BILL ANALYSIS Ó
AB 2502
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Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2502
(Mullin) - As Amended April 18, 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.
4)States that it is the intent of the Legislature to reaffirm
that existing law requires that the action of any legislative
body of any city, county, or city and county to adopt a new
inclusionary housing ordinance be taken openly and that their
deliberations be conducted openly consistent with the
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requirements of the Ralph M. Brown Act.
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.
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:
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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
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.
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FISCAL EFFECT: None
COMMENTS:
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
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
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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 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
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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.
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
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
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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.
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 Properties, L.P. v. City of Los
Angeles (2009).
Purpose of this bill: 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
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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
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."
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.
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AB 1229 was vetoed with the following message:
"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."
Arguments in Support: According to supporters, "AB 2502
clarifies state law and allows jurisdictions to choose the
affordable housing policies that fit the development context in
their communities. Local inclusionary housing programs have
provide one of the most effective tools for producing new homes
affordable to working families and creating strong, diverse
neighborhoods with a range of housing choices. Nearly 170 cities
and counties in California have adopted inclusionary housing
polices as a complement to other local, state, and federal
strategies to address the state's ongoing affordable housing
shortage. "
Arguments in Opposition : According to opponents, "this bill
does more than respond to Palmer by expressly authorizing local
governments to condition all market-rate development on the
provision of below market-rate affordable housing, not limited
to rental development which was the subject of the Palmer case.
Furthermore this measure mandates prices controls on market-rate
housing projects, which will manifest as a tax on new homebuyers
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and renters. The net result would be a damper on housing
production and negative impacts to local economies and
employment centers."
REGISTERED SUPPORT / OPPOSITION:
Support
Non-Profit Housing Association of Northern California (sponsor)
Alameda County Board of Supervisors
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
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California Housing Partnership Corporation
California Pan-Ethnic Health Network
California Rural Legal Assistance Foundation
California State Association of Counties
Century Housing
Chinatown Community Development Center
Cities Association of Santa Clara County
City and County of San Francisco
City of Belmont
City of Freemont
City of Napa
City of San Jose
City of Sunnyvale
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City of Walnut Creek
City of West Hollywood
Community Housing Opportunities Corporation
Community Housing Partnership
Community Legal Services in East Palo Alto
Contra Costa County Board of Supervisors
East Bay Housing Organizations
East LA Community Corporation
Every One Home
Faith in Action Bay Area
Greenbelt Alliance
Greenlining Institute
Grounded Solutions Network
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HIP Housing
Housing California
Koreatown Immigrant Workers Alliance (KIWA)
Law Foundation of Silicon Valley
League of California Cities
League of Women Voters of California
Little Tokyo Service Center
Los Angeles County Board of Supervisors
Marin County Board of Supervisors
MidPen Housing Corporation
Multicultural Communities for Mobility
National Association of Social Workers, California Chapter
Northern California Community Loan Fund
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Peer Advocated SRHT
People's Self-Help Housing
Physicians for Social Responsibility-LA (PSR-LA)
Planning and Conservation League
Public Advocates, Inc.
Public Counsel
San Diego Housing Federation
San Francisco Council of Community Housing Organizations
Sonoma County Board of Supervisors
Southeast Asian Community Alliance
St. Mary's Center
Strategic Actions for a Just Economy (SAJE)
T.R.U.S.T. South LA
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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
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
East Bay Rental Housing Association
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GH Palmer Associates
North Valley Property Owner Association
San Diego County Apartment Association
Santa Barbara Rental Property Association
Southwest California Legislative Council
Analysis Prepared by:Lisa Engel / H. & C.D. / (961) 319-2085