BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1934


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1934 (Santiago)


          As Amended  August 18, 2016


          Majority vote


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          Original Committee Reference:  H. & C.D.




          SUMMARY:  Creates a development bonus when a commercial  
          developer enters into an agreement for partnered housing to  
          contribute affordable housing through a joint project or two  
          separate projects encompassing affordable housing. Specifically,  
          this bill:  


          1)Provides that when a commercial developer has entered into an  
            agreement for partnered housing to contribute affordable  
            housing through a joint project or two separate projects  
            encompassing affordable housing, the local government must  
            grant the commercial developer a development bonus.
          2)Provides that the agreement for partnered housing shall be  
            between the commercial developer and the housing developer,  
            shall identify how the commercial developer will contribute  
            affordable housing, and shall be approved by the city, county,  








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            or city and county.


          3)States 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; and


             c)   Located within one-half mile of a major transit stop, as  
               defined in Section 21155(b) of the Public Resources Code.


          4)Defines "partner" as the formation of a partnership, limited  
            liability company, corporation, or other entity recognized by  
            the state in which the commercial development applicant and  
            the affordable housing developer are each partners, members,  
            shareholders or other participants, or a contract or agreement  
            between a commercial development applicant and affordable  
            housing developer for the development of both the commercial  
            and the affordable housing properties.


          5)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% increase in maximum allowable intensity in  
               the General Plan, zoning ordinance, or other regulation.


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









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             c)   Up to a 20% increase in maximum height requirements.


             d)   Up to a 20% increase in minimum parking requirements.


             e)   Use of a limited-use/limited-application elevator for  
               upper floor accessibility.


             f)   An exception to a zoning ordinance or other land use  
               regulation.


          6)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 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 must be used towards the  
               cost of constructing the affordable housing project.


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


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


          9)Provides that, if the developer of affordable units does not  








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            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. 


          10)Requires, in order to qualify for a development bonus, 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.


          11) Provides that nothing in this section shall preclude an  
            affordable housing developer from seeking a density bonus,  
            concessions or incentives, waivers or reductions of  
            development standards, or parking ratios under existing  
            density bonus law.


          12)Provides that a development bonus shall not include a  
            reduction or waiver 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.


          13)Provides that a city or county shall submit to the Department  
            of Housing and Community Development, as part of the annual  
            report, information describing an approved commercial  
            development bonus, including the terms of the agreements  
            between the commercial developer and the affordable housing  
            developer, and the developers and the local jurisdiction, and  
            the number of affordable units constructed as part of the  
            agreements.


          14)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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          15)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.  


          16)Provides a sunset date of January 1, 2022.


          The Senate amendments:


          1)Add a sunset date of January 1, 2022.


          2)Provide that a city or county shall submit to the Department  
            of Housing and Community Development, as part of the annual  
            report, information describing an approved commercial  
            development bonus, including the terms of the agreements  
            between the commercial developer and the affordable housing  
            developer, and the developers and the local jurisdiction, and  
            the number of affordable units constructed as part of the  
            agreements.


          3)Delete the requirement that affordable housing must be in  
            close proximity to both pedestrian amenities and transit  
            corridors, and instead requires housing to be located within  
            one-half mile of a major transit stop, as defined in Public  
            Resources Code Section 21155(b).


          4)Define "partner" as the formation of a partnership, limited  
            liability company, corporation, or other entity recognized by  
            the state in which the commercial development applicant and  
            the affordable housing developer are each partners, members,  
            shareholders or other participants, or a contract or agreement  
            between a commercial development applicant and affordable  
            housing developer for the development of both the commercial  
            and the affordable housing properties.









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          5)Provide 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,  
            instead of the market rate units, until the developer has  
            completed construction of the affordable units. 


          6)Delete the definition of "commence with construction."


          7)Require, in order to qualify for a development bonus, 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.


          8)Provide that nothing in this section shall preclude an  
            affordable housing developer from seeking a density bonus,  
            concessions or incentives, waivers or reductions of  
            development standards, or parking ratios under existing  
            density bonus law.


          9)Specify that a development bonus for a commercial developer  
            may include an exception to a zoning ordinance or other land  
            use regulation.


          10)Make numerous technical, clarifying changes.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          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  








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          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.


          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 changes 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  








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          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 a cash payment to an affordable housing developer to  
          be used towards the cost of constructing the 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 the commercial  
          development under construction until the affordable units are  
          completed.


          Senate amendments make numerous technical and clarifying  
          changes, add a reporting requirement, and add a sunset date of  
          January 1, 2022.


          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 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:  
          0004733











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