BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1500


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          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;  








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                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  








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                 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)








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          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.  










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           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  








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          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.











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          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."










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           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:








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           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:










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           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:









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           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.


             










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          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  








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          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








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          Sierra Club California




          Analysis Prepared by:Rebecca Rabovsky / H. & C.D. / (916)  
          319-2085