BILL ANALYSIS Ó
AB 2501
Page 1
ASSEMBLY THIRD READING
AB
2501 (Bloom and Low)
As Amended April 14, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Housing |5-1 |Chiu, Steinorth, |Beth Gaines |
| | |Burke, Chau, Lopez | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |7-0 |Eggman, Alejo, | |
|Government | |Bonilla, Chiu, | |
| | |Cooley, Gordon, | |
| | |Linder | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-2 |Gonzalez, Bloom, |Gallagher, |
| | |Bonilla, Bonta, |Obernolte |
| | |Calderon, McCarty, | |
| | |Eggman, Eduardo | |
| | |Garcia, Chau, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 2501
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SUMMARY: Makes changes to the 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:
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
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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
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
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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.
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.
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.
AB 2501
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COMMENTS:
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 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:
1)Ten percent of the total units for lower income households;
2)Five percent of the total units of a housing for very low
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income households;
3)A senior citizen housing development or mobilehome park; and,
4)Ten percent of the units in a common-interest development
(CID) for moderate-income households.
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:
1)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.
2)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.
3)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.
Timeline for reviewing density bonus application: Existing law
does not set a timeline by which a local government must process
an application for a density bonus. This bill would require a
local government to list in its ordinance the documents and
information it requires to process an application. Within 30
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days of receiving the application, a local government would be
required to notify an applicant if the application is complete
or provide a list of items that are required to complete it.
Also, a local government must provide a process for making a
decision on a density bonus application within 60 days from
deeming the application complete. If a local government does
not take any action within 60 days of determining that the
application is complete then it is deemed approved. Adding a
timeline to statute will provide greater certainty to developers
and help inform their decisions regarding a development.
Without knowing the average time it takes a local government to
process a density bonus application it's unclear if these are
the appropriate timelines.
Electing to accept no density increase: State law allows a
developer a percentage increase in density in return for
inclusion of a corresponding amount of very- low, low, moderate
income units. The maximum amount of density increase a
developer can seek is 35%. Existing law allows a developer to
choose to accept less of a density increase than he or she is
entitled under the statute. The statute does not state
explicitly that a developer can seek an amount equal to zero
above the zoned density however some have interpreted the law to
allow this. This bill would explicitly state that a developer
can elect to accept no increase in density.
Determining the value of concessions and incentives: Developers
are allowed to submit a proposal for specific incentives and
concession as part of the application for a density bonus.
Local governments are required to grant the concessions or
incentives a developer requests unless they make written
findings based on substantial evidence that the concession or
incentive are not required in order to provide the affordable
housing, would have specific adverse health and safety impacts,
or have an adverse impact on a property registered historic
property that cannot be mitigated. When seeking a reduction in
a site development standard or modification of zoning
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requirements or architectural design requirements, or other
regulatory incentives and concessions, existing law requires
that reduction or modification result in "identifiable,
financially sufficient and actual cost reductions." This
language was added to the statute by SB 1818 (Hollingsworth),
Chapter 928, Statutes of 2004. According to the Assembly
Committee analysis of SB 1818, "Current law requires local
governments to provide applicants for density bonuses with
incentives and concessions in addition to a density bonus, but
the law does not quantify the value of the incentives and
concessions that must be offered. SB 1818 requires that the
incentives and concessions "result in identifiable, financially
sufficient and actual cost reductions".
According to supporters of this bill, the intent of this
language to ensure that the concessions and incentives are
financially sufficient to reduce the cost of the development to
make the affordable housing units financially feasible.
Further, according to supporters of this bill, in some cases
local governments interpret this language to require developers
to submit pro formas showing the amount of profit they will make
on a project. The question becomes who determines whether or
not a concession or incentives is "financially sufficient" to
make the affordable housing units pencil out. To resolve this
dispute, this bill states that the reduction in site development
standards or modification of zoning requirements result in
identifiable and actual cost reductions as determined by the
developer.
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
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induce market-rate developers to build below-market units
without any public funding. Currently, State Density Bonus Law
provides cost-reducing incentives to developers who agree to
make a percentage of their homes affordable to low- and
moderate-income households. The incentives include reduced
parking requirements, increased density, smaller set-backs, and
other modified development standards that reduce costs and/or
allow a developer to use land more efficiently. Both
market-rate and below-market developers have used the law's
incentives to add to the state's stock of permanently affordable
homes. However, the law has a number of ambiguous provisions
that create uncertainty for developers. Additionally, some
local governments have deliberately interpreted the law to
discourage developers from accessing its benefits. AB 2501
clarifies a number of these ambiguous provisions in order to
increase the law's effectiveness as an incentive to build
desperately needed affordable homes. The bill: clearly states
the legislature's intent to encourage the development of
affordable housing and provide incentives by right to
developers, establishes a clear process and deadlines for local
governments to approve or deny a density bonus application,
clarifies that an applicant for a density bonus need only
demonstrate that requested incentives reduce the cost of
development, increases certainty regarding the number of
additional units available as a result of the density increase,
limits the ability of local governments to impose additional
requirements to block density bonus projects."
Arguments in opposition: According to the League of California
Cities, "AB 2501 would make significant changes to existing law.
It requires a city to take action on the density bonus within
60 days of finding the application complete. This is too short
a time frame for those applications for a density bonus that are
filed in conjunction with another land use approval (e.g.
conditional use permit, subdivision map, etc.). Most
applications for a density bonus are made in conjunction with an
application for a land use approval that requires a public
hearing and takes longer to process. Typically a city will
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process the granting of the density bonus in conjunction with
the processing of the application. A city should not grant a
density bonus before it approves the project that the density
bonus is attached."
Analysis Prepared by:
Lisa Engel / H. & C.D. / (916) 319-2085 FN:
0002982