BILL ANALYSIS Ó
AB 2502
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2502
(Mullin and Chiu) - As Amended March 30, 2016
SUBJECT: Land use: zoning regulations.
SUMMARY: Authorizes the legislative body of a city or county to
establish inclusionary housing requirements as a condition of
development. Specifically, this bill:
1)Authorizes the legislative body of a city or county to
establish, as a condition of development, inclusionary housing
requirements, which may require the provision of residential
units affordable to and occupied by moderate income,
lower-income, very low-income, or extremely low-income
households, as specified.
2)States the Legislature's intent to supersede any holding or
dicta in Palmer/Sixth Street Properties, L.P. v. City of Los
Angeles (2009) 175 Cal.App.4th 1396, to the extent that the
opinion in that case conflicts with the authority of local
governments to adopt inclusionary housing requirements, and
specifies that the bill does not otherwise enlarge or diminish
the authority of a jurisdiction beyond those powers that
existed as of July 21, 2009.
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3)States that the Legislature finds and declares all of the
following:
a) Inclusionary housing ordinances have provided quality
affordable housing to over 80,000 Californians, including
the production of an estimated 30,000 units of affordable
housing in the last decade alone;
b) Since the 1970's, over 170 jurisdictions have enacted
inclusionary housing ordinances to meet their affordable
housing needs;
c) While many of these local programs have been in place
for decades, the recent decision in Palmer/Sixth Street
Properties v. City of Los Angeles, has created uncertainty
and confusion for local governments regarding the future
viability of this important local land use tool; and,
d) It is the intent of the Legislature to reaffirm the
authority of local jurisdictions to enact and enforce these
ordinances.
EXISTING LAW:
1)Grants cities and counties the power to make and enforce
within their limits all local, police, sanitary, and other
ordinances and regulations not in conflict with general laws.
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2)Declares the Legislature's intent to provide only a minimum of
limitation with respect to zoning in order that counties and
cities may exercise the maximum degree of control over local
zoning matters.
3)Specifically authorizes the legislative body of any county or
city to adopt ordinances that do any of the following:
a) Regulate the use of buildings, structures, and land as
between industry, business, residences, open space,
agriculture, recreation, enjoyment of scenic beauty, use of
natural resources, and other purposes;
b) Regulate signs and billboards;
c) Regulate all of the following:
i) The location, height, bulk, number of stories, and
size of buildings and structures;
ii) The size and use of lots, yards, courts, and other
open spaces;
iii) The percentage of a lot that may be occupied by a
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building or structure; and,
iv) The intensity of land use.
d) Establish requirements for offstreet parking and
loading;
e) Establish and maintain building setback lines; and,
f) Create civic districts around civic centers, public
parks, public buildings, or public grounds, and establish
regulations for those civic districts.
4)Limits, pursuant to the Costa-Hawkins Rental Housing Act, the
permissible scope of local rent control ordinances and
generally gives the owner of residential real property the
right to establish the initial rental rate for a dwelling or
unit.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill authorizes the legislative body of
any city or county to adopt ordinances to establish, as a
condition of development, inclusionary housing requirements
and makes a number of legislative findings and declarations to
supersede any holding or dicta in Palmer/Sixth Street
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Properties, L.P. v. City of Los Angeles (2009).
This bill is sponsored by the author.
2)Author's Statement. According to the author, "AB 2502
restores local governments' ability to enact inclusionary
housing policies by clarifying that the Costa-Hawkins rent
control law does not apply to inclusionary housing policies.
This bill amends the state's Planning and Zoning law to
indicate that inclusionary zoning is an allowable land use
power. Article XI, Section 7 of the California Constitution
grants counties and cities the exercise of police power, which
allows them 'to make and enforce within its limits all local,
police, sanitary, and other ordinances and regulations not in
conflict with general laws.' Many cities and counties have
implemented inclusionary housing ordinances as a land use
regulation under their police power. Inclusionary housing
ordinances require that developers allocate a certain
percentage of housing units in a new development to be
affordable to low- and moderate-income households.
"Nearly 170 cities and counties in California have implemented
inclusionary housing policies to address the shortage of
affordable housing across the state. These ordinances vary in
the inclusionary housing unit requirements, depth of
affordability, and alternative methods of compliance for
developers. Since 2003, inclusionary programs have produced
more than 30,000 affordable housing units to working
households, seniors, and special needs populations. AB 2502
restores local governments' ability to enact inclusionary
housing policies by clarifying that the Costa-Hawkins rent
control law does not apply to inclusionary housing policies.
