BILL ANALYSIS                                                                                                                                                                                                    



                                                                       AB 744


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          ASSEMBLY THIRD READING


          AB  
          744 (Chau)


          As Amended  June 2, 2015


          Majority vote


           -------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                  |Noes                 |
          |                |      |                      |                     |
          |                |      |                      |                     |
          |----------------+------+----------------------+---------------------|
          |Housing         |6-1   |Chau, Steinorth,      |Beth Gaines          |
          |                |      |Burke, Chiu, Lopez,   |                     |
          |                |      |Mullin                |                     |
          |                |      |                      |                     |
          |----------------+------+----------------------+---------------------|
          |Local           |7-2   |Gonzalez, Alejo,      |Maienschein, Waldron |
          |Government      |      |Chiu, Cooley, Gordon, |                     |
          |                |      |Holden, Linder        |                     |
          |                |      |                      |                     |
          |----------------+------+----------------------+---------------------|
          |Appropriations  |12-4  |Gomez, Bonta,         |Bigelow, Chang,      |
          |                |      |Calderon, Daly,       |Gallagher, Wagner    |
          |                |      |Eggman, Eduardo       |                     |
          |                |      |Garcia, Gordon,       |                     |
          |                |      |Holden, Quirk,        |                     |
          |                |      |Rendon, Weber, Wood   |                     |
          |                |      |                      |                     |
          |                |      |                      |                     |
           -------------------------------------------------------------------- 










                                                                       AB 744


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          SUMMARY: Requires a city, county, or city and county, upon the  
          request of a developer that receives a density bonus, to reduce or  
          eliminate the minimum parking requirements for the development, if  
          it meets specified criteria.  Specifically, this bill:  


          1)Includes legislative intent language. 


          2)Defines a "major transit stop" to have the same meaning as  
            Public Resources Code Section 21155(b).  


          3)Provides that when a developer agrees to include the maximum  
            number of very low- and low- income units under Density Bonus  
            Law within one-half mile of a major transit stop and with  
            unobstructed access to the major transit stop from the  
            development, then upon the request of the developer a city,  
            county, or city and county shall not impose a parking ratio that  
            exceeds 0.5 spaces per bedroom.   


          4)Provides that if a development is 100% affordable to lower  
            income families then upon the request of a developer, a city,  
            county, or city and county, shall eliminate the minimum parking  
            requirements for the development, if it meets one of the  
            following criteria:


             a)   The development is located within one-half mile of a  
               "major transit stop" and there is unobstructed access to the  
               major transit stop from the development; 


             b)   The development is a for-rent housing development for  
               individuals who are 62 years of age or older; or


             c)   The development is a special needs housing development.








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          1)Provides that this bill does not preclude a city, county, or  
            city and county from reducing or eliminating a parking  
            requirement for developments of any type or location.


          2)Allows a city, county, or city and county to impose a higher  
            parking standard than the one for 2), and 3), above, that does  
            not exceed the standard under Density Bonus Law, based upon  
            substantial evidence in an area-wide or jurisdiction-wide  
            parking study conducted by an independent consultant within the  
            last five years that includes but is not limited to an analysis  
            of: parking availability, differing levels of transit access,  
            walkability access to transit services, the potential for shared  
            parking, and the effect of parking requirements on the cost of  
            market-rate and subsidized parking.   


          3)Requires the city, county, or city and county who has completed  
            a parking study and imposes a higher standard than 2) and 3)  
            above, to make findings supporting the need for a higher parking  
            ratio.  


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, the fiscal impact is minor, non-reimbursable costs to  
          cities and counties.


          COMMENTS:  


          Background:  


          California is facing a housing affordability crisis on many  
          fronts. According to the United States Department of Housing and  
          Urban Development, California has six of the most expensive rental  








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          markets in the country. Nationwide, rents in 2014 grew the fastest  
          in the San Jose and San Francisco metropolitan areas, increasing  
          by 14.4% and 13.5%, respectively.  Between 2006 and 2011, rents  
          increased throughout the state by an average of 10%. Lower-income  
          households represent a majority of renter households. Out of 5.1  
          million renters in California, 60% are in lower-income households,  
          while one in four renter households are in the extremely  
          low-income. One in two renters in California pay in excess of 30%  
          of their income towards housing and one in four renters pay half  
          of their income towards housing.


