BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 744            Hearing Date:     6/30/2015
          |Author:   |Chau                                                  |
          |Version:  |6/23/2015                                             |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Alison Dinmore                                        |
          |:         |                                                      |

          SUBJECT:  Planning and zoning:  density bonuses

            DIGEST:  This bill requires a city or county, upon the request  
          of a developer that receives a density bonus, to eliminate the  
          minimum parking requirements for the development, if it meets  
          specified criteria.  

          Existing law:

          1)Defines "density bonus" as a density increase over the  
            otherwise maximum allowable residential density as of the date  
            of application by the applicant to the city, county, or city  
            and county.  

          2)Requires all cities and counties to adopt an ordinance that  
            specifies how they will implement state density bonus law.

          3)Requires a city, county, or city and county to grant one  
            density bonus and incentives or concessions when an applicant  
            for a housing development seeks and agrees to construct a  
            housing development, excluding any units permitted by the  
            density bonus awarded, that will provide for at least any one  
            of the following:

             a)   Ten percent of the total units of a housing development  
               for lower income households;


          AB 744 (Chau)                                       Page 2 of ?
             b)   Five percent of the total units of a housing development  
               for very low-income households;

             c)   A senior citizen housing development or a mobilehome  
               park that limits residency based upon age requirements for  
               housing for older persons;
             d)   Ten percent of the total dwelling units in a common  
               interest development (CID) for persons and families of  
               moderate income, provided all the units in the development  
               are offered to the public for purchase. 

          1)Requires cities and counties to provide an applicant for a  
            density bonus concessions and incentives based on the number  
            of below market-rate units included in the project as follows:  

             a)   One incentive or concession if the project includes at  
               least 10% of the total units for low-income households, 5%  
               for very low-income households, or 10% for moderate-income  
               households in a CID;

             b)   Two incentives or concessions if the project includes at  
               least 20% of the total units for low-income households, 10%  
               for very low-income households, or 20% for moderate-income  
               households in a CID; and

             c)   Three incentives or concessions if the project includes  
               at least 30% of the total units for low-income households,  
               15% for very low-income households, or 30% for  
               moderate-income households in a CID. 

          2)Provides that, upon the developer's request, the local  
            government may not require parking standards greater than the  
            following (the developer may, however, request additional  
            parking incentives or concessions): 

             a)   Zero to one bedrooms:  one onsite parking space;

             b)   Two to three bedrooms:  two onsite parking spaces; and

             c)   Four or more bedrooms:  two and one-half parking spaces.

          1)Defines "major transit stop" as a site containing an existing  
            rail transit station, a ferry terminal served by either a bus  
            or rail transit service, or the intersection of two or more  


          AB 744 (Chau)                                       Page 3 of ?
            major bus routes with a frequency-of-service interval of 15  
            minutes or less during the morning and afternoon peak commute  

          This bill:

          1)Provides that when a developer agrees to include the maximum  
            number of very low- or 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.

          2)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.  "Unobstructed  
               access" means a resident is able to walk to the major  
               transit stop without encountering natural or constructed  

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

             c)   The development is a special needs housing development.

          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 that conducted an  
            area-wide or jurisdiction-wide parking study within the last  
            five years by an independent consultant to impose a higher  
            vehicular parking ratio than the one for 1) and 2) above, but  
            does not exceed the standard under Density Bonus Law.  The  
            study must be based on substantial evidence and include, but  
            not be limited to, an analysis of parking availability,  
            differing levels of transit access, walkability access to  
            transit services, the potential for shared parking, and the  


          AB 744 (Chau)                                       Page 4 of ?
            effect of parking requirements on the cost of market-rate and  
            subsidized parking.

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


          Purpose of the bill.  In some cases, cities and counties apply  
          minimum parking standards to affordable housing developments  
          that do 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.  An  
          in-depth analysis of parking utilization at 68 affordable  
          housing developments throughout the Bay Area by Transform's  
          GreenTrip program found substantial overdevelopment of  
          residential parking, at an extremely high cost. 

          This bill would allow a developer that is requesting a density  
          bonus and including 100% affordable units in the development to  
          also request that the city or county eliminate the minimum  
          parking requirements for the development. This bill promotes  
          affordable housing by enabling developers to invest in building  
          more affordable dwelling units instead of spending public  
          subsidies on unneeded parking spaces.  It also reduces  
          construction costs and encourages building of urban infill,  
          transit-oriented development, and senior and special needs  
          housing while preserving a city's right to establish parking  
          standards suitable for their specific circumstances. 

          Background of Density Bonus Law.  Given California's high land  
          and construction costs for housing, it is extremely difficult  
          for the private market to provide housing units that are  
          affordable to low- and even moderate-income households.  Public  
          subsidy is often required to fill the financial gap on  
          affordable units.  Density Bonus Law, however, allows public  
          subsidies to be reduced or even eliminated by allowing a  
          developer to include more total units in a project than would  
          otherwise be allowed by the zoning in order to spread the cost  
          of the affordable units over the project as a whole.  The idea  
          is to cover at least some of the affordability gap with  


          AB 744 (Chau)                                       Page 5 of ?
          regulatory incentives rather than additional subsidy.

