BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2508 (Caballero)
Hearing Date: 08/12/2010 Amended: 08/02/2010
Consultant: Mark McKenzie Policy Vote: T&H 9-0
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BILL SUMMARY: AB 2508 would allow a city to apply for Infill
Incentive Grant (IIG) Program funds for a project that does not
meet the current minimum density requirements. Specifically,
this bill would authorize a city with a population of between
100,000 and 2,000,000 persons to petition the Department of
Housing and Community Development (HCD) for an exception to the
jurisdiction's classification as "metropolitan" if it believes
it cannot meet the IIG Program's density requirements.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Eligibility expansion Future cost pressures, millions
annuallyBond*
_____________ ----------see staff
comments---------
* Regional Planning, Housing, and Infill Incentive Account
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STAFF COMMENTS: SUSPENSE FILE.
Proposition 1C provided $850 million in general obligation bond
funds for grants for capital projects related to housing and
housing-related infill development. SB 86 (Budget and Fiscal
Review), Chapter 179 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. In order to qualify for an
allocation of IIG funds, a project must meet specified criteria,
including density requirements established in housing element
law for accommodating lower income housing (Mullin densities).
For example, a jurisdiction classified as "metropolitan" is
authorized for IIG funds if a qualifying project or infill area
for which a project grant may be awarded includes residential
densities of at least 30 units per acre.
AB 2508 would allow a city qualifying as "metropolitan" because
its population is greater than 100,000 in a metropolitan
statistical area (MSA) of less than 2,000,000 to petition HCD
for an allocation of IIG funds if it believes an exception to
the statutory density requirements is warranted. The bill would
allow HCD to grant such an exception until January 1, 2015.
This bill is intended to allow the City of Salinas to compete
for future allocations of IIG funds without demonstrating that a
project meets the program's density requirements. This would
appear to contradict the purpose of the program, which is to
promote more compact development. It is unclear how many cities
would qualify for the exception provided by this bill, but to
the extent that more applicants are competing for IIG funds,
this bill would create cost pressures in the millions of
dollars. Average IIG awards are over $7 million. Staff notes
that HCD has issued two rounds of IIG funding since 2007-08, and
awarded all Proposition 1C bond funds made available for the
program. While IIG funds are currently exhausted, AB 2508 would
apply to any future IIG funds.