BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2501|
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THIRD READING
Bill No: AB 2501
Author: Bloom (D) and Low (D), et al.
Amended: 8/19/16 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.
Senate Floor Amendments of 8/19/16 make clarifying changes and
resolve chaptering conflicts with other bills.
ANALYSIS:
AB 2501
Page 2
Existing law:
1) Requires all local governments to adopt an ordinance that
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
AB 2501
Page 3
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
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
AB 2501
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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.
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
AB 2501
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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. 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
AB 2501
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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.
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.
AB 2501
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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
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
AB 2501
Page 8
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. 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
AB 2501
Page 9
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 the sponsors worked to address
the concerns raised by a number of organizations in opposition
to this 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 this bill and all
those listed in opposition were opposed to a prior version of
this bill.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/19/16)
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: (Verified8/23/16)
City of Encinitas
City of Fontana
City of Fountain Valley
City of Highland
City of Lakeport
City of San Carlos
AB 2501
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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
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
8/23/16 12:10:14
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