BILL ANALYSIS
AB 1450
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Date of Hearing: April 13, 2005
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Simon Salinas, Chair
AB 1450 (Evans) - As Amended: April 4, 2005
SUBJECT : Land use: density bonus.
SUMMARY : Requires that units targeted for moderate-income
households as part of a housing development receiving a density
bonus be affordable at a rent that does not exceed 30% of 120%
of the area's median income, and creates requirements for the
continued affordability and resale of these units.
Specifically, this bill :
1)Requires that a housing development applicant agree, and the
local government ensure, the continued affordability of all
units that qualified the applicant for a density bonus for a
minimum of 30 years.
2)Requires that units targeted for moderate-income households as
part of a housing development receiving a density bonus be
affordable at a rent that does not exceed 30% of 120% of the
area's median income.
3)Requires that a housing development applicant agree, and the
local government ensure, that the initial occupants of the
moderate-income units that qualified the applicant for a
density bonus in a condominium or planned unit development are
persons and families of moderate income.
4)Requires, upon any resale of these moderate-income units, the
local government to either:
a) Require restrictions and conditions on the resale to
ensure continued affordability to, and occupancy by,
moderate-income persons and families for at least 30 years;
or
b) Permit the seller to retain the value of any
improvements, the down payment, and the seller's
proportionate share of appreciation.
5)Permits the local government to require that any resale or
other transfer of a unit be subject to its prior approval and
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reasonable restrictions and conditions, and to disapprove a
sale or transfer of a unit at less than 95% of full market
value.
EXISTING LAW :
1)Requires a city, county, or city and county to grant a density
bonus and incentives or concessions when the applicant for the
housing development seeks and agrees to construct at least any
one of the following:
a) Ten percent of the total units of a housing development
for lower-income households, as defined in Section 50079.5
of the Health and Safety Code;
b) Five percent of the total units of a housing development
for very low income households, as defined in Section 50105
of the Health and Safety Code;
c) A senior citizen housing development as defined in
Sections 51.3 and 51.12 of the Civil Code; or
d) Ten percent of the total dwelling units in a condominium
project as defined in subdivision (f) of, or in a planned
development as defined in subdivision (k) of, Section 1351
of the Civil Code, for persons and families of moderate
income, as defined in Section 50093 of the Health and
Safety Code.
2)Requires an applicant to agree to, and the local government to
ensure, continued affordability of all lower income units for
30 years or a longer period of time if required by the
construction or mortgage financing assistance program,
mortgage insurance program, or rental subsidy program.
3)Requires that units targeted for lower-income households shall
be affordable at a rent that does not exceed 30% of 60% of
area median income, and that units targeted for very low
income households shall be affordable at a rent that does not
exceed 30% of 50% of area median income.
FISCAL EFFECT : Unknown
COMMENTS :
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1)SB 1818 (Hollingsworth), Chapter 928, Statutes of 2004, made
significant changes to the state's Density Bonus Law by, among
other things, raising the density bonus from 25% to 35% and
extending the bonus to developers who include moderate-income
units in condominium projects or planned developments. The
stated purpose for including moderate income units was to
encourage the building of units affordable to first-time
homebuyers.
SB 1818 went into effect on January 1, 2005.
2)The proponents of AB 1450 are concerned that SB 1818 contained
insufficient guarantees for the continued affordability of
moderate-income units past their initial sale. Density bonus
law does include such guarantees for lower income units. They
propose to require a local government to ensure the
"affordability" of all units that are used to obtain a density
bonus for a period of at least 30 years, permit a local
government to place restrictions and conditions on the resale
of these units to ensure continued affordability for at least
30 years, and permit a local government to require that any
resale or other transfer of a unit be subject to its prior
approval and reasonable restrictions and conditions, and to
disapprove a sale or transfer of a unit at less than 95% of
full market value.
3)According to the opponents of AB 1450, the bill reverses the
effort to make the density bonus law a real incentive for the
construction of housing for first time homebuyers by placing
extremely long-term price restrictions on property, which make
homeownership of one of these units much more unattractive.
Homeowners could be required to obtain permission from the
city or county before selling one of these units, and
prohibited from selling for less than 95% of fair market
value. The opponents maintain that deed restrictions have
always proven to be sufficient to provide for recouping of
local government's share of appreciation in such units.
Finally, the open-ended authorization for a local government
to place any "reasonable restriction" on the property that it
determines is necessary could lead to serious unintended
consequences.
4)The author's staff has pointed out that currently local
governments are permitted to make and enforce affordability
covenants for moderate-income housing under inclusionary
zoning ordinances. During the debate on SB 1818, a number of
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legislators expressed concern that the bill would interfere
with the enforcement of these ordinances, and were assured by
the affordable housing advocates supporting SB 1818 that this
was not the case. The Committee may wish to ask both the
proponents and opponents of AB 1450 whether there is any
restriction on local governments adopting inclusionary zoning
ordinances in order to achieve the sort of middle-income
affordability guarantee this bill attempts to create through
statewide statute.
5)The Committee may wish to seriously consider whether AB 1450
is premature and/or unnecessary. SB 1818 has only been in
effect since January - not enough time to determine whether
the "abuses" of the moderate-income provisions cited by the
proponents have occurred or will occur. SB 1818 was the
subject of intense discussion and negotiation. This Committee
heard and approved it. The bill passed and was signed into
law. Insofar as
AB 1450 is an attempt to reopen the debate over one of the
central provisions of SB 1818 before the statute has been in
effect long enough to determine whether a problem exists, it
must be asked if it is either appropriate or timely.
6)This bill has been double-referred to both the Committees on
Local Government and Housing and Community Development.
REGISTERED SUPPORT / OPPOSITION :
Support
Sonoma County Housing Advocacy Group [SPONSOR]
CA State Association of Counties (if amended)
Opposition
CA Association of Realtors
CA Building Association
CA Chamber of Commerce
Analysis Prepared by : J. Stacey Sullivan / L. GOV. / (916)
319-3958