BILL ANALYSIS Ó
AB 2501
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2501
(Bloom and Low) - As Amended April 14, 2016
SUBJECT: Housing: density bonuses.
SUMMARY: Makes a number of changes to density bonus law.
Specifically, this bill:
1)Clarifies that when an applicant seeks a density bonus for a
housing development within, or for the donation of land for
housing within the jurisdiction of a city or county, that
local government shall provide the applicant with waiver and
reduction of development standards for the production of
housing units and child care facilities, in addition to
incentives or concessions, as currently provided in density
bonus law.
2)Prohibits a local government from conditioning the submission,
review, or approval of an application for a density bonus on
the preparation of an additional report or study that is not
otherwise described in density bonus law.
3)Requires, in order to provide for the expeditious processing
of a density bonus application, the local government to do all
of the following:
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a) Adopt procedures and timelines for processing a density
bonus application;
b) Provide a list of all documents and information required
to be submitted with the density bonus application in order
for the density bonus application to be deemed complete,
consistent with density bonus law; and,
c) Notify the applicant for a density bonus whether the
application is complete in a manner that is consistent with
the Permit Streamlining Act (Act).
4)Modifies the circumstance under which a local government can
refuse to grant a concession or incentive to a developer to
when a concession or incentive "does not reduce the cost of
the development" rather than when it "is not required in
order" to provide for the affordable housing costs.
5)Provides that a local government must bear the burden of proof
for the denial of a requested concession or incentive.
6)Provides that denial of a requested concession or incentive
will be deemed to have exhausted the applicant's existing
administrative remedies.
7)Clarifies that "density bonus" means the maximum allowable
gross residential density.
8)Clarifies that a developer that makes an application for a
density bonus may elect to accept no increase in the density
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of a project.
9)Clarifies that the definition of "density bonus" includes any
incentive or concessions, or wavier or reduction of
development standard, provided to the applicant for the
production
of housing units and child care facilities.
10)Adds "mixed use development" to the definition of "housing
development." Mixed use development means developments
consisting of residential and nonresidential uses in which the
nonresidential uses are less than 50% of the total square
footage of the development and are limited to neighborhood
commercial use and to the first floor of the buildings that
are two or more stories. Neighborhood commercial means small
scale-general or specialty stores that furnish goods and
services primarily to residents of the neighborhood.
11)Provides that the granting of a concession or incentive
cannot, in and of its self, require a special study.
12)Deletes the requirement that incentives or concessions
proposed by a developer or local government result in
"identifiable, financially sufficient" and actual cost
reductions, and instead, require the "identifiable" and actual
cost reductions.
13)Clarifies that each component of any density bonus
calculation, including base density and bonus density,
resulting in fractional units will be separately rounded up to
the next whole number. Finds and declares that this provision
is declaratory of existing law.
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14)Provides that the density bonus law shall be interpreted
liberally in favor of producing the maximum number of total
housing units.
15)Provides that no reimbursement is necessary because a local
agency has the authority to levy service charges, fees, or
assessment sufficient to pay for the program or level of
service mandated by this act.
EXISTING LAW:
1)Requires all cities and counties to adopt an ordinance that
specifies how they will implement state density bonus law.
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 mobilehome park;
and,
d) 10% of the units in a common-interest development (CID)
for moderate-income households.
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1)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 30 years.
2)Requires that the applicant agree to, and the city or county
ensure, that the initial occupant
of the moderate-income units that are directly related to the
receipt of the density bonus in a Common Interest Development
(CID) are moderate income and that the units are offered at a
cost affordable to moderate-income households.
3)Requires the local government to enforce an equity-sharing
agreement upon the resale of any moderate-income units that
qualified a housing development for a density bonus.
4)Allows, upon sale of the unit, the seller to keep the value of
any improvements, the down payment, and the seller's
proportionate share of appreciation.
5)Provides that the local government shall recapture its
proportionate share of appreciation, which shall be used
within three years for promotion of affordable homeownership.
6)Requires the city or county to allow an increase in density of
20% over the otherwise maximum allowable residential density
under the applicable zoning ordinance and land use element of
the general plan for low-income, very low-income, or senior
housing, and by 5% for moderate-income housing in a CID.
