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: 8/18/16 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.
Senate Floor Amendments of 8/18/16 make clarifying changes,
require a city or county to report to the Legislature if it
grants a development bonus, and add a five-year sunset.
ANALYSIS:
Existing law:
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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
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 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:
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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
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
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Page 4
identifiable cost reductions
This bill:
1) Creates a development bonus for commercial developers that
have entered into an agreement for partnered housing to
contribute affordable housing through 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 housing shall be constructed on the site of the
commercial development or on a site that is 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) 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% increase 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
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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
commercial developments shall be approved by the
affordable-housing developer, the commercial developer, and
the city, county, or city and county.
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 donate 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 a cash payment to
the affordable housing developer that shall be used
towards the costs of constructing the affordable housing
construction
6) States that State Density Bonus Law applies.
7) Provides that nothing shall preclude any additional
allowances or incentives offered to affordable housing
developers by local governments pursuant to law or
regulation.
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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 the requirements within an ordinance that
requires the payment of a fee by a commercial developer for
the promotion or provision of affordable housing.
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)Requires a city or county to submit to the Department of
Housing and Community Development, as part of an existing
required annual report, information describing a commercial
development bonus, including the terms of the agreements
between the commercial developer and the affordable housing
developer, the developers and the local jurisdiction, and the
number of affordable units constructed as part of the
agreements.
12)Provides that this bill shall only remain in effect until
January 1, 2022.
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
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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).
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
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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.
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
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SUPPORT: (Verified8/18/16)
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
OPPOSITION: (Verified8/19/16)
City of Camarillo
City of Sacramento
City of San Dimas
City of San Marcos
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
8/19/16 18:49:14
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