BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 184|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 184
Author: Leno (D)
Amended: 5/9/11
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 5-3, 5/3/11
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian
NOES: Gaines, Harman, Huff
NO VOTE RECORDED: Rubio
SUBJECT : Land use: zoning regulations
SOURCE : California Rural Legal Assistance Foundation
Western Center on Law and Poverty
DIGEST : This bill overturns the Palmer decision and
expressly authorizes a county or city to establish
inclusionary housing requirements as a condition of
development.
ANALYSIS : Article XI, Section 7 of the California
Constitution grants counties and cities the power "to make
and enforce within its limits all local, police, sanitary,
and other ordinances and regulations not in conflict with
general laws." This is generally referred to as the police
power of local governments. The Planning and Zoning law
within state statute is a general law that sets forth
minimum standards for counties and cities to follow in land
use regulation, but the law also establishes the
Legislature's clear intent to "provide only a minimum of
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limitation in order that counties and cities may exercise
the maximum degree of control over local zoning matters."
Using this police power, many counties and cities have
adopted ordinances, commonly called "inclusionary zoning
ordinances," that require developers to ensure that a
certain percentage of housing units in a new development be
affordable to lower income households. According to the
California Rural Housing Coalition's database, 140
jurisdictions in California currently have mandatory
inclusionary zoning ordinances. These ordinances vary
widely in the percentage of affordable units required, in
the depth of affordability required, and in the options
through which a developer may choose to comply. Most if
not all such ordinances apply to both rental and ownership
housing.
In 2009 in the case of Palmer v. City of Los Angeles , the
Second District California Court of Appeal opined that the
city's affordable housing requirements associated with a
particular specific plan (akin to an inclusionary zoning
ordinance), as it applied to rental housing, conflicted
with and was preempted by a state statute known as the
Costa-Hawkins Rental Housing Act. The Costa-Hawkins Act
limits the permissible scope of local rent control
ordinances. Among its various provisions is the right for
a rental housing owner generally to set the initial rent
level at the commencement of a tenancy, even if the local
rent control ordinance would otherwise limit rent levels
across tenancies. This provision is known as vacancy
decontrol because the rent level is temporarily
decontrolled after a voluntary vacancy. The act also gives
rental housing owners the right to set the initial and all
subsequent rental rates for a unit built after February 1,
1995. The court opined that "forcing Palmer to provide
affordable housing units at regulated rents in order to
obtain project approval is clearly hostile to the right
afforded under the Costa-Hawkins