BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2501 Hearing Date: 6/21/2016
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|Author: |Bloom |
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|Version: |6/15/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Alison Dinmore |
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SUBJECT: Housing: density bonuses
DIGEST: This bill makes a number of changes to density bonus
law, including clarifying the processing of a density bonus
application.
ANALYSIS:
Existing law:
1) Requires all local governments to adopt an ordinance that
specifies how they will implement state density bonus law.
2) Requires local governments 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)
AB 2501 (Bloom) Page 2 of ?
for moderate-income households.
1) Requires that the applicant agree to, and the local
government to ensure, continued affordability of all low-
and very low-income units that qualified the applicant for
the density bonus for at least 55 years.
2) Requires the local government 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.
3) Requires that the density bonus for low-, very low-, and
moderate-income units increase incrementally according a set
formula.
4) Requires cities and counties to provide an applicant for a
density bonus with 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
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
AB 2501 (Bloom) Page 3 of ?
1) 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
2) Requires the local government to grant the incentive or
concession requested by the developer, unless the city or
county makes written findings that the concession or
incentive is not needed to provide the affordable housing;
or that the concession or incentive would have a specific
adverse impact on health and safety, the environment, or an
historical resource.
3) Allows a developer to request a waiver or reduction of
development standards.
4) Specifies that the developer must show that the requested
waiver or modification of development standards is necessary
to make the housing units economically feasible. Defines
"development standard" to include site and construction
conditions that apply to a residential development, pursuant
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to any ordinance, general plan element, specific plan,
charter amendment, or other local condition, law, policy,
resolution, or regulation.
5) 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%.
6) Provides that upon the request of a developer, a city,
county, or city and county shall not require a vehicular
parking ratio, inclusive of handicapped and guest parking,
that meets the following ratios:
a) Zero to one bedroom - one onsite parking space
b) Two to three bedrooms - two onsite parking spaces
c) Four and more bedrooms - two and one-half parking
spaces.
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, county, or
city and county, that local government shall comply with
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 or required by state
law.
3) Requires the local government, in order to provide for
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expeditious processing of a density bonus application, to do
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 and consistent with density bonus law.
c) Notify the applicant for a density bonus whether the
application is complete, consistent with the Permit
Streamlining Act.
4) Requires a local government to grant one density bonus;
incentives or concessions, waivers or reductions in
development standards; and parking ratios when an applicant
for a housing development seeks and agrees to construct a
housing development, excluding any units permitted by the
density bonus awarded.
5) Modifies the circumstance under which a local government
can refuse to grant a concession or incentive to a developer
when a concession or incentive "does not reduce the cost of
the development" from that when "it is not required in
order" to provide for the affordable-housing costs.
6) Provides that the city, county, or city and county shall
bear the burden of proof for the denial of a requested
concession or incentive.
7) Clarifies that "density bonus" means the maximum allowable
gross residential density, or if elected by the applicant, a
lesser percentage of density increase, including but not
limited to no increase in density.
8) Adds "mixed-use development" to the definition of "housing
development."
9) Provides that the granting of a concession, in and of
itself, cannot require a special study.
10) Deletes the requirement that incentives or concessions
proposed by the developer or local government result in
"identifiable, financially sufficient" and actual cost
reductions, and instead require the "identifiable" and
actual cost reductions.
AB 2501 (Bloom) Page 6 of ?
11) 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.
12) States that a request for a reduction in parking ratio,
under existing law, shall neither reduce nor increase the
number of incentives or concessions to which the applicant
is entitled.
13) Provides that density bonus law shall be interpreted
liberally in favor of producing the maximum number of total
housing units.
COMMENTS:
1) Purpose. 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.
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
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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.
3) Clarifying application requirements and processing
timelines. Current law does not set a timeline by which a
local government must process an application for a density
bonus. This bill requires the local government, in order to
provide for expeditious processing of a density bonus
application, to adopt procedures and timelines for
processing a density bonus application; provide a list of
all documents and information required to be submitted with
the density bonus application, and notify the applicant for
a density bonus whether the application is complete.
Further, this bill 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
and that the granting of an application, in and of itself,
cannot require a special study. Adding a timeline and
clarifying the application requirements will provide greater
certainty to developers and help inform their decisions
regarding a development.
4) Choosing to accept no density increase. Current density
bonus law permits a developer a percentage increase in
density in return for inclusion of a corresponding amount of
very low-, low-, and 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
density increase than he or she is entitled under the
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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 say this.
This bill would explicitly state that a developer can elect
to accept no increase in density.
5) Determining the value of concessions and incentives.
Under current law, 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 to provide the affordable housing, which would
have specific adverse health and safety impacts, or have an
adverse impact on a registered historic property that cannot
be mitigated. When seeking incentives and concessions,
existing law requires that they 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 Senate
Housing and Community Development Committee analysis of that
bill:
"The references to 'identifiable and actual
cost reductions' ensure that the incentives
have some value. The intent of adding
'financially sufficient' is to ensure that
that value is more than nominal and actually
of benefit to the developer. However, the
term suffers from vagueness and as a result
lacks practical meaning. What is the
standard against which sufficiency is to be
judged?"
The intent of the language is to ensure that the concessions
and incentives actually reduce the cost of the development
to make the affordable housing units financially feasible.
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 incentive is
"financially sufficient" to make the affordable housing
units pencil out. This bill proposes to resolve that issue
by stating that the reduction in site development standards
AB 2501 (Bloom) Page 9 of ?
or modifications of zoning requirements result in
identifiable and actual cost reductions as determined by the
developer.
6) Opposition. According to the opposition, this bill
violates the separation of powers and limits the ability of
a local government to interpret its own development
standards. Additionally, this bill would limit a city's
ability to reduce development standards without waiving them
and allow developers to determine whether project
modifications result in cost reductions rather than the
city. Local governments process many permits for
development projects and request studies if the project
necessitates more analysis. Disallowing full project
analysis may be detrimental to the welfare of the local
community.
Assembly Votes
Floor: 50-11
Appr: 14-2
L.Govt: 7-0
H&CD: 5-1
Related Legislation:
AB 1934 (Santiago) - 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. This bill will also be heard in this
committee today.
AB 2442 (Holden) - requires local agencies to grant a density
bonus when a developer agrees to construct housing for
transitional foster youth, disabled veterans, or homeless
persons. This bill will also be heard in this committee today.
AB 2556 (Nazarian) - requires a jurisdiction, in cases where a
proposed development is replacing existing affordable housing
units, to adopt a rebuttable presumption regarding the number
and type of affordable housing units necessary for density bonus
eligibility. This bill will also be heard in this committee
today.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: Yes
AB 2501 (Bloom) Page 10 of ?
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 15, 2016.)
SUPPORT:
California Rural Legal Assistance Foundation
Western Center on Law and Poverty
California Apartment Association
California Association of Realtors
California Economic Summit
California Housing Consortium
City of Los Angeles
East Bay Developmental Disabilities Legislative Coalition
East Bay Rental Housing Associations
Leading Age California
The Arc and United Cerebral Palsy California Collaboration
OPPOSITION:
California State Association of Counties
City of Encinitas
City of Fontana
City of Fountain Valley
City of Highland
City of Lakeport
City of Sacramento
City of San Carlos
City of San Luis Obispo
City of Tiburon
City of Torrence
City of West Covina
League of California Cities
Rural County Representatives of California
San Francisco Council of Community Housing Organizations
South Bay Cities Council of Governments
Ventura Council of Governments
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