BILL ANALYSIS Ó
AB 1934
Page 1
Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 1934
(Santiago) - As Amended April 4, 2016
SUBJECT: Planning and zoning: density bonuses: mixed-use
projects
SUMMARY: Creates a density bonus for commercial developers that
partner with an affordable housing developer to construct a
mixed-used development. Specifically, this bill:
1)Provides that when a commercial developer agrees to partner
with an affordable housing developer to construct a mixed-used
project with housing located on site or located within a
one-mile radius of the proposed development, a local
government must in addition to granting incentives and
concessions under State Density Bonus Law also grant the
commercial developer a density increase of up to 20% variance
of the local governments zoning ordinance or regulation,
including but not limited to, floor area ratios or reduction
of commercial linkage fees.
2)Provides that no reimbursement is required by this act because
a local agency or school district has the authority to levy
service charges, fees, or assessments sufficient to pay the
program or level of service.
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3)Makes findings and declarations that the development of
affordable housing is a matter of statewide concern and it is
not a municipal affair, and therefore, this bill applies to
all cities including charter cities.
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 local government.
2)Requires all cities and counties to adopt an ordinance that
specifies how they will implement state density bonus law.
3)Requires local governments to grant a density bonus when an
applicant for a housing development of five or more units
seeks and agrees to construct a project that will contain at
least any one of the following:
a) 10% of the total units for lower-income households;
b) 5% of the total units for very-low income
households;
c) A senior citizen housing development or mobilehome
park; and,
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d) 10% of the units in a common-interest development
(CID) for moderate-income households.
1)Requires that the applicant agree to continued affordability
of all low- and very low-income units that qualified the
applicant for the density bonus for at least 30 years.
2)Specifies that concessions or incentives may include the
following:
a) A reduction in site development standards or a
modification of zoning code requirements or architectural
design requirements that exceed the minimum building
standards.
b) 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 are compatible with the project and the surrounding
area.
c) Other regulatory incentives or concessions proposed by
the developer or the local government that result in
identifiable, financially sufficient, and actual cost
reductions.
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1)Requires local governments to provide applicants with the
following number of incentives or concessions:
a) One incentive or concession for projects that include at
least 10% of the total units for lower-income households,
at least 5% for very low-income households, or at least 10%
for persons and families of moderate-income in a common
interest development.
b) Two incentives or concessions for projects that include
at least 20% of the total units for lower-income
households, at least 10% for very low-income households, or
at least 20% for persons and families of moderate-income in
a common interest development.
c) Three incentives or concessions for projects that
include at least 30% of the total units for lower-income
households, at least 15% for very low-income households, or
at least 30% for persons and families of moderate-income in
a common interest development.
FISCAL EFFECT: Unknown.
COMMENTS:
In 1979 the Legislature enacted density bonus law to help
address the affordable housing shortage and to encourage
development of more low- and moderate-income housing units.
Density bonus is a tool to encourage the production of
affordable housing that is used by both market rate and
affordable housing developers. In return for inclusion of
affordable units in a development, developers are given an
increase in density over a city's zoned density and concessions
and incentives. The increase in density and concessions and
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incentives are to offset the cost the affordable units which
will be offered at a lower rent, as low as 30% of area median
income. Developers that seek a density bonus must agree to
restrict very low- and low-income rental units to affordable
levels for 55 years.
State law specifies concessions and incentives that a local
government may include in its density bonus ordinance including
a reduction in site development standards, or a modification of
zoning code requirements, or architectural design requirements
that exceed the minimum building standards, and 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 are compatible with the
project and the surrounding area. A developer or city can also
propose other regulatory incentives or concessions that result
in identifiable, financially sufficient, and actual cost
reductions.
This bill seeks to encourage greater production of affordable
units by creating a "density bonus" for commercial developers
who partner with an affordable housing developer to construct
affordable units. Affordable housing developers would receive a
density bonus commensurate with the number of affordable units
included in the development plus concessions and incentives. The
affordable units could be built on the same site as the
commercial development or within one mile. In addition to the
density bonus and concessions and incentives provided for the
affordable units, the commercial developer would receive a
"density bonus" equal to an increase of up to 20% of the
variance in the floor area ratios and commercial linkage fees.
Purpose of this bill : According to the author, "Local
governments can be wary of high density residential development
because of the corresponding increase in demand for public
services and infrastructure. Conversely, in an era of tight
budgets, local governments have more incentive to approve
commercial developments which will increase revenues (i.e.
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hotels with transient occupancy tax or retail establishments
which generate sales tax). AB 1934 represents a solution to
all three of these dilemmas: a piece of California's affordable
housing crisis solution which brings both residential and
commercial developers to the table. AB 1934 creates a new
combined bonus that shall be provided by local governments to
affordable housing developers and commercial developers who
partner together to construct a mixed-use project in which
affordable housing will either be on-site or located within a
1-mile radius of the sister development. The variances can
include, but are not limited to, floor area ratios and
commercial linkage fees. AB 1934 seeks to marry two needs: a)
the state's need for affordable housing; and b) local
government's desire for increased revenues, by encouraging
non-traditional housing developers to enter the market and think
outside the box in their developments."
Arguments in support: The California Apartment Association
states in support, "California is struggling to meet the needs
of its citizens when it comes to housing production, especially
housing that is affordable near job centers and public
transportation. We appreciate your proposed solution that meets
the needs of local governments for economic development along
with the construction of affordable housing for individuals and
families who work in our communities.
Arguments in opposition: According to the League of California
Cities, they have a number of concerns with the bill: "First
density bonus law applies to housing developments of five or
more units. It's based upon the premise that density bonus
increases (and other concessions and incentives) allow a
developer to recover the cost of constructing housing units that
are affordable to certain income categories. The tradeoff is:
Developer gives city affordable units; city gives developer
density bonus and other concessions and incentives that reduce
developer's costs. This bill says that a commercial developer
which might have no connection to the housing developer gets a
20% variance from regulatory requirements (including floor area
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ratios) and fees. The bill simply requires the commercial
developer to partner with the housing developer. There is no
definition of "partners." There is also no definition of
"commercial development". There is no fair trade off in this
bill. The developer of the commercial development is giving the
city nothing; yet the city gives the commercial developer a 20%
variance in the regulatory requirements and fees.
Staff comments:
It's unclear to staff what are the appropriate types of
concessions and incentives that a commercial developer should
receive in return for partnering with an affordable housing
developer. The bill would give a commercial developer a 20%
variance of the local governments zoning ordinance or
regulation, including but not limited to, floor area ratios or
commercial linkage fees. In addition, commercial linkage fees
are often used to fund production of a affordable housing.
Modifying those fees could reduce funding overall for affordable
housing. The committee may wish to consider modifying the
language to more closely align with the state density bonus law
by amending the language as follows:
This bill would also allow the affordable housing to be built
within one-mile of the commercial development. The committee may
wish to consider if that policy supports the goals of the bill
to encourage mixed use development that combines commercial
space and affordable housing development or if it should be
deleted.
Committee amendments :
(a) When an applicant for approval for commercial development
agrees to partner with an affordable housing developer to
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construct a mixed-used project for which the housing will be
either located onsite at the proposed commercial development or
located within a one-mile radius of the proposed commercial
development , the city, county, or city and county shall, in
addition to any density bonus and incentives or concessions
granted to the affordable housing developer as prescribed in
Section 65915 grant to the commercial developer a density bonus
as prescribed in subdivision (b).
(b) The density bonus granted to the commercial developer shall
mean exceptions resulting in significant cost reductions over
the maximum allowable intensity in the general plan, zoning
ordinance or other regulation, a density increase of up to 20
percent variance of the city, county, or city and county 's
zoning ordinance or regulation, including, but not limited to,
floor area ratios and may include modification to development
standards such as heights and parking requirements. or
commercial linkage fees.
Double referred: If AB 1934 passes this committee, the bill will
be referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION:
Support
California Apartment Association
Opposition
AB 1934
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American Planning Association California Chapter
League of California Cities
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085,
Lisa Engel / H. & C.D. / (961) 319-2085