"In 2009, a state appellate court ruling in the Palmer v. City
of Los Angeles case indicated that the state's Costa-Hawkins
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Rental Housing Act prohibits local governments from creating
affordable rental housing through local inclusionary programs.
"AB 2502 is identical to AB 1229 (Atkins), which Governor
Brown vetoed in 2013. In his veto message, the Governor
indicated that prior to making a legislative change regarding
inclusionary housing, he wanted to wait for the California
Supreme Court to issue its decision on the California Building
Industry Association (CBIA) v. City of San Jose case.
In this case, CBIA argued that San Jose's 15% inclusionary
housing ordinance is unconstitutional on the basis of the
Fifth Amendment, which indicates that private property should
not be taken for public use without just compensation. In
June 2015, the Supreme Court unanimously upheld San Jose's
inclusionary housing ordinance and ruled that the ordinance is
an exercise of the city's police power."
3)Background. Article XI, Section 7 of the California
Constitution grants each city and county the power "to make
and enforce within its limits all local, police, sanitary, and
other ordinances and regulations not in conflict with general
laws." This is generally referred to as the police power of
local governments. The Planning and Zoning Law is a general
law that sets forth minimum standards for cities and counties
to follow in land use regulation, but the law also establishes
the Legislature's intent to "provide only a minimum of
limitation in order that counties and cities may exercise the
maximum degree of control over local zoning matters."
Using this police power, many cities and counties have adopted
ordinances, commonly called "inclusionary zoning" or
"inclusionary housing" ordinances, that require developers to
ensure that a certain percentage of housing units in a new
development be affordable to lower-income households. These
ordinances vary widely in the percentage of affordable units
required, the depth of affordability required, and the options
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through which a developer may choose to comply. Most, if not
all, of such ordinances apply to both rental and ownership
housing.
In 2009, in the case of Palmer v. City of Los Angeles, the
Second District California Court of Appeal opined that the
city's affordable housing requirements associated with a
particular specific plan (which was similar to an inclusionary
zoning ordinance), as it applied to rental housing, conflicted
with and was preempted by a state law known as the
Costa-Hawkins Rental Housing Act. The Costa-Hawkins Act
limits the permissible scope of local rent control ordinances.
Among its various provisions is the right for a rental
housing owner generally to set the initial rent level at the
start of a tenancy, even if the local rent control ordinance
would otherwise limit rent levels across tenancies. This
provision is known as vacancy decontrol because the rent level
is temporarily decontrolled after a voluntary vacancy. The
act also gives rental housing owners the right to set the
initial and all subsequent rental rates for a unit built after
February 1, 1995. The court opined that "forcing Palmer to
provide affordable housing units at regulated rents in order
to obtain project approval is clearly hostile to the right
afforded under the Costa-Hawkins Act to establish the initial
rental rate for a dwelling or unit."
The Legislature enacted the Costa-Hawkins Rental Housing Act
in 1995 with the passage of AB 1164 (Hawkins), Chapter 331.
The various analyses for this bill exclusively discuss rent
control ordinances and do not once mention inclusionary zoning
ordinances, of which approximately 64 existed in the state at
that time. The Assembly concurrence analysis of
AB 1164, which is very similar to the other analyses, states
that the bill "establishes a comprehensive scheme to regulate
local residential rent control." The analysis includes a
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table of jurisdictions that would be affected by the bill, and
the table exclusively includes cities with rent control
ordinances and does not include any cities that had
inclusionary zoning ordinances affecting rental housing. The
analysis also states, "Proponents view this bill as a moderate
approach to overturn extreme vacancy control ordinances which
unduly and unfairly interfere into the free market." The
analysis further describes strict rent control ordinances as
those that impose vacancy control and states, "Proponents
contend that a statewide new construction exemption is
necessary to encourage construction of much needed housing
units, which is discouraged by strict local rent controls."
This legislative history provides no indication that the
Legislature intended to affect inclusionary zoning with the
passage of AB 1164.
4)Prior Legislation. AB 1229 (Atkins, 2013) would have
expressly authorized cities and counties to establish
inclusionary housing requirements as a condition of
development. The bill further declares the intent of the
Legislature to supersede any holding or dicta in Palmer v.
City of Los Angeles that conflicts with this authority. AB
1229 was vetoed with the message that "This bill would
supersede the holding of Palmer v. City of Los Angeles and
allow local governments to require inclusionary housing in new
residential development projects. As Mayor of Oakland, I saw
how difficult it can be to attract development to low and
middle income communities. Requiring developers to include
below-market units in their projects can exacerbate these
challenges, even while not meaningfully increasing the amount
of affordable housing in a given community. The California
Supreme Court is currently considering when a city may insist
on inclusionary housing in new developments. I would like the
benefit of the Supreme Court's thinking before we make
legislative adjustments in this area."
