BILL ANALYSIS                                                                                                                                                                                                    Ķ

                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

          |Bill No:  |AB 744                           |Hearing    |7/15/15  |
          |          |                                 |Date:      |         |
          |Author:   |Chau                             |Tax Levy:  |No       |
          |Version:  |7/8/15                           |Fiscal:    |Yes      |
          |Consultant|Favorini-Csorba                                       |
          |:         |                                                      |


          Places a cap on the parking ratios that local governments may  
          impose on some affordable housing developments.

           Background and Existing Law

           Local Planning.  Cities and counties must adopt general plans  
          with seven specified elements, including a land use element that  
          contains standards for population density and building profiles.  
           Most local land use decisions must be consistent with these  
          general plans.  All cities and counties' decisions on  
          subdivisions and public works projects must be consistent with  
          their general plans.  General law cities and counties' zoning  
          ordinances and conditional use permits must be consistent with  
          their general plans.  However, except for the City of Los  
          Angeles's zoning ordinance, charter cities' zoning ordinances  
          and conditional use permits don't have to be consistent with  
          their general plans.

          Local ordinances can set a variety of rules intended to shape  
          developments, including setting maximum densities for housing  
          units or minimum numbers of required parking spaces.  These  
          parking space requirements are often based on a "parking ratio"  
          that requires builders to include a certain number of parking  
          spaces per unit, depending on the size of the unit.  High  
          parking ratios can increase the cost of housing because  


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          constructing off-street parking can be expensive.  For example,  
          estimates of the average cost of constructing parking spaces  
          range from $15,000 to $34,000 per space.

          Density Bonus Law.  Given California's high land and  
          construction costs, it can be difficult for developers to  
          provide housing units that are affordable to low- and  
          moderate-income households.  In order to improve the financial  
          viability of developments that provide housing at a cost below  
          the market rate, the state enacted the Density Bonus Law, which  
          allows a development that meets certain criteria to include more  
          total units in a project than would otherwise be allowed by  
          local zoning.  To be eligible for a density bonus, a development  
          must do any of the following:
                 Reserve at least 10% of the units for lower income  
                 Reserve at least 5% of the units for very low income  
                 Be either a senior citizen housing development or a  
               mobile home park for older persons, as defined in the Civil  
               Code; or
                 Reserve at least 10% of the units in a common interest  
               development for people of moderate income, as long as all  
               units are available for purchase by the general public.

          These affordable housing units must remain affordable for at  
          least 55 years.  Developers that meet the requirements in  
          density bonus law receive several other benefits in addition to  
          higher allowable densities, including "concessions" such as  
          regulatory exemptions that result in cost reductions and waivers  
          of development standards that would physically prevent the  
          development from being constructed.  Density bonus law also caps  
          the parking ratio that a local government may require at:
                 1 parking space per unit with zero or one bedroom;
                 2 parking spaces per unit with two or three bedrooms;
                 2.5 parking spaces per unit with four or more bedrooms.

          Developments that include higher percentages of low or very low  
          income households get higher allowable housing densities and  
          other benefits, up to maximum percentages of 20% low income or  
          11% very low income.  For example, a housing project with only  
          5% of very low income housing is entitled to a 20% increase in  
          density, one concession, unlimited waivers from development  
          standards, and reduced parking standards for the entire project.  


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           A housing project with 11% very low income units receives a 35%  
          increase in density, two concessions, and the same access to  
          waivers and reduced parking standards.

