BILL ANALYSIS Ó AB 1500 Page 1 Date of Hearing: April 15, 2015 ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Ed Chau, Chair AB 1500 (Maienschein) - As Introduced February 27, 2015 SUBJECT: California Environmental Quality Act: homeless complex projects: exemption SUMMARY: Exempts from the requirements of California Environmental Quality Act (CEQA) homeless complex projects, as defined. Specifically, this bill: 1)Exempts "homeless complex projects" from the requirements of CEQA. 2)Defines "homeless complex projects" as an activity or approval necessary for, or incidental to, the development, planning, design site acquisition, subdivision, financing, leasing, construction, operation, or maintenance of: a) An emergency shelter; b) Temporary or transitional housing; c) Supportive housing; AB 1500 Page 2 d) Low-income housing; e) Building that provides services for homeless persons; and f) Associated development, including any accessory roadway, utility, or other improvement to that shelter, housing, building, or associated development. EXISTING LAW: 1)Under CEQA requires lead agencies with the principal responsibility for carrying out or approving a proposed project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA. CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines (Public Resources Code Section 21000, et seq.). 2)Requires the Office of Planning and Research (OPR) and the Natural Resources Agency to prepare, adopt, and periodically update CEQA guidelines, including identifying classes of projects determined to have no significant effect on the environment and therefore eligible for a categorical exemption, as well as guidelines for the mitigation of greenhouse gas emissions (Public Resources Code Section 21083). 3)Exempts from CEQA specified residential housing projects that meet criteria established to ensure the project does not have a significant effect on the environment, including: a) Affordable agricultural housing projects of not more AB 1500 Page 3 than 45 units within a city, or 20 units within an agricultural zone, on a site not more than five acres in size; b) Affordable urban housing projects of not more than 100 units on a site not more than five acres in size; and c) Urban infill housing projects of not more than 100 units on a site not more than four acres in size that is within one-half mile of a major transit stop. (Public Resources Code Sections 21159.20-21159.28) 4)With respect to the CEQA exemption for affordable housing projects, authorizes an exemption to any development project that consists of the construction, conversion, or use of residential housing consisting of not more than 100 units that is affordable to low-income households if: a) The developer of the development project provides sufficient legal commitments to the appropriate local agency to ensure the continued availability and use of the housing units for lower income households for a period of at least 30 years, at affordable monthly housing costs; b) The development project site is, among other things, not more than five acres in area, and is located within an urbanized area; and c) The development project meets the criteria listed in Public Resources Code Section 21159.21, including consistency with any applicable general plan, specific plan, and local coastal program, is not located within the boundaries of a state conservancy, and does not have a significant effect on historical resources. (Public Resources Code Section 21159.23) AB 1500 Page 4 5)Requires local agencies to file notice of specified CEQA housing exemptions with OPR however, failure to file this notice does not affect the validity of the project (Public Resources Code Section 21152.1). FISCAL EFFECT: Unknown. COMMENTS: Background: CEQA provides a process for evaluating the environmental effects of applicable projects undertaken or approved by public agencies. If a project is not exempt from CEQA, an initial study is prepared to determine whether the project may have a significant effect on the environment. If the initial study shows that the project would not have a significant effect on the environment, the lead agency must prepare a negative declaration. If the initial study shows that the project may have a significant effect, the lead agency must prepare an EIR. Generally, an EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Prior to approving any project that has received environmental review, an agency must make certain findings. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures. AB 1500 Page 5 CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines. SB 1925 (Sher), Chapter 1039, Statutes of 2002, exempted from CEQA certain residential projects providing affordable urban or agricultural housing, or located on an infill site within an urbanized area, and meeting specified unit and acreage criteria. The stated intent of the Legislature in enacting those provisions included "creating a streamlined procedure for agricultural employee housing, affordable housing, and urban infill housing projects that do not have an adverse effect on the environment." For purposes of qualifying for the CEQA exemption for affordable housing, among other criteria projects must not be located within an urbanized area, not more