BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1934


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          ASSEMBLY THIRD READING


          AB  
          1934 (Santiago)


          As Amended  June 1, 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 |                     |








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          |                |     |                      |                     |
          |                |     |                      |                     |
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          SUMMARY:  Creates a development bonus for commercial developers  
          that partner with an affordable housing developer to construct a  
          joint project or two separate projects encompassing affordable  
          housing.  Specifically, this bill:  


          1)Provides that when a commercial developer agrees to partner  
            with an affordable housing developer to construct a joint  
            project or two separate projects encompassing affordable  
            housing, a local government must in addition to granting  
            incentives and concessions under State Density Bonus Law also  
            grant the commercial developer a development bonus. 


          2)Provides that the development bonus for the commercial  
            developer means:  incentives, mutually agreed upon by the  
            developer and the jurisdiction, that may include, but are not  
            limited to, any of the following:


             a)   Up to a 20% variance in maximum allowable intensity in  
               the General Plan, zoning ordinance, or other regulation.


             b)   Up to a 20% variance in maximum allowable floor area  
               ratio.


             c)   Up to a 20% variance in minimum parking requirements.


             d)   A specific use of a limited-use/limited-application  
               elevator for upper floor accessibility.









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          3)States that "offsite housing" shall be all of the following:


             a)   Within the boundaries of the local government;


             b)   In close proximity to public amenities including schools  
               and employment centers; and


             c)   In close proximity to both pedestrian amenities and  
               transit corridors.


          4)Provides that the agreement for partnered housing and  
            commercial developments shall be approved by the affordable  
            housing developer, the commercial developer, and the local  
            government.


          5)Provides that affordable housing may be contributed by the  
            commercial developer in one of the following manners:


             a)   The commercial developer may directly build the units.


             b)   The commercial developer may dedicate a portion of the  
               site or property elsewhere to the affordable housing  
               developer for use as a site for affordable housing.


             c)   The commercial developer may make an in-lieu payment to  
               the affordable housing developer that must be used towards  
               the cost of affordable housing construction on a pending  
               project.










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          6)States that the affordable housing replacement provisions in  
            State Density Bonus Law apply.


          7)Provides that nothing shall preclude any additional allowances  
            or incentives offered to developers by local governments  
            pursuant to law or regulation.


          8)Provides that, if the developer of affordable units does not  
            commence construction of the units in accordance with the  
            agreed upon timeline, the local government may withhold  
            certificates of occupancy for any market rate units under  
            construction until the developer has completed construction of  
            the affordable units. 


          9)Defines "commence with construction" as either of the  
            following:


             a)   Commence or complete the construction of affordable  
               units; or


             b)   Issuance of building permits for the construction of the  
               affordable units.


          10)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. 


          11)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 "development 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.  In addition to the density bonus and  
          concessions and incentives provided for the affordable units,  
          the commercial developer would receive a "development bonus"  
          which means incentives agreed upon between the commercial  
          developer and the local government, such as variances in zoning  
          regulations that result in significant cost reductions.  


          The types of projects promoted by this bill could result in  
          mixed-use developments, or could result in the commercial and  
          residential developments on separate sites.  A commercial  
          developer may choose to build the units itself, or may opt to  
          have an affordable housing developer build the units either  
          onsite or offsite.  A commercial developer also has the option  
          of making an in-lieu payment to an affordable housing developer  
          to be used towards the costs of construction on a pending  
          affordable housing project.  If the affordable housing developer  
          does not commence with construction at the agreed upon time, the  
          local government may withhold certificates of occupancy for any  
          market rate units under construction until the affordable units  
          are completed.


          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  








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          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 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:                                             
                          Rebecca Rabovsky / H. & C.D. / (916) 319-2085     
                                                                  FN:  
          0003385