7)Requires that the density bonus for low-, very low-, and
moderate-income units increase incrementally according to the
following formula:
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a) For each 1% increase above 10% for low-income units, the
density bonus shall increase by 1.5% to a maximum of 35%;
b) For each 1% increase above 5% for very low-income units,
the density bonus shall increase by 2.5% to a maximum of
35%; and,
c) For each 1% increase above 10% for moderate-income
units, the density bonus shall increase by 1% to a maximum
of 35%.
8)Requires cities and counties to provide an applicant for a
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
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; and,
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.
9)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,
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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; or,
d) Other regulatory incentives or concessions proposed by
the developer or the city or county that result in
identifiable cost reductions.
10)Requires the local government to grant the incentive or
concession requested by the developer, unless the city or
county makes written findings that:
a) The concession or incentive is not needed to provide the
affordable housing; or,
b) That the concession or incentive would have a specific
adverse impact on health and safety, the environment, or an
historical resource.
11)Prohibits a city or county from applying any development
standard that will have the effect of precluding the
construction of housing that qualifies for a density bonus at
the densities or with the concessions or incentives required
by density bonus law.
12)Allows a developer to request a waiver or reduction of
development standards.
13)Specifies that the developer must show that the requested
waiver or modification of development standards is necessary
to make the housing units economically feasible.
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14)Defines "development standard" to include site and
construction conditions that apply to
a residential development, pursuant to any ordinance, general
plan element, specific plan, charter amendment, or other local
condition, law, policy, resolution, or regulation.
15)Requires a city or county to grant either an additional
density bonus or an additional concession or incentive, when
the applicant proposes to include a child care facility in or
adjacent to the housing development.
16)Provides a 15% density bonus to the developer of any
market-rate housing project who donates land to a city or
county that could accommodate housing for very low-income
households equal to at least 10% of the number of units in the
market-rate development.
For each 1% increase above the 10%, the density bonus shall
increase by 1% up to a maximum combined density increase of
35%.
17)Provides that to be eligible for the land donation density
bonus, all of the following conditions must be met:
a) The applicant must donate and transfer the land no
later than the approval of the final subdivision map,
parcel map or development application;
b) The land being donated is suitable to accommodate units
affordable to very-low income households in an amount not
less than 10% of the number of residential units of the
proposed development;
c) The transferred land is at least one acre or can
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accommodate 40 units, has the appropriate general plan
designation, is appropriately zoned for affordable housing,
can be served by infrastructure, and the land has all the
necessary permits and approvals;
d) The land is subject to deed restrictions ensuring
continued affordability;
e) The land is donated to the local agency or to a housing
developer approved by the local agency; and,
f) The transferred land is either within the boundary of
or, if the local agency agrees, within 1/4 mile of the
proposed development.
18)Provides that, upon the developer's request, the local
government may not require parking standards greater than the
following (the developer may, however, request additional
parking incentives or concessions):
a) Zero to one bedrooms: one onsite parking space;
b) Two to three bedrooms: two onsite parking spaces; and,
c) Four or more bedrooms: two and one-half parking spaces.
19)Clarifies that local governments may still grant density
bonuses greater than what is provided under state law, or
lower for developments that do not meet the requirements of
state law.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
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1)Bill Summary. This bill makes a number of changes to density
bonus law. The bill clarifies that when an applicant seeks a
density bonus for a housing development within, or for the
donation of land for housing within the jurisdiction of a city
or county, that local government shall provide the applicant
with waiver and reduction of development standards for the
production of housing units and child care facilities, in
addition to incentives or concessions, as provided currently
in density bonus law. The bill also prohibits a local
government from conditioning the submission, review, or
approval of an application for a density bonus on the
preparation of an additional report or study that is not
otherwise described in density bonus law. The bill requires,
in order to provide for the expeditious processing of a
density bonus application, the local government to do all of
the following: a) Adopt procedures and timelines for
processing a density bonus application; b) Provide a list of
all documents and information required to be submitted with
the density bonus application in order for the density bonus
application to be deemed complete, consistent with density
bonus law; and,
c) Notify the applicant for a density bonus whether the
application is complete in a manner that is consistent with
the Permit Streamlining Act (Act).
