BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2501|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  AB 2501
          Author:   Bloom (D) and Low (D), et al.
          Amended:  8/1/16 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:  50-11, 5/27/16 - See last page for vote

           SUBJECT:   Housing:  density bonuses


          SOURCE:    California Rural Legal Assistance Foundation
                     Western Center on Law and Poverty 

          
          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  








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             specifies how they will implement state density bonus law.   
             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

              d)    10% of the units in a common-interest development  
                (CID) for moderate-income households


           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.  Requires 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.


           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  







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                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  
                identifiable cost reductions


           6) 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.







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           7) Allows a developer to request a waiver or reduction of  
             development standards.


           8) 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  
             to any ordinance, general plan element, specific plan,  
             charter amendment, or other local condition, law, policy,  
             resolution, or regulation.


           9) 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%.


           10)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  







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                                                                    Page  5


             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.  This bill does not prohibit a local government from  
             requiring an applicant to provide reasonable documentation to  
             establish eligibility for a requested density bonus,  
             incentives or concessions, waivers or reductions of  
             development standards, and parking ratios.


           3) Requires the local government, in order to provide for  
             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) Modifies the circumstance under which a local government can  
             refuse to grant a concession or incentive to a developer when  
             a concession or incentive "result[s] in identifiable and  
             actual cost reductions" from that when "it is not required in  
             order" to provide for the affordable-housing costs.


           5) Provides that the city, county, or city and county shall  
             bear the burden of proof for the denial of a requested  
             concession or incentive.  







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           6) 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.  


           7) Provides that the granting of a concession, in and of  
             itself, cannot require a special study.  "Study" does not  
             include reasonable documentation to establish eligibility for  
             the concession or incentive or to demonstrate that the  
             incentive or concession meets the definition set forth in  
             existing law. 


           8) 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 requires the "identifiable" and  
             actual cost reductions. 


           9) 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. 


           10)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.  


          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  







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             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 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 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  







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             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.  A local government is not prohibited from requiring  
             an applicant to provide reasonable documentation to establish  
             eligibility for a requested density bonus, incentives or  
             concessions, waivers or reductions of development standards,  
             and parking ratios.  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  
             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 explicitly states that a developer can elect to  
             accept no increase in density.  


           5) Opposition.  The author and sponsors worked to address the  
             concerns raised by a number of organizations in opposition to  
             the bill, including representatives of local governments, and  
             took a number of amendments in the Senate Transportation and  
             Housing Committee to address those concerns.  Those  
             amendments are now in the current version of the bill and all  
             those listed in opposition were opposed to a prior version of  
             the bill.  







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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          SUPPORT:   (Verified8/9/16)


          California Rural Legal Assistance Foundation (co-source)
          Western Center on Law and Poverty (co-source)
          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:   (Verified8/18/16)


          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 San Marcos 
          City of Santa Barbara 
          City of Tiburon 
          City of Torrance 
          City of West Covina 
          San Francisco Council of Community Housing Organizations 
          South Bay Cities Council of Governments 
          Ventura Council of Governments 


          ASSEMBLY FLOOR:  50-11, 5/27/16







                                                                    AB 2501  
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          AYES:  Alejo, Travis Allen, Arambula, Atkins, Baker, Bloom,  
            Bonilla, Bonta, Burke, Calderon, Campos, Chau, Chávez, Cooley,  
            Cooper, Dababneh, Daly, Eggman, Frazier, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Holden, Jones-Sawyer, Lackey, Linder, Lopez, Low, Maienschein,  
            McCarty, Medina, Nazarian, Olsen, Quirk, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  
            Weber, Wilk, Wood, Rendon
          NOES:  Achadjian, Beth Gaines, Gallagher, Harper, Irwin, Kim,  
            Levine, Mathis, Obernolte, Wagner, Waldron
          NO VOTE RECORDED:  Bigelow, Brough, Brown, Chang, Chiu, Chu,  
            Dahle, Dodd, Grove, Hadley, Roger Hernández, Jones, Mayes,  
            Melendez, Mullin, O'Donnell, Patterson, Ting, Williams

          Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
          8/18/16 14:03:57


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