. This disclosure may
be included in other transactional documents.

(f) The lease or rental agreement of any portion of a multifamily
residential real property or commercial real property that is entered
into, renewed, or amended on or after January 1, 2017, shall be
accompanied by a written disclosure stating the property owner’s
responsibility to replace all noncompliant plumbing fixtures with
water-conserving plumbing fixtures on or before January 1, 2019.

(g) The following provision is deemed adequate to satisfy the
notice requirement prescribed by subdivision (f):

 

“Section 1101.4 of the Civil Code requires all single-family
residences to be equipped with water-conserving plumbing fixtures
on or after January 1, 2017. Section 1101.5 of the Civil Code
requires all multifamily residential real property and all commercial
real property to be equipped with water-conserving plumbing
fixtures on or after January 1, 2019. Fixtures in this dwelling,
multifamily residential real property, or commercial property may
not comply with Sections 1101.4 of 1101.5 of the Civil Code. The
property owner is responsible for equipping this property with
water-conserving plumbing fixtures by January 1, 2017, or January
1, 2019.”

 

(h) Multifamily residential real properties and commercial real
properties in compliance with subdivision (a) or (d), and
commercial real properties without plumbing fixtures, shall not
be required to comply with the notice requirements prescribed by
subdivision (f).

end delete