BILL ANALYSIS Ó
AB 2556
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2556
(Nazarian) - As Amended April 5, 2016
SUBJECT: Density bonuses
SUMMARY: Requires a jurisdiction, in cases where a proposed
development is replacing existing affordable housing units, to
adopt a rebuttable presumption regarding the number and type of
affordable housing units necessary for density bonus
eligibility. Specifically, this bill:
1)Requires a jurisdiction, if the income of the household that
occupies the unit is not known, to adopt a rebuttable
presumption that lower income households occupied the units in
the same proportion of lower income households to all
households within the census tract, in which the development
is located, as determined by the last decennial census.
2)Requires a jurisdiction, in cases where all dwelling units
have been vacated or demolished within the five-year period
preceding the density bonus application and the incomes of the
persons and families in occupancy at the highpoint of the
affordable units is not known, to adopt a rebuttable
presumption that lower income households occupied these units
in the same proportion of lower income households to all
households within the census tract in which the development is
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located, as determined from the last decennial census.
3)Authorizes a jurisdiction, if the existing property has been
subject to a form of rent or price control and has been
occupied by a person or family with an income above lower
income, to do the following:
a. Require the replacement unit to be made available at
affordable rent or affordable housing cost to, and
occupied by, a low income person or family. If the
replacement unit is required to be made available at
affordable rent, the unit shall be subject to a recorded
affordability restriction for at least 55 years.
b. Require the replacement unit to be replaced in
compliance with the rent or price control ordinance of
the city, county, or city and county.
4)Requires the jurisdiction to ensure the initial occupant for
all qualifying units are very low, low, or moderate income, as
specified.
EXISTING LAW:
1)Defines "density bonus" as a density increase over the
otherwise maximum allowable residential density as of the date
of application by the applicant to the local government.
2)Requires all cities and counties to adopt an ordinance that
specifies how they will implement state density bonus law.
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3)Provides that the density bonus for low-, very low-, and
moderate-income units increase incrementally according to a
set formula.
4)Prohibits an applicant from receiving a density bonus or any
other incentives or concessions if a proposed housing
development or condominium project is located on any property
that includes a parcel on which dwelling units have, at any
time in the five-year period preceding the application, been:
a. Occupied by lower- or very low-income households;
b. Subject to a recorded covenant, ordinance, or law
that restricts rents to levels affordable to persons and
families of lower- or very low-income; or
c. Subject to any other form of rent or price control
through a public entity's valid exercise of its police
power.
5)Provides that a developer may overcome the above prohibition
if the proposed housing development would replace the existing
affordable units with at least the same number and type of
affordable units and either of the following applies:
a. The proposed housing development, inclusive of the
replacement units, contains affordable units at the
percentages set forth in density bonus law.
b. Each unit in the development, exclusive of a
manager's unit or units, is affordable to, and occupied
by, either a lower or very low income household.
6)Defines "replace" to mean either:
a. If any affordable housing units in the existing
development are occupied on the date of application, the
proposed housing development must provide at least the
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same number of units of equivalent size or type, or both,
to be made available at affordable rent or affordable
housing cost to, and occupied by, persons and families in
the same or lower income category as those households in
occupancy.
b. If all affordable housing units in the existing
development have been vacated or demolished within the
five-year period preceding the application, the proposed
housing development must provide at least the same number
of units of equivalent size or type, or both, as existed
at the highpoint of those units in the five-year period
preceding the application to be made available at
affordable rent or affordable housing cost to, and
occupied by, persons and families in the same or lower
income category as those persons and families in
occupancy at that time, if known.
FISCAL EFFECT: Unknown
COMMENTS: To help address California's affordable housing
shortage, the Legislature enacted density bonus law to encourage
the development of more affordable units. Under current law, a
city or county must grant a density bonus, concessions and
incentives, prescribed parking requirements, as well as waivers
of development standards upon a developer's request when the
developer includes a certain percentage of affordable housing in
a housing development project.
Density bonus law was originally enacted in 1979, but has been
changed numerous times since. SB 1818 (Hollingsworth), Chapter
928, Statutes of 2004, made significant changes to the law,
including reducing the number of housing units required to be
provided at below market rate in order to qualify for a density
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bonus.
AB 2222 (Nazarian), Chapter 682, Statutes of 2014 encouraged the
preservation of existing affordable units by prohibiting an
applicant from receiving a density bonus, incentive, or
concession if a proposed housing development or condominium
project is located on property where dwelling units have, at any
time in the five-year period preceding the application, been
occupied by very low- or lower-income households or subject to
rent control. An applicant may overcome this prohibition by at
least replacing all of the existing affordable units with units
of equivalent affordability, size and/or type.
In implementing the provisions of AB 2222, cities, housing
advocates, and developers have discovered several places where
the law needs clarification. AB 2222 did not address how to
determine the number of units that have to be replaced when
resident income information is not known. AB 2556 provides a
method for making this determination, basing it on income data
for the census tract in which the project is located.
Additionally, AB 2222 did not provide guidance on what the rent
level for the replacement unit should be in cases where the
current occupant of the rent-controlled unit is not
lower-income, for example due to wage increases. AB 2556 allows
cities to require that these units be replaced either with a
deed-restricted unit affordable to low-income families or with
another rent-controlled unit. Although a jurisdiction cannot
mandate that rent control apply to new developments, in this
case developers may voluntarily choose to comply and offer units
rent-controlled units if they are seeking a density bonus for
their project. For developers, one benefit of rent-controlled
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units relative to affordable units is that the former generally
include an escalator for rent increases.
Purpose of the bill: According to the author, "There is a need
to clarify language in AB 2222. This bill maintains the intent
of AB 2222 in requiring developers to replace affordable units
while providing greater clarity for developers and local
governments in meeting replacement requirements. AB 2556
recognizes that adequate affordable housing is an issue of
statewide concern. This bill preserves and promotes the supply
of affordable units for years to come".
Arguments in support: According to the sponsors, Western Center
on Law and Poverty and the California Rural Legal Defense
Foundation: "In implementing the provisions of AB 2222, cities,
housing advocates, and developers have discovered several places
where the law needs clarification. AB 2222 required the
replacement of rent-controlled units, but did not provide
guidance on what the rent level for the replacement unit should
be in cases where the current occupant of the rent-controlled
unit is not lower-income. AB 2556 allows cities to require that
these units be replaced either with a deed-restricted unit
affordable to low-income families or with another
rent-controlled unit."
Committee amendments:
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On page 6, delete lines 15 to 32 and replace with:
"(C) Notwithstanding subparagraph (B), for any dwelling unit
described in subparagraph (A) that is or was subject to a form
of rent or price control through a local government's valid
exercise of its police power and that is or was occupied by
persons or families above lower income, the city, county, or
city and county may do either of the following:
(i) Require that the replacement unit be made available at
affordable rent or affordable housing cost to, and occupied by,
low-income persons or families. If the replacement units will be
rental dwelling units, these units shall be subject to a
recorded affordability restriction for at least 55 years. If the
proposed development is for-sale units, the units replaced shall
be subject to paragraph (2).
(ii) Require that the unit be replaced in compliance with the
jurisdiction's rent or price control ordinance."
Double referred: If AB 2556 passes this committee, the bill
will be referred to the Committee on Local Government.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Rural Legal Assistance Foundation (co-sponsor)
Western Center on Law & Poverty (co-sponsor)
Opposition
None on file
Analysis Prepared by:Ken Spence / H. & C.D. / (916) 319-2085
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