          The funding sources to support construction of affordable housing  
          have drastically diminished over the last five years. The  
          dissolution of redevelopment agencies eliminated up to $1 billion  
          in funding that was available for affordable housing construction.  
           The last statewide housing bond was approved in 2008 and the  
          proceeds of those bonds have been exhausted.   


           Density Bonus Law:


          To help address California's affordable housing shortage, the  
          Legislature enacted density bonus law to encourage the development  
          of more affordable units.  Under current law, a city or county  
          must grant a density bonus, concessions and incentives, prescribed  
          parking requirements, as well as waivers of development standards  
          upon a developer's request when the developer includes a certain  
          percentage of affordable housing in a housing development project.  
           This bill would amend density bonus law to allow developers that  
          agree to either include a percentage of affordable units or where  
          the development is 100% affordable to lower income families and  
          individuals to request a city or county reduce or eliminate  
          parking ratios. 


          Cost of parking spaces:  









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          Affordable housing is expensive to build in California due to both  
          the amount of subsidy needed to make the housing affordable and  
          the cost of local regulatory requirements. In some cases, cities  
          and counties apply minimum parking standards to housing  
          developments that may not reflect the demand from tenants for  
          parking.  These projects may be close to transit stations or home  
          to seniors or individuals with special needs who drive less  
          frequently and have fewer vehicles.  Parking spaces, which  
          sometimes go unused, can significantly increase the cost of  
          construction.  The average construction cost per space, excluding  
          land cost, in a parking structure in the United States is $24,000  
          for aboveground parking and $34,000 for underground parking.  
          Certain types of parking, podium or subterranean, can increase  
          parking costs by 6% or more relative to other types of parking.  


          This bill would require cities or counties to waive the minimum  
          parking ratio for developments that are solely for lower-income  
          tenants.  These projects would have to be either close to major  
          transit, for seniors who are 62 years or older, or for special  
          needs populations.  Developments that are solely affordable to  
          low-income tenants typically require Low-Income Housing Tax  
          Credits (LIHTC) to finance the project. To compete for LIHTC,  
          projects needs to meet scoring criteria including proximity to  
          transit. Although projects that are senior or special needs are  
          not required to meet the standard that they are within one-half  
          mile of major transit they will need to meet the transit  
          requirements of the LIHTC.    


          Parking study: 


          This bill would allow a city or county to impose a higher parking  
          ratio than then those outlined in this bill if the city has  
          conducted a study within the last five years that includes  
          substantial evidence that supports the need for a higher parking  
          ratio.  The city could only increase the parking ratio to the  








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          existing standard that is allowed under Density Bonus Law.  This  
          provision was included to address concerns raised by cities who  
          argued they needed a means to increase parking beyond the  
          requirements of this bill.  


          Sustainable development goals:  


          California has taken steps over the last several years to  
          establish programs and policies to help incentivize regional and  
          local planning efforts.  AB 32 (Nez), Chapter 488, Statutes of  
          2006:  The California Global Solutions Act of 2006 requires  
          California to reduce greenhouse gas (GHG) emissions to 1990 levels  
          by 2020.  SB 375 (Steinberg), Chapter 728, Statutes of 2008,  
          supports the state's climate action goals to reduce GHG emissions  
          through coordinated transportation and land use planning with the  
          goal of more sustainable communities.  A key component of reducing  
          GHG emissions is moving people out of their cars and onto public  
          transit.  Cities and counties are required to adopt sustainable  
          community strategies to show how development will support  
          reduction in GHG emissions. 


          Purpose of this bill:  


          According to the author, this bill would reduce a local barrier to  
          building affordable housing by requiring a city or county and an  
          affordable housing developer to negotiate the appropriate parking  
          ratio rather than relying upon a standard that does not make sense  
          for the development or the tenants living in the development.   
          Much of California's existing parking requirements are based on  
          low-density and single-purpose land use designations.  Parking is  
          costly to build and maintain and can increase the cost of projects  
          in existing development areas.  











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          Analysis Prepared by:                                               
                          Lisa Engel / H. & C.D. / (916) 319-2085  FN:  
          0000876