          State Transit Policies.  A number of state policies encourage  
          new developments near public transit in order to reduce vehicle  
          miles traveled.  The Planning and Zoning Law declares three  
          state planning priorities, including encouraging efficient  
          development patterns.  That priority can be furthered by new  
          development that uses land efficiently, is adjacent to developed  
          areas, is planned for new growth, is served by adequate  
          transportation, and minimizes taxpayers' continuing costs.  In  
          addition, California has a goal of reducing greenhouse gas  
          emissions (AB 32, Nuņez & Pavley, 2006).  Reducing vehicle  
          emissions involves multiple strategies, including clean  
          technology as well as reducing the amount of vehicle miles  
          traveled.  Among the ways to reduce vehicle miles is better  
          coordination of transportation and land use plans and increasing  
          the density in existing areas and new development projects.  To  
          those ends, Senate Bill 375 (Steinberg, 2008) linked  
          transportation planning and land use planning by state,  
          regional, and local agencies by providing metropolitan planning  
          organizations and their constituent cities and counties with,  
          among other things, incentives to promote development within  
          one-half mile of a "major transit stop."  SB 375 defines a major  
          transit stop to mean 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 major bus routes  
          with a frequency of service interval of 15 minutes or less  
          during the morning and afternoon peak commute periods.

          Some organizations want to further encourage affordable housing  
          development near transit by reducing the number of parking  
          spaces that are required for certain new developments. 

           Proposed Law

           Assembly Bill 744 adds several provisions to the density bonus  
          law that reduce the parking ratios that cities and counties may  
          impose on new developments that meet certain criteria.   
          Specifically, AB 744:
                 Prohibits local governments from requiring parking  
               ratios greater than  0.5 spaces  per unit for a development  


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               that includes, at least 20% low income or 11% very low  
               income housing units and is within one-half mile of a major  
               transit stop, as defined by state law.
                 Prohibits local governments from requiring parking  
               ratios greater than  0.5 spaces  per unit for a development  
               that is entirely composed of low or very low income rental  
               housing units and is within  mile of a major transit stop.  
                 Prohibits local governments from requiring parking  
               ratios greater than  0.5 spaces  per unit for a development  
                  o         Is a senior citizen development renting to  
                    individuals 62 years of age or older; 
                  o         Is entirely composed of low or very low income  
                    rental housing units, and;
                  o         Has paratransit or is located within  mile of  
                    a bus line that runs at least eight times per day.
                 Prohibits local governments from requiring parking  
               ratios greater than  0.3 spaces  per unit for a development  
                  o         Is a special needs housing development,  
                    defined as a development for the benefit of persons  
                    with mental health needs, physical or developmental  
                    disabilities, or those at risk of homelessness;
                  o         Is entirely composed of low or very low income  
                    rental housing units, and;
                  o         Has paratransit or is located within  mile of  
                    a bus line that runs at least eight times per day. 

          These ratios include parking set aside for guests and  
          handicapped spaces.  The affordable housing developments near  
          transit that qualify under AB 744 must provide unobstructed  
          access to the transit stop that they are near, meaning that a  
          resident must be able to access the stop without encountering  
          natural or constructed impediments. 

          AB 744 also allows a local government to impose a parking ratio  
          up to the ratios allowed in current law, for developments that  
          receive density bonuses if the local government makes findings  
          that a higher parking ratio is needed, based on findings in any  
          parking study conducted for the area by an independent  
          consultant in the past seven years that demonstrates the need.

          AB 744 also allows developers that receive density bonuses to  


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          use a concession to request changes to parking restrictions  
          beyond those established by the bill.  It also states that it  
          does not prevent a local government from reducing or eliminating  
          parking requirements, for any development in any location and  
          includes findings and declarations identifying the need for its  

           State Revenue Impact

           No estimate.


           1.  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.  This bill promotes affordable housing by enabling  
          developers to invest in building more affordable dwelling units  
          instead of spending funds on parking spaces that may go unused.   
          AB 744 also encourages building of urban infill,  
          transit-oriented development, and senior and special needs  
          housing by providing benefits to those categories of  
          development.  It also ensures the mobility of residents of these  
          developments by only granting a benefit to developments in  
          locations that provide residents with access to alternative  
          forms of transportation, such as transit and paratransit.   
          Finally, AB 744 provides flexibility to locals because it allows  
          cities to establish parking standards suitable for their  
          specific circumstances upon demonstration that the greater  
          parking requirements are necessary. 