5)California Building Industry Association (CBIA) v. City of San
Jose. The City of San Jose's inclusionary housing ordinance
passed in 2010 and required all new residential development
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projects of 20 or more units to sell at least 15% of the
for-sale units at a price that is affordable to low- or
moderate-income households. The ordinance allowed developers
to opt out of the 15% requirements by dedicating land
elsewhere or by paying "in-lieu" fees to the city. Shortly
before the ordinance took effect, CBIA filed a lawsuit in
superior court, maintaining that the ordinance was invalid on
its face on the ground that the city, in enacting the
ordinance, failed to provide a sufficient evidentiary basis
"to demonstrate a reasonable relationship between any adverse
public impacts or needs for additional subsidized housing
units in the City ostensibly caused by or reasonably
attributed to the development of new residential developments
of 20 units or more and the new affordable housing exactions
and conditions imposed on residential development by the
Ordinance."
The superior court agreed with CBIA's contention and issued a
judgment enjoining the city from enforcing the challenged
ordinance. The Court of Appeal then reversed the superior
court judgment, and concluded that the matter should be
remanded to the trial court. CBIA then sought review of the
Court of Appeal decision in the Supreme Court which granted
review.
The Supreme Court in June of 2015 concluded that the Court of
Appeal decision should be upheld, and that "contrary to CBIA's
contention, the conditions the San Jose ordinance imposes upon
future development do not impose 'exactions' upon the
developers' property so as to bring into play the
unconstitutional conditions doctrine under the takings clause
of the federal or state Constitution." The ruling also noted
that enforcing these limits to address a growing housing
problem is "constitutionally legitimate" and cited the severe
scarcity of affordable housing in California in its decision.
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6)Arguments in Support. Supporters argue that the bill restores
the authority of local agencies to adopt effective
inclusionary policies, which have been effective at creating
affordable housing for the last 40 years, without fear of
litigation.
7)Arguments in Opposition. Opponents argue that this bill makes
inclusionary zoning profoundly unfair and would seriously
discourage new multifamily development, and that the bill is
an overreaction to one lawsuit.
8)Committee Amendment. The Committee may wish to ask the
authors to accept an amendment that would clarify that any
city adopting a new inclusionary housing ordinance after the
effective date of the bill shall hold a public hearing and
require a public vote of the legislative body.
9)Double-Referral. This bill is double-referred to the Housing
and Community Development Committee.
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REGISTERED SUPPORT / OPPOSITION:
Support
Alliance for Community Transit - Los Angeles (ACT-LA)
American Planning Association, California Chapter
Asian Pacific Environmental Network
Bay Area Regional Health Inequities Initiative
Burbank Housing Development Corporation
California Coalition for Rural Housing
California Housing Consortium
California Pan-Ethnic Health Network
California Rural Legal Assistance Foundation
California State Association of Counties
Century Housing
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Chinatown Community Development Center
Cities of Belmont, Napa, Sunnyvale, and Walnut Creek
City and County of San Francisco
Counties of Contra Costa, Los Angeles, Marin, and Sonoma
Community Housing Opportunities Corporation
Community Housing Partnership
Community Legal Services in East Palo Alto
East Bay Housing Organizations
East LA Community Corporation
Every One Home
Grounded Solutions Network
HIP Housing
Housing California
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Koreatown Immigrant Workers Alliance (KIWA)
Law Foundation of Silicon Valley
League of Women Voters of California
Little Tokyo Service Center
MidPen Housing Corporation
Multicultural Communities for Mobility
National Association of Social Workers, California Chapter
Non-Profit Housing Association of Northern California
Northern California Community Loan Fund
Peer Advocated SRHT
Public Advocates, Inc.
Strategic Actions for a Just Economy (SAJE)
San Diego Housing Federation
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San Francisco Council of Community Housing Organizations
Southeast Asian Community Alliance
St. Mary's Center
Tenants Together
Thai Community Development Center
Western Center on Law and Poverty
Opposition
Apartment Association California Southern Cities
Apartment Association of Greater Los Angeles
Apartment Association of Orange County
California Apartment Association
California Association of Realtors
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California Building Industry Association
California Business Properties Association
California Chamber of Commerce
East Bay Rental Housing Association
GH Palmer Associates
North Valley Property Owner Association
Santa Barbara Rental Property Association
San Diego County Apartment Association
Southwest California Legislative Council
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958
AB 2502
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