          Under existing law, if a developer agrees to construct a housing  
          development and meets a specified percentage of affordable  
          units, the city or county must provide all of the following  
          benefits: a density bonus, incentives or concessions, waiver of  
          any development standards that prevent the developer from  
          utilizing the density bonus or incentives, and reduced parking  

          While a local government is not required to provide financial  
          assistance or fee waivers, the incentives a local government  
          must grant include any of the following:

          1)A reduction in site development standards;

          2)A modification of zoning code requirements (including a  
            reduction in setbacks, square footage requirements, or parking  
            spaces, or architectural design requirements that exceed the  
            minimum building standards);

          3)Approval of mixed-use zoning in conjunction with the housing  
            project if commercial, office, industrial, or other land uses  
            will reduce the cost of the housing development, and if such  
            non-residential uses are compatible with the project; or

          4)Other regulatory incentives or concessions that result in  
            identifiable, financially sufficient, and actual cost  

          Cost of parking spaces.  Transform's GreenTrip program analyzed  
          parking utilization at 68 affordable-housing developments  
          throughout the Bay Area and found substantial overdevelopment of  
          residential parking, at an extremely high cost.  Surveying the  
          buildings' parking lots at night when residents would be  
          expected to be sleeping (with their cars in the on-site spaces),  
          the study found that 31% of the 9,387 spaces were empty.  The  
          cost to construct those spaces amounted to approximately $139  
          million.  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.


          AB 744 (Chau)                                       Page 6 of ?
          Developments that are available only to low-income persons  
          generally receive Low Income Housing Tax Credits (LIHTC) to  
          finance the project.  To compete for LIHTC, projects need to  
          meet scoring criteria, including proximity to transit.  While  
          senior or special-needs projects 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.

          This bill would require cities and counties to waive costly  
          minimum parking requirements upon request from of a developer,  
          in cases where a development serves low-income persons.  The  
          development must be within one-half mile of a major transit  
          stop, serve only persons over 62 years old, or serve persons  
          with special needs.  

          Parking study/bill exception.  This bill provides that a city or  
          county may impose a higher standard of parking than what is  
          otherwise permitted under this section based upon substantial  
          evidence found in an area- or jurisdiction-wide parking study.   
          The study must be conducted by an independent consultant within  
          the last five years and includes certain requirements.  

          Sustainability goals and transit-oriented development.  AB 32  
          (Nez, Chapter 488, Statutes of 2006) requires California to  
          reduce greenhouse gas (GHG) emissions to 1990 levels by 2020.   
          SB 375 (Steinberg, Chapter 728, Statutes 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 by requiring cities and counties  
          to adopt sustainable communities strategies to show how  
          development will support reduction in GHG emissions.  A key  
          component of reducing GHG is to move people out of their cars  
          and into public transit.  To encourage use of transit, some  
          cities and counties have adopted policies like eliminating  
          minimum parking requirements for projects that are close to  
          transit where demand for parking spaces is low.  They recognize  
          that parking requirements prevent infill redevelopment on small  
          lots where it is difficult and costly to fit both a new building  
          and the required parking.  They also see that parking  
          requirements prevent new uses for older buildings that lack the  
          required parking spaces.

          Arguably, cities and counties that place minimum parking  
          requirements for developments near transit may not reflect the  
          demand for parking.  This is particularly likely in 100%  


          AB 744 (Chau)                                       Page 7 of ?
          affordable developments within one-half mile of a transit stop,  
          a seniors-only development, or a development that serves  
          special-needs individuals.  In fact, a review of developments  
          funded through the Department of Housing and Community  
          Development's Transit-Oriented Development Implementation  
          Program (TOD program) showed that lower income households drive  
          25-30% fewer miles when living within one-half mile of transit  
          than those living in non-TOD areas.  

          Opposition.  Opponents state that while some housing projects  
          serving unique populations may need less parking, minimum levels  
          of parking should remain intact as these populations still often  
          have cars.  Many seniors do not give up their cars at 62 years  
          of age and many low-income persons require their cars to get to  
          work.  Additionally, adequate parking should be available for  
          guests and service providers.  Opponents argue that Density  
          Bonus Law already offers two tiers of parking incentives to  
          developers: 1) statutory maximums commencing at one parking  
          space per bedroom, and 2) the ability to seek additional  
          concessions to further reduce parking below the maximums.

          Double-referred.  This bill is also referred to the Senate  
          Governance and Finance Committee.  

          Assembly Votes:

            Floor:    52-34
            Appr:     12-4
            LGov:       7-2
            H&CD:       6-1
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  Yes

           POSITIONS:  (Communicated to the committee before noon on  
                          June 24, 2015.)

          American Planning Association (Support if Amended)
          Association of Regional Center Agencies 
          Blaydes & Associates American Planning Association (Support if  


          AB 744 (Chau)                                       Page 8 of ?
          California Association of Local Housing Finance Agencies 
          California Apartment Association
          California Bicycle Coalition
          California Council for Affordable Housing 
          California Economic Summit 
          California Housing Consortium 
          California League of Conservation Voters 
          California State Treasurer, John Chiang 
          Circulate San Diego
          City of Richmond, California 
          Council of Infill Builders
          Domus Development
          Donald C. Shoup, Professor of Urban Planning, UCLA Luskin School  
          of Public Affairs
          Eden Housing 
          EAH Housing
          Enterprise Community Partners 
          Habitat for Humanity Greater San Francisco
          Housing Authority of the City of Alameda
          Housing California
          Housing Leadership Council of San Mateo County
          John Chiang, California State Treasurer
          LINC Housing
          Local Government Commission
          Lyft, Inc. 
          Mayor Ed Lee, City of San Francisco 
          Mercy Housing California
          Metropolitan Transportation Commission 
          Michael Lane, Policy Director, Non-Profit Housing Association of  
          Northern California 
          National Community Renaissance 
          Natural Recourses Defense Council 
          Non-Profit Housing Association of Northern California 
          Rebecca J. Garcia, Councilmember, City of Watsonville
          Sacramento Housing Alliance
          San Diego County Bike Coalition
          Tenderloin Neighborhood Development Corporation
          9 individuals


          City of Camarillo
          City of Encinitas 


          AB 744 (Chau)                                       Page 9 of ?
          City of Glendale 
          City of Lakewood
          County of Los Angeles
          League of California Cities 

                                      -- END --