BILL ANALYSIS
AB 1450
Page 1
Date of Hearing: January 11, 2006
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Simon Salinas, Chair
AB 1450 (Evans) - As Amended: April 4, 2005
SUBJECT : Land use: density bonus.
SUMMARY : 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, and creates other requirements related to
moderate-income units under density bonus law. 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 an applicant for a
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 common
interest development, as defined in Section 1351 of the
Civil Code, for persons and families of moderate income, as
defined in Section 50093 of the Health and Safety Code,
provided that all units in the development are offered to
the public for purchase.
2)Requires an applicant to agree to, and the local government to
ensure, continued affordability of all low- and very
low-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 rents for the units targeted for lower-income
households be set at an affordable rent as defined in Section
50053 of the Health and Safety Code.
4)Requires that owner-occupied units be available at an
affordable housing cost as defined in Section 50052.5 of the
Health and Safety Code.
5)Requires local governments to enforce an equity-sharing
AB 1450
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agreement, unless it is in conflict with the requirements of
another public funding source or law, for moderate-income
units that are directly related to a density bonus.
6)Stipulates that upon resale of a moderate-income unit directly
related to a density bonus, the seller shall retain the value
of any improvements, the downpayment, and the seller's
proportionate share of appreciation, and the local government
shall recapture any initial subsidy and its proportionate
share of appreciation.
FISCAL EFFECT : Unknown
COMMENTS :
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)SB 435 (Hollingsworth), Chapter 496, Statutes of 2005, made
additional changes to density bonus law to clarify and clean
up certain provisions of SB 1818, including expanding the
moderate-income provisions to all common interest
developments, stating that all units in the common interest
development for the developer is applying for a density bonus
on the basis of the inclusion of moderate income units must be
offered to the public for purchase, and clarifying the resale
requirements for moderate-income units.
3)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, and that SB 435
did not rectify this situation. 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, 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
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to disapprove a sale or transfer of a unit at less than 95% of
full market value.
4)By requiring moderate-income units to remain affordable for at
least 30 years, this bill would ensure that local governments
are not compelled to grant developers substantial density
bonuses based on production of moderate-income units only to
see those units cease to be part of their affordable housing
stock at the first transfer of ownership. Local governments
would get a stable, long-term stock of affordable housing for
moderate-income households in exchange for the concessions
granted in the density bonus.
5)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.
In addition, 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.
6)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
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.
7)PROPOSED AMENDMENTS . In its current form, AB 1450 appears to
contain a contradiction. It makes the continued affordability
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of moderate-income units for at least 30 years a requirement,
but it also appears to give local governments the option of
either requiring 30-year affordability or continuing to allow
resale at a profit. The author has proposed dealing with this
issue by amending the bill to state that the 30-year
affordability requirement applies to all units used to qualify
for a density bonus and leaving all other provisions of
existing density bonus law alone.
The committee may wish to consider whether treating
moderate-income units the same as low- and very low-income
units would render unnecessary the current provisions of law
relating to the resale of moderate-income units, found in
Government Code Sec. 65915(c)(2).
8)TECHNICAL AMENDMENTS . The language of AB 1450 does not
currently correspond to the changes in density bonus law made
by SB 435, which went into effect on January 1. The bill
needs to be redrafted to reflect current law. Any amendments
agreed to in Local Government will require adoption in the
Appropriations Committee due to deadline constraints.
9)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]
American Planning Association, CA Chapter (if amended)
League of CA Cities
Opposition
CA Association of Realtors
CA Building Association
CA Chamber of Commerce
Analysis Prepared by : Anya Lawler / L. GOV. / (916) 319-3958