BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 2508
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: caballero
VERSION: 5/3/10
Analysis by: Mark Stivers FISCAL: no
Hearing date: June 29, 2010
SUBJECT:
Infill Infrastructure Grant Program and minimum densities
DESCRIPTION:
This bill allows a city or county to petition the Department of
Housing and Community Development for an exception to the
density requirements of the Infill Infrastructure Grant Program.
ANALYSIS:
In November 2006, California voters approved Proposition 1C, the
$2.85 billion Housing and Emergency Shelter Trust Fund Act of
2006. Among other things, Proposition 1C included $850 million
for grants for capital projects related to housing and
housing-related infill development and for brownfield cleanup
that promotes housing and housing-related infill development.
Ultimately, the Legislature appropriated $790 million to the
Infill Infrastructure Grant (IIG) Program, to be administered by
the Department of Housing and Community Development (HCD). SB
86 (Budget Committee), Chapter 179, Statutes of 2007,
established the statutory framework for the IIG Program, which
offers gap financing grants to cover the costs of infrastructure
improvements necessary for the development of infill housing.
Under current law, to be eligible for an IIG grant, an infill
project or infill area must meet the following criteria:
Be located in a city or county that has an HCD-approved
housing element.
Include not less than 15 percent affordable units.
Have an average residential density equal to or greater than
the "Mullin densities" described below or greater than 10
AB 2508 (CABALLERO) Page 2
units per acre in rural areas.
Be located in an area designated for mixed-use or residential
development in a local or regional land use plan.
Under housing element law, each city and county must adopt a
housing element to its general plan that identifies and analyzes
existing and projected housing needs, identifies adequate sites
with appropriate zoning to meet its share of the regional
housing need for each income group, and ensures that regulatory
systems provide opportunities for, and do not unduly constrain,
housing development. HCD reviews both draft and adopted housing
elements to determine whether or not they are in substantial
compliance with the law.
For the purposes of housing element law, current statute uses
density as a proxy for affordability. In order to show that it
can accommodate lower-income housing, a city or county must show
that is has sites zoned to allow higher-density multifamily
housing in one of two ways:
Provide an analysis demonstrating how the adopted densities
accommodate lower-income housing, based on market demand,
financial feasibility, or recent development experience.
Meet or exceed the following default densities established in
statute and known as the "Mullin densities":
? 30 units per acre for metropolitan jurisdictions,
generally defined as any city or county (except for
jurisdictions of less than 25,000 population) in a
Metropolitan Statistical Area (MSA) with a population of 2
million persons or greater and any city or county over
100,000 population in any size MSA.
? 20 units per acre for suburban jurisdictions, generally
defined as cities and counties in an MSA of less than 2
million persons (except for jurisdictions over 100,000
population) and jurisdictions under 25,000 population in
larger MSAs.
? 15 units per acre for incorporated cities within
non-metropolitan counties and for non-metropolitan counties
that have micropolitan areas (i.e., Del Norte, Humboldt,
Lake, Mendocino, Nevada, Tehama, and Tuolumne Counties).
? 10 units per acre for unincorporated areas in all
non-metropolitan counties.
This bill allows a city or county, with respect to the IIG
Program only, to petition HCD for an exception to the Mullin
AB 2508 (CABALLERO) Page 3
densities if the agency believes it is unable to meet this
requirement. The petition shall include the reasons for the
exception and provide information supporting the need for the
exception.
COMMENTS:
1.Purpose of the bill . Current law defines the City of Salinas
as a "metropolitan" jurisdiction for purposes of the IIG,
requiring projects to have an average density of 30 units per
acre to be eligible for funding. According to the author,
this designation is not accurate because Salinas in neither a
central city nor an urban core. Moreover, the city "lacks the
overall infrastructure to develop at a density of 30 units per
acre." As a result, the author believes that the city cannot
qualify for IIG funds and introduced this bill to establish a
process for cities or counties to petition HCD to lower the
density requirements applicable to IIG projects in their
jurisdictions.