          2.   Home rule  .  Local governments must balance competing  
          priorities when determining the amount of parking that is  
          required for new developments.  Cities must look at the broader  
          impacts on the community that result from inadequate parking for  
          new development.  Residents and the guests or service providers  
          of those residents who are unable to find a place to park within  
          their development will look elsewhere, such as city streets or  


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          parking lots for businesses.  This spillover can hurt nearby  
          businesses, by taking parking spaces that would otherwise be  
          used by customers and can engender community resistance to these  
          types of projects as nearby residents become concerned about the  
          projects' impacts. That's why we elect local leaders to make  
          these decisions.

          3.   Sure, but will it work?   For market-rate housing, it makes  
          sense to let the market determine how much parking a housing  
          development needs.  Market-rate housing developers have an  
          incentive to identify the amount of parking that potential  
          residents demand because residents can pay similar prices  
          elsewhere if their demand isn't met.  However, with affordable  
          housing, the market may not function as well.  Buyers and  
          renters seeking affordable housing have fewer options.  Housing  
          developers may choose to build the minimum amount of parking  
          allowable under law in order to maximize revenue, and low-income  
          residents may live there anyway, regardless of whether the  
          available transit and parking options meet their needs.  For  
          example, transit options may not be adequate for residents who  
          travel to their jobs outside peak commute periods.  The  
          Committee may wish to consider amending AB 744 to ensure that  
          residents of developments with these lower parking ratios have  
          easy access to necessary transportation, by reducing the  
          distance to transit for a project to be eligible for the lower  
          parking minimums or adjusting the requirements of what  
          constitutes a major transit stop for the purposes of the bill.

          4.  Mandate  .  The California Constitution generally requires the  
          state to reimburse local agencies for their costs when the state  
          imposes new programs or additional duties on them.  According to  
          the Legislative Counsel's Office, AB 744 creates a new  
          state-mandated local program because it increases the duties of  
          local officials who must award density bonuses.  AB 744 says  
          that if the Commission on State Mandates determines that it  
          creates a state-mandated local program, the state must reimburse  
          local agencies by following the existing statutory process for  
          mandate claims.

          5.  Charter cities  .  The California Constitution allows cities  
          that adopt charters to control their own "municipal affairs."   
          In all other matters, charter cities must follow the general,  
          statewide laws.  Because the Constitution doesn't define  
          "municipal affairs," the courts determine whether a topic is a  


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          municipal affair or whether it's an issue of statewide concern.   
          AB 744 includes a legislative finding and declaration that the  
          need to address infill development and excessive parking  
          requirements is a matter of statewide concern, so its  
          requirements apply to all cities and counties in California,  
          including charter cities and counties. 

          6.  Incoming!  The Senate Transportation and Housing Committee  
          approved AB 744 by a vote of 7-4 on July 7, 2015. 


          Assembly Actions

           Assembly Housing and Community Development Committee:    6-1
          Assembly Local Government Committee:                   7-2
          Assembly Appropriations Committee:                  12-4
          Assembly Floor:                                   52-24


          Support and  
          Opposition   (7/9/15)

           Support  :  American Planning Association-California Chapter;  
          California Association of Local Housing Finance Agencies;  
          California Council for Affordable Housing; California Apartment  
          Association; California Association of Local Housing Finance  
          Agencies; California Economic Summit; California Housing  
          Consortium; Circulate San Diego; Council of Infill Builders;  
          Domus Development; Donald C. Shoup, Professor of Urban Planning;  
          Housing Authority of the City of Alameda; LifeSTEPS; LINC  
          Housing; Local Government Commission; Natural Resources Defense  
          Council; Non-Profit Housing Association of Northern California;  
          San Francisco Mayor Edwin Lee; Brian Stanke; Richard Hedges;  
          Daniel Gomez; Jason Burstis; William Chapin; Tanya Narath; Jean  
          Long; Gerard Sorensen; Jennifer West; 


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           Opposition  :  City of Camarillo; City of Encinitas; City of  
          Lakewood; County of Los Angeles; League of California Cities.

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