than five acres in area, and fewer than 100 units. Since then, additional legislation has provided CEQA exemptions and streamlining for residential and certain other projects in infill areas. SB 375 (Steinberg), Chapter 728, Statutes of 2008, provided a CEQA exemption for a narrow set of eligible residential projects in infill areas adjacent to transit. SB 226 (Simitian), Chapter 469, Statutes of 2011, provided abbreviated CEQA review procedures for a broader set of urban infill projects, including retail, commercial, and public buildings. SB 743 (Steinberg), Chapter 386, Statutes of 2013, established a new exemption for residential, mixed-use and "employment center" projects located within one-half mile of a major transit stop, if the project is consistent with an adopted specific plan and specified elements of a SB 375 strategy. It also required OPR to propose revisions to the CEQA Guidelines for transportation impacts to better support infill development. Affordable housing in California: There is no question that California is facing an affordable housing crisis, and the state has long been associated with high AB 1500 Page 6 housing costs. The Public Policy Institute of California has identified that more than 36% of mortgaged homeowners and 47% of all renters are spending more than 35% of their household incomes on housing. There is a decrease in the number of homeowners and an increase in the number of renters. At the same time vacancy rates are low and rents are increasing. According to the U.S. Department of Housing and Urban Development, California has six of the most expensive rental markets in the country. Nationwide, rents in 2014 grew the fastest in the San Jose and San Francisco metropolitan areas, increasing by 14.4 percent and 13.5 percent, respectively. Between 2006 and 2011, rents increased throughout the state by an average of ten percent. 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. In March of 2015, the LAO published a report entitled "California's High Housing Costs: Causes and Consequences." Among other things, the report noted that "California's home prices and rents have risen because housing developers in California's coastal areas have not responded to economic signals to increase the supply of housing and build housing at higher densities." The report went on to specify that CEQA is one of the most significant factors hindering development, as it can be used to stop or limit housing development in coastal areas, thus reducing supply and driving up prices statewide. Between 2004- 2013, the LAO found that local agencies in the state's ten largest cities took on average about two and a half years to approve housing projects that required an EIR. AB 1500 Page 7 There is an often divisive balancing act between avoiding unnecessary significant environmental impacts and unduly hindering development. CEQA exemptions and streamlining attempt to strike a balance between these two concerns. Purpose of this bill: According to the author, "CEQA has contributed to increased housing costs and has been a barrier to affordable housing in California." AB 1500 "would cut costs for the construction and maintenance of emergency shelters, temporary or transitional housing, supportive housing or low-income housing resulting in an increase in housing opportunities for the homeless or soon to be homeless." In the author's view, CEQA has an especially pronounced effect on affordable housing because "[u]nlike other major development projects, homeless complex projects do not have a high potential for profits upon completion and are less worth the costs incurred with CEQA challenges." The author also points out that "California has the largest population of persons experiencing homelessness of any state in the country? The state has one of the highest rates of homelessness, with one in every 230 residents homeless at any point in time, and one in every 95 residents homeless at some point during the course of a year. In the rest of the country, most homeless people are sheltered, temporarily living in shelters or in transitional housing. In California, 70% of homeless people live unsheltered, the largest percentage in the nation." AB 1500 Page 8 Arguments in Support : The California Building Industry Association and the California Chamber of Commerce contend that "[a]lthough CEQA is an important and well-intended environmental law, the unfortunate reality is that CEQA is being misused by interest groups for reasons completely unrelated to the environment, thus keeping many of California's most impoverished residents from a safe and adequate place to call home." The American Planning Association, California Chapter, supports AB 1500 if amended. Their suggestions are focused on the emergency shelter exemption, and would limit the other types of exempted projects in the bill to those that are tied to an emergency shelter. Additionally, they specify that "without a definition of 'associated development' the bill appears to provide the exemption to additional, unnamed projects, including a large project even if the homeless emergency shelter or any facilities specifically tied to that shelter are only one small piece of the development." Other suggestions include ensuring that facilities