BILL ANALYSIS Ó
AB 2501
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
2501 (Bloom and Low)
As Amended August 19, 2016
Majority vote
--------------------------------------------------------------------
|ASSEMBLY: |50-11 |(May 27, 2016) |SENATE: |34-3 |(August 25, |
| | | | | |2016) |
| | | | | | |
| | | | | | |
--------------------------------------------------------------------
Original Committee Reference: H. & C.D.
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
AB 2501
Page 2
the preparation of an additional report or study that is not
otherwise described in density bonus law.
3)Allows a local government to require reasonable documentation
to establish eligibility for a density bonus, incentives and
concessions, waivers of development standards, and parking
ratios.
4)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).
5)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 result in
identifiable and actual cost reductions" to provide for
affordable housing costs or rents for the targeted units
rather than when it "is not required in order" to provide for
the affordable housing costs.
6)Provides that a local government must bear the burden of proof
for the denial of a requested concession or incentive.
AB 2501
Page 3
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)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.
10)Provides that the granting of a concession or incentive
cannot, in and of itself, require a special study.
11)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.
12)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.
13)Provides that the density bonus law shall be interpreted
liberally in favor of producing the maximum number of total
housing units.
AB 2501
Page 4
14)Provides that a request pursuant to this subdivision shall
neither reduce nor increase the number of incentives or
concessions to which the applicant is entitled.
15)Provides that no reimbursement is necessary because a local
agency has the authority to levy service charges, fees, or an
assessment sufficient to pay for the program or level of
service mandated by this act.
The Senate amendments:
1)Allow a local government to require reasonable documentation
to establish eligibility for a density bonus, incentives and
concessions, waivers of development standards and parking
ratios.
2)Clarify that a city must grant a developer incentives and
concessions as part of a request for a density increase if
requested by the developer and if the request is consistent
with state law.
3)Provide that a request for a parking reduction does not reduce
or increase the number of incentives or concessions to which
the applicant is entitled.
4)Delete the provision that provides that denial of a requested
concession or incentive will be deemed to have exhausted the
applicant's existing administrative remedies.
5)Delete the provision that 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
AB 2501
Page 5
facilities.
6)Delete the express prohibition on a developer requesting an
increase in density as a concession or incentive.
7)Modify 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 result in identifiable and
actual cost reductions" to provide for affordable housing
costs or rents for the targeted units.
8)Make clear that incentives and concessions means regulatory
incentives and concessions, reduction in site development
standards, zoning, or architectural design standards that
result in actual identifiable costs reductions to providing
for affordable housing costs or for rents for the targeted
affordable units.
9)Add conforming changes to avoid chaptering conflicts with AB
2442 (Holden) and AB 2556 (Nazarian), both of the legislative
session.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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 40 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
AB 2501
Page 6
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
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
AB 2501
Page 7
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 respond to a density bonus application as
required under the Permit Streaming Act. Within 30 days of
receiving the application, a local government would be required
to notify an applicant in writing if the application is
complete. If the determination is not made within 30 days then
the density bonus application would be deemed complete.
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.
AB 2501
Page 8
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 is 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
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 is 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. This bill deletes
"financially sufficient" as the standard and requires the
reduction in site development standards, modification of zoning
requirements, or concession or incentive, to result in
identifiable and actual cost reductions to provide for
affordable housing costs or affordable rents.
Analysis Prepared by:
Lisa Engel / H. & C.D. / (916) 319-2085 FN:
AB 2501
Page 9
0004967