2.Salinas' status . While the MSA in which Salinas is located
generally qualifies as a suburban region, the city's
population of 153,948 (as of January 1, 2010) qualifies it as
a metropolitan jurisdiction for purposes of the IIG Program,
as does every other city in the state with a population of
greater than 100,000.
3.No justification . According to the author, the city lacks the
overall infrastructure to develop at a density of 30 units per
acre. In its letter of support, the City of Salinas writes
that while it is one of the most densely populated communities
in the state, "with a few possible exceptions, the Salinas
economy cannot support development at 30+ units to the acre.
The infrastructure is insufficient; rent levels will not
underwrite the development cost; a young populace needs more,
not less, open space." Neither the author nor the city,
however, has provided any evidence to back up these claims.
Thirty units per acre is not a particularly high density and
represents a typical four-story suburban apartment or
condominium complex rather than a mid-rise or high-rise
building. The IIG Program only requires that the individual
project being proposed have an average density of 30 units per
acre. As a result, even for a "metropolitan" city to
participate, it must only locate one single infill site for a
suburban-style development. In fact, the point of the IIG
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density requirement is to incentivize cities and counties to
push the envelope on densities in order promote more compact,
sustainable forms of development. If a city or county wants
state funding, it may have to reach beyond its comfort zone.
In most cases, infrastructure capacity is a function of the
number of units more than the density of development. If a
city has sufficient water or sewer capacity to serve 1000 new
homes, the density of the homes will not impact this capacity
much. In fact, higher density development often requires less
infrastructure, such as water for landscaping and road
capacity, and allows for more open space by reducing the
overall acreage of development. Given the high level of
overall development in Salinas over the last decade, it is not
clear that the city's infrastructure truly is insufficient to
accommodate a single IIG project. Concerns about density
often are political. Though refuted by numerous academic
studies, neighboring residents often fear the impacts of
higher-density development, making it politically unpopular
for local elected officials.
Most importantly, however, the IIG program was specifically
created and designed to address infrastructure deficiencies
and project financing gaps. The whole idea was that
higher-density infill development is financially infeasible if
there are significant infrastructure needs to overcome. The
program provides significant public funding to improve
infrastructure so that developers need not cover these cost
alone, thereby making more projects feasible.
Given the purpose of the IIG program to promote higher-density
development, the lack of evidence that cities cannot
accommodate a single project of 30 units per acre, and the
fact that the IIG Program is specifically designed to fill
infrastructure and financing gaps, the committee may wish to
consider whether it is consistent with the intent of the IIG
Program to allow cities and counties to petition for lower
density requirements.
4.No money . Proposition 1C provides $790 million for the IIG
Program. HCD has awarded all of the available funds. It is
very unlikely that this program will receive additional
funding in the foreseeable future, if ever.
5.No explicit effect . As currently written, the bill allows a
city or county to petition HCD for an exception to the IIG
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density requirement, but it does not require HCD to evaluate
such a petition and does not expressly allow HCD to grant such
an exception. Arguably, the bill allows a jurisdiction to
submit a petition and nothing more. Because HCD has no new
duties under the bill, Legislative Counsel has keyed the bill
non-fiscal.
6.No standards . This bill allows a city or county to petition
HCD for an exception to the density requirements of the IIG
Program based on the jurisdiction's belief that it is "unable"
to meet the requirements. The bill neither defines "unable"
nor establishes any criteria by which HCD shall evaluate such
a petition. As a result, HCD could grant exceptions for any
reason or for no reason at all, possibly resulting in the
effective repeal of the density requirement of the IIG
Program. To the extent that the committee wishes to allow
such petitions, it may wish to consider establishing some
parameters for the granting of exceptions.
Assembly Votes:
Floor: 72-0
Local Gov: 9-0
HCD: 9-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: California State Association of Counties
City of Salinas
City of Watsonville
League of California Cities
OPPOSED: None received.