BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1867
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Harkey
VERSION: 4/26/10
Analysis by: Mark Stivers FISCAL: no
Hearing date: June 29, 2010
SUBJECT:
Housing elements: credit for conversion
DESCRIPTION:
This bill allows a city or county to count against its housing
need the conversion of existing homeownership units in complexes
of three or more units to affordable rental housing.
ANALYSIS:
The Planning and Zoning Law requires cities and counties to
prepare and adopt a general plan, including a housing element,
to guide the future growth of a community. Cities and counties
located within the territory of a metropolitan planning
organization (MPO) must revise their housing elements every
eight years following the adoption of every other regional
transportation plan. Cities and counties in rural non-MPO
regions must revise their housing elements every five years.
Before each revision, each community is assigned its fair share
of housing for each income category through the regional housing
needs assessment (RHNA) process.
A housing element must identify and analyze existing and
projected housing needs, identify adequate sites with
appropriate zoning to meet its share of the RHNA, and ensure
that regulatory systems provide opportunities for, and do not
unduly constrain, housing development. The Department of
Housing and Community Development (HCD) reviews both draft and
adopted housing elements to determine whether or not they are in
substantial compliance with the law.
In general, in order for a city or county to show that it can
accommodate its RHNA allocation, it must identify sites on which
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new housing may be built. Current law also allows a city or
county, however, to meet up to 25% of its RHNA allocation
through the conversion (converting non-affordable units to
affordable units through purchase of affordability covenants or
the units themselves), preservation (extending the term of
affordability on existing affordable housing units), or
substantial rehabilitation of affordable housing units under
specified conditions, including among others:
The city or county must have met (i.e., housing units were
built) at least some portion of its RHNA allocation for very
low- and low-income housing in the previous planning period.
The city or county must identify the specific, existing
sources of available funding in the housing element and commit
assistance to individual developments (i.e., enter into a
legally binding agreement to provide the necessary financial
assistance) within the first two years of the housing element
planning period.
The converted, preserved, or rehabilitated units must be made
available for occupancy within two years of the execution of
the agreement committing assistance.
For purposes of counting units against the city's or county's
RHNA allocation, the converted, preserved, or rehabilitated
units must be counted in the appropriate income category.
The city or county must include in its annual housing element
progress report it submits to HCD for the third year of the
planning period an update on its progress in providing the
units counted.
With respect to units converted from non-affordable to
affordable in particular, the following conditions also apply:
The units must be located in multifamily rental housing
complexes of four or more units.
The units must not be acquired by eminent domain.
The units must be unoccupied by low-income households or, if
occupied, the city or county must provide relocation
assistance to occupants displaced by the conversion.
The units must constitute a net increase in the city's or
county's stock of assisted affordable housing units.
The units must be subject to an affordability covenant and
remain affordable for a period of at least 55 years.
This bill , for purposes of utilizing the authority to meet up to
25% of its RHNA allocation through the conversion of
non-affordable units to affordable units, allows a city or
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county to count the conversion of existing homeownership units
in complexes of three or more units to affordable rental
housing.
COMMENTS:
1.Purpose of the bill . According to the author, local
governments must have more tools to provide housing for all
segments of their populations. This measure will allow for
greater flexibility for local governments, will result in
additional affordable housing opportunities in appropriate
sites, and will allow municipalities to help the low-income
residents of existing substandard dwelling units.
2.The opportunity cost . Housing element law requires cities and
counties to identify adequate sites that are appropriately
zoned to accommodate their share of the regional housing need.
While the presence of adequately zoned sites does not
guarantee that housing will be produced, it is also true that
housing cannot be built without adequately zoned sites. While
this bill may contribute to making some market-rate units
affordable through conversion, it will also contribute to the
shortage of properly zoned land that is a primary contributor
to California's long-standing housing shortage and
unaffordability.
3.Rewarding bad behavior . While this bill is no longer
sponsored or supported by the City of San Juan Capistrano, it
stems from a situation in that city. In a section of the city
near downtown and the train station, there are a number of
3-plex condominiums. These units are individually owned,
either by owner-occupants or landlords, and many are occupied
by more than one family. The city was interested in
purchasing as many of these units as possible, converting them
to affordable rental housing units, and getting credit to help
the city achieve housing element compliance.
San Juan Capistrano, however, does not have a particularly
good track record when it comes to zoning sites for affordable
housing and approving rental housing projects. The city does
not yet have an HCD-approved housing element for the planning
period that began in June, 2006. According to HCD's reviews
of the city's two draft housing elements to date, the city
currently needs to identify or rezone additional sites to
accommodate its housing need for lower-income households. One
site under consideration is even owned by the city, yet the
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city has not been interested in making this site available for
affordable housing. The city may have other sites that could
be rezoned for affordable housing, but the city has not yet
committed to such a rezoning. As a result, this bill may help
divert the city away from rezoning possible sites for
affordable housing, which could actually result in the new
construction and net increase in affordable housing units.
It should also be noted that the city has maintained a number
of exclusionary housing development standards, including a
maximum 35% lot-coverage ratio, a 35-foot height limit, a
maximum second floor to first floor ratio of 80%, and a
requirement that all residential development projects over 50
cubic yards go through a discretionary review process. HCD
has cited the need for the city to analyze and address these
constraints, and to date the city has failed to revise its
land use controls. In addition, the city has so far failed to
identify a zone that can accommodate emergency shelters
without a conditional use permit, as required by SB 2
(Cedillo), Chapter 633, Statutes of 2007.
Moreover, the bill may encourage the city to direct its
housing resources away from the new construction of affordable
housing. Under the bill, a city may only get credits towards
25% of its RHNA obligation but can spend 100% of its housing
resources on conversion. This follows a situation in 2003 and
2004 in which the city contracted with a non-profit affordable
housing developer to assess potential sites for development,
entered into an exclusive negotiating agreement with the
developer for the most promising and only available site, and
then, after strong opposition from neighboring homeowners to
the proposed 60-unit project, voted not to pursue a
development agreement with the developer for affordable rental
housing. Ultimately, the site was developed with 20-30
Habitat for Humanity homes, less than half of the number of
units originally proposed.
Lastly, if the city were to employ the conversion strategy
this bill encourages, the converted affordable housing units
would only be occupied by one family. While reducing
overcrowding is positive and current law requires the local
government to provide relocation assistance to displaced
occupants, the city's lack of rental housing will almost
surely require displaced families to move out of the city.
It can be argued that this bill runs contrary to state policy
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and encourages a city's or county's aversion to rezoning and
making available sites for the new construction of affordable
housing. The committee may wish to consider requiring that a
city or county that seeks to get RHNA credit for conversion of
ownership units to commit at least an equal amount of
financial assistance to the new construction of affordable
rental housing for lower-income households.
Assembly Votes:
Floor: 74-0
HCD: 9-0
Local Gov: 6-2
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: California State Association of Counties
City of Buena Park
City of Dana Point
City of Laguna Hills
City of Mission Viejo
City of Oakland
City of Palm Desert
City of San Clemente
City of Torrance
OPPOSED: None received.