Additionally, the bill modifies the circumstance under which a
local government can refuse to grant a concession or incentive
to a developer to when a concession or incentive "does not
reduce the cost of the development" rather than when it "is
not required in order" to provide for the affordable housing
costs, and provides that a local government must bear the
burden of proof for the denial of a requested concession or
incentive.
This bill is sponsored by the Western Center on Law and
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Poverty and the California Rural Legal Assistance Foundation.
2)Author's Statement. According to the author, "California
remains one of the most expensive housing markets in the
United States. Through the loss of redevelopment agencies and
reductions in state and federal housing funding, fewer
resources are available to address this need. One tool for
increasing affordable housing production is through regulatory
incentives that reduce barriers to the production of
affordable housing and encourage market-based solutions.
State Density Bonus law (Government Code Sections 65915 -
65918) provides concessions and incentives to housing
developers who agree to make a percentage of the units in
their development affordable to low- and moderate-income
households. However, the law has a number of ambiguous
provisions that discourage developers from utilizing it, or
are used by local governments to prevent developers from
accessing the law.
"Developers and local governments need certainty in order for
Density Bonus law to be an effective incentive to produce
affordable housing. Right now that certainty is lacking.
AB 2501 would strengthen state Density Bonus law to help
encourage market rate developers to include affordable units
within residential developments, and reduce costs for
affordable housing developers. AB 2501 would address a number
of these ambiguous provisions and strengthen the incentives."
3)Background. Density bonus law was originally enacted in 1979,
but has been changed numerous times since. The Legislature
enacted the density bonus law to help address the affordable
housing shortage and to encourage development of more low- and
moderate- income housing units. Nearly forty years later, the
Legislature faces the same challenges. Density bonus is a tool
to encourage the production of affordable housing by market
rate developers, although it is used by developers building
100% affordable developments as well. In return for inclusion
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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 intended to financially support
the inclusion
of the affordable units. Because of numerous amendments over
the years, state density bonus law is confusing and subject to
interpretation by both developers and cities as to its
meaning.
All local governments are required to adopt an ordinance that
provides concessions and incentives to developers that seek a
density bonus on top of the cities zoned density in exchange
for including extremely low-, very low-, low-, and
moderate-income housing. Failure to adopt an ordinance does
not relieve a local government from complying with state
density bonus law. Local governments must 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 mobilehome park;
and,
d) 10% of the units in a common-interest development (CID)
for moderate-income households.
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A developer can submit a request to a local government as part
of their density bonus application for incentives and
concessions. Developers can receive the following number
of incentives or concessions:
a) One incentive or concession for projects that include at
least 10% of the total units for lower-income households,
at least 5% for very low-income households, or at least 10%
for moderate-income households in a common interest
development
b) Two incentives or concessions for projects with at least
20% lower-income households, at least 10% for very
low-income households, or at least 20% for moderate-income
households in common interest developments.
c) Three incentives or concessions for projects with at
least 30% lower-income households, at least 15% for very
low-income households, or at least 30% for moderate-income
households in common interest developments.
1)Arguments in Support. According to the sponsors, Western
Center on Law and Poverty and the California Rural Legal
Assistance Foundation, "AB 2501 is one piece of a
multi-pronged effort by legislators, housing advocates, and
other organizations to address California's unfortunate
dominance of the list of the country's least-affordable
housing markets. By reducing regulatory barriers to housing
development, this bill would stretch any increase in state
housing funding further and would induce market-rate
developers to build below-market units without any public
funding."
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2)Arguments in Opposition. Opponents argue that this bill
contains provisions that would limit the ability of a city to
interpret its own development standards, diminish the role of
planning commissions and impose unrealistic timeframes.
3)Double-Referral. This bill was heard by the Housing and
Community Development Committee on April 13, 2016, where it
passed with a 5-1 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
California Rural Legal Assistance Foundation [SPONSOR]
Western Center on Law and Poverty [SPONSOR]
California Apartment Association
California Association of Realtors
California Housing Consortium
Opposition
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California State Association of Counties
Cities of Fontana and Torrance (based on 4/5/2016 version)
League of California Cities (based on 4/5/2016 version)
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958