remain in service for a reasonable period of time, and that local agencies should be allowed to limit the size of the complex depending on its location and surrounding uses. Arguments in Opposition: In opposing AB 1500, Sierra Club California believes the bill goes too far, as it exempts the construction of many types of housing. In opponents' view, "[m]any local governments need to provide more low-income housing, but a CEQA exemption for the homeless is not a proper way to help provide this housing." Staff Comments: AB 1500 Page 9 The Committee may wish to accept the amendments below, which, among other things, ensure that exempted low income housing projects contain a specified percentage of low income units. The amendments make the following substantive changes: 1)Changes the term "homeless complex project" to "priority housing project." 2)Removes "building that provides services for the homeless" from the exemption. 3)Narrows the definition of "low income housing" to mean housing with at least 20% affordable units, as defined, and with long-term deed restrictions for those units. 4)Provides that the exemption only applies if these requirements are met: a) The project would not result in a net loss of existing affordable units in the project area. b) The city or county where the project is located has a compliant Housing Element, and is in compliance with the Housing Element Annual Reporting Requirements, at the time the notice of determination of exemption is filed with OPR. 1)Clarifies that the exemption does not alter, affect, expand, or diminish a public agency's obligation to comply with regulatory requirements imposed pursuant to other laws. Committee Amendments: AB 1500 Page 10 1)On page 2, between lines 4 and 5, insert: (1) "Affordable housing cost" has the same meaning as set forth in Section 50052.5 of the Health and Safety Code. (2) "Affordable rent" has the same meaning as set forth in Section 50053 of the Health and Safety Code. 2)On page 2, in line 5, strike out "(1)" and insert: (3) 3)On page 2, strike out lines 7 to 15, inclusive, in line 16, strike out "(3)" and insert: (4) 4)On page 2, in line 16, strike out "affordable" , strike out lines 17 to 19, inclusive, and insert: AB 1500 Page 11 At least 20 percent of the units affordable to lower income households subject to all of the following: (A) The project developer shall provide sufficient legal commitments to the appropriate local agency to ensure the continued availability and use of the housing units for extremely low income households, very low income households, or lower income households at monthly housing costs with an affordable housing cost or affordable rent for the period required by the applicable financing method. (B) Rental units shall be affordable for at least 55 years. (C) Ownership units shall be subject to resale restrictions or equity sharing requirements for at least 30 years. (5) "Lower income household" has the same meaning as set forth in Section 50079.5 of the Health and Safety Code. (6) "Priority housing project" means an activity or approval necessary for, or incidental to, the development, planning, design site acquisition, subdivision, financing, leasing, construction, operation, or maintenance of an emergency shelter, transitional housing, supportive housing, low-income housing, or associated development, including any accessory roadway, utility, or other improvement to that shelter, housing, building, or associated development. AB 1500 Page 12 5)On page 2, in line 20, strike out"(4)" and insert: (7) 6)On page 2, in line 23, strike out "(5)" and insert: (8) 7)On page 2, in line 25, strike out "homeless complex project." and insert: priority housing project if all the following conditions are met: (1) the project does not result in a net loss in the number of housing units with an affordable housing cost or affordable rent to lower income households within the project area. (2) The lead agency has filed a notice of determination with the Office of Planning and Research consistent with Section 21152.1. (3) The city or county in which the project is located has adopted a housing element that the Department of Housing and Community Development has determined to be in compliance with applicable statutes and regulations at the time the lead agency files the notice of determination with the Office of Planning and Research. (4) The city or county in which the project is located is AB 1500 Page 13 compliant with the housing element portion of its annual report, required pursuant to Section 65400 of the Government Code, at the time the local agency files the notice of determination with the Office of Planning and Research. (c) This section does not alter, affect, expand, or diminish a public agency's obligation to comply with statutory or regulatory requirements imposed pursuant to other laws. Double referred : If AB 1500 passes this committee, the bill will be referred to the Committee on Natural Resources. REGISTERED SUPPORT / OPPOSITION: Support American Planning Association, California Chapter (Support if Amended) California Building Industry Association California Chamber of Commerce Opposition AB 1500 Page 14 Sierra Club California Analysis Prepared by:Rebecca Rabovsky / H. & C.D. / (916) 319-2085