BILL ANALYSIS Ó
AB 2556
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2556
(Nazarian) - As Amended April 14, 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)Allows the city or county, in cases where a proposed
development is replacing existing affordable housing units,
for any dwelling unit 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 of
families above lower income, to do either of the following:
a) Require that the replacement units 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. Requires, if the proposed development is
for-sale units, the units replaced shall be subject to
existing law; or,
b) Require that units be replaced in compliance with the
jurisdiction's rent or price control ordinance.
4)Makes other minor, non-substantive changes.
5)States that no reimbursement is required because a local
agency has the authority to levy service charges, fees, or
assessments sufficient to pay for the program or level of
service mandated by this act.
EXISTING LAW:
1)Defines "density bonus" as a density increase over the
otherwise maximum allowable residential density as of the date
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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.
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
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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 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: This bill is keyed fiscal.
COMMENTS:
1)Background and Previous Legislation. To help address
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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 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.
2)Bill Summary. This bill makes several changes to AB 2222
(Nazarian), Chapter 682, Statutes of 2014. 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.
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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
units relative to affordable units is that the former
generally includes an escalator for rent increases.
This bill is sponsored by the Western Center on Law and
Poverty and the California Rural Legal Assistance Foundation.
3)Author's Statement. 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."
4)Arguments in Support. According to the sponsors, Western
Center on Law and Poverty and the California Rural Legal
Assistance Foundation: "In implementing the provisions of AB
2222, cities, housing advocates, and developers have
discovered several places where the law needs clarification.
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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."
5)Arguments in Opposition. None on file.
6)Double-Referral. This bill was heard in the Housing and
Community Development Committee on April 13, 2016, where it
passed with a 6-0 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
California Rural Legal Assistance Foundation [SPONSOR]
Western Center on Law and Poverty [SPONSOR]
American Planning Association, California Chapter
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Opposition
None on file
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958