BILL ANALYSIS Ó
AB 2502
Page 1
ASSEMBLY THIRD READING
AB
2502 (Mullin and Chiu)
As Amended April 18, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |5-3 |Eggman, Bonilla, |Waldron, Beth |
|Government | |Chiu, Cooley, Gordon |Gaines, Linder |
| | | | |
|----------------+-----+----------------------+--------------------|
|Housing |5-2 |Chiu, Burke, Chau, |Steinorth, Beth |
| | |Lopez, Mullin |Gaines |
| | | | |
| | | | |
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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.
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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.
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
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deliberations be conducted openly consistent with the
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:
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,
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iv) The intensity of land use.
d) Establish requirements for off-street 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
Properties, L.P. v. City of Los Angeles (2009).
This bill is sponsored by the author.
2)Author's Statement. According to the author,
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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 Rental Housing Act prohibits local
governments from creating affordable rental housing
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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. California Constitution Article XI, Section 7,
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
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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
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
Costa-Hawkins 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
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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 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) of 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
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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
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 this 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.
Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958
FN: 0002815