BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1934


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          ASSEMBLY THIRD READING


          AB  
          1934 (Santiago)


          As Amended  April 14, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Housing         |6-0  |Chiu, Steinorth,      |                    |
          |                |     |Burke, Chau, Lopez,   |                    |
          |                |     |Mullin                |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Local           |8-0  |Eggman, Waldron,      |                    |
          |Government      |     |Alejo, Bonilla, Chiu, |                    |
          |                |     |Cooley, Gordon,       |                    |
          |                |     |Linder                |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |15-1 |Gonzalez, Bloom,      |Obernolte           |
          |                |     |Bonilla, Bonta,       |                    |
          |                |     |Calderon, McCarty,    |                    |
          |                |     |Eggman, Gallagher,    |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia, Chau, |                    |
          |                |     |Holden, Quirk,        |                    |
          |                |     |Santiago, Weber, Wood |                    |








                                                                    AB 1934


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          |                |     |                      |                    |
          |                |     |                      |                    |
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          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 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 bonus. 


          2)Provides that the density bonus for the commercial developer  
            means:  exceptions resulting in significant cost reductions  
            over the maximum allowable intensity in the general fund,  
            zoning ordinance or other regulation of the city, county, or  
            city and county including but not limited to floor area ratios  
            and may include modification to the development standards such  
            as high and parking requirements.  


          3)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. 


          4)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.  










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          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, no state fiscal impact.  Local agencies have the  
          authority to levy fees for related costs and thus, any local  
          costs are not reimbursable. 


          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  
          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.










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          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 must be built on the same site as the  
          commercial development.  In addition to the density bonus and  
          concessions and incentives provided for the affordable units,  
          the commercial developer would receive a "density bonus" which  
          means exceptions to existing general plan and zoning regulations  
          that result in significant cost reductions.  


          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.  
          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." 


          Analysis Prepared by:                                             








                                                                    AB 1934


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                          Lisa Engel / H. & C.D. / (916) 319-2085  FN:  
          0002976