BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1934|
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THIRD READING
Bill No: AB 1934
Author: Santiago (D)
Amended: 8/1/16 in Senate
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 10-0, 6/28/16
AYES: Beall, Cannella, Allen, Gaines, Galgiani, Leyva,
McGuire, Mendoza, Roth, Wieckowski
NO VOTE RECORDED: Bates
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 68-9, 6/2/16 - See last page for vote
SUBJECT: Planning and zoning: development bonuses:
mixed-use projects
SOURCE: Author
DIGEST: This bill 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.
ANALYSIS:
Existing law:
1)Requires all cities and counties to adopt an ordinance that
specifies how they will implement state density bonus law.
Defines "density bonus" as a density increase over the
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Page 2
otherwise maximum allowable residential density as of the date
of application by the applicant to the local government.
2)Requires cities and counties 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 of a housing for very low-income
households
c) A senior citizen housing development or mobile home park
d) 10% of the units in a common-interest development (CID)
for moderate-income households
3)Requires that the applicant agree to, and the city or county
ensure, continued affordability of all low- and very
low-income units that qualified the applicant for the density
bonus for at least 55 years.
4)Requires cities and counties to provide an applicant for
density bonus concessions and incentives based on the number
of below market-rate units included in the project as follows:
a) One incentive or concession, if the project includes at
least 10% of the total units for low-income households, 5%
for very low-income households, or 10% for moderate-income
households in a CID
b) Two incentives or concessions, if the project includes
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Page 3
at least 20% of the total units for low-income households,
10% for very low-income households, or 20% for
moderate-income households in a CID
c) Three incentives or concessions, if the project includes
at least 30% of the total units for low-income households,
15% for very low-income households, or 30% for
moderate-income households in a CID
5)Specifies that concessions or incentives may include the
following:
a) A reduction in site development standards
b) A modification of zoning code requirements or
architectural design requirements that exceed the minimum
building standards, including a reduction in setbacks,
square footage requirements, or parking requirements, that
results in identifiable, financially sufficient, and actual
cost reductions
c) 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 if such nonresidential uses are compatible
with the project
d) Other regulatory incentives or concessions proposed by
the developer or the city or county that result in
identifiable cost reductions
This bill:
1) Creates a development bonus for commercial developers that
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Page 4
agree to partner with an affordable housing developer to
construct a joint project or two separate projects
encompassing affordable housing, in addition to granting
incentives and concessions under State Density Bonus Law.
2) 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
c) Is located within one-half mile of a major transit
stop
3) Provides that the development bonus granted to the
commercial developer shall mean 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
4) Provides that the agreement for partnered housing and
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Page 5
commercial developments shall be approved by the affordable
housing developer, the commercial developer, and the local
government.
5) Provides that for purposes of this bill, 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 shall be used
towards the costs of affordable housing construction on a
pending project.
6) States that State Density Bonus Law applies.
7) Provides that nothing shall preclude any additional
allowances or incentives offered to developers by local
governments pursuant to law or regulation.
8) Requires, in order to qualify for a development bonus under
this bill, a commercial developer to partner with a housing
developer that provides at least 30% of the total units for
low-income households or at least 15% of the total units for
very low-income households.
9) Provides that a development bonus shall not include a
reduction of fees for affordable housing or authorize
noncompliance with other affordable housing requirements
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within a local commercial linkage and impact fee ordinance.
10)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 the commercial development
under construction until the developer has completed
construction of the affordable units.
11)Defines "commence with construction" as either of the
following:
a) Commence with the construction of affordable units
b) Issuance of building permits for the construction of
the affordable units
Comments
1)Purpose . According to the author, California's housing costs
have far outpaced those of other states in the last
half-century. As of 2015, the typical California home costs
$440,000, or two-and-a-half times the national average; and
the average monthly rent in California is $1,240, or about 50%
higher than in other states. It is possible to offset the
effects of high land costs through more dense development.
For this reason, California has enacted an affordable housing
density bonus law. Local governments, however, can be wary of
high-density residential development because of the
corresponding increase in demand for public services and
infrastructure. Conversely, local governments have more
incentive to approve commercial developments, which increase
revenues (i.e., through transient occupancy taxes or retail
establishments that generate sales taxes).
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This bill seeks to marry two needs - the need for more
affordable housing and local government's desire for increased
revenue - by encouraging non-traditional housing developers to
enter the market. This bill creates a new development bonus
that shall be provided by local governments to affordable
housing developers and commercial developers who partner
together to construct affordable housing. The variances
include, but are not limited to: an increase in floor-area
rations; a specific use of a limited use/limited application
elevator; a decrease in the required minimum amount of parking
spaces; an increase in building height; a decrease in set-back
requirements; or other incentives as agreed to by the local
government and the commercial developer.
2)Density bonus law. Given California's high land and
construction costs for housing, it is extremely difficult for
the private market to provide housing units that are
affordable to low- and even moderate-income households.
Public subsidy is often required to fill the financial gap on
affordable units. Density bonus law allows public entities to
reduce or even eliminate subsidies for a particular project by
allowing a developer to include more total units in a project
than would otherwise be allowed by the local zoning in
exchange for affordable units. Allowing more total units
permits the developer to spread the cost of the affordable
units more broadly over the market-rate units. The idea of
density bonus law is to cover at least some of the financing
gap of affordable housing with regulatory incentives, rather
than additional subsidy.
Under existing law, if a developer proposes to construct a
housing development with a specified percentage of affordable
units, the city or county must provide all of the following
benefits: a density bonus, incentives, or concessions
(hereafter referred to as incentives); waiver of any
development standards that prevent the developer from
utilizing the density bonus or incentives; and reduced parking
standards.
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3)Development bonuses and affordable housing. This bill seeks
to encourage greater production of affordable housing by
creating a development bonus for commercial developers who
partner with affordable-housing developers to construct
affordable-housing units. The affordable-housing developers
would receive a density bonus that corresponds with the number
of affordable units included in the development, as well as
receive concessions and incentives. The commercial developer
would receive a "development bonus," which means incentives
agreed upon by the commercial developer and the local
government, such as variances in zoning regulations that
result in significant cost reductions.
The housing contemplated in this bill could be mixed-use
developments or workforce housing on the same property as the
commercial development, or the housing could be "off-site."
The off-site housing must be within the boundaries of the
local government, in close proximity to schools and employment
centers, and within a half-mile of public transit. The
housing could be built by either the commercial developer or
the affordable-housing developer.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/8/16)
California Apartment Association
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Council for Affordable Housing
California Housing Consortium
San Francisco Council of Community Housing Organizations
San Gabriel Valley Economic Partnership
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OPPOSITION: (Verified8/8/16)
City of Camarillo
City of Sacramento
City of San Dimas
City of San Marcos
League of California Cities
ASSEMBLY FLOOR: 68-9, 6/2/16
AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla,
Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez,
Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Roger
Hernández, Holden, Jones, Jones-Sawyer, Kim, Lackey, Levine,
Linder, Low, Maienschein, Mayes, McCarty, Medina, Mullin,
Nazarian, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas,
Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,
Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NOES: Travis Allen, Baker, Brough, Hadley, Harper, Irwin,
Lopez, Mathis, Obernolte
NO VOTE RECORDED: Bigelow, Beth Gaines, Melendez
Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
8/10/16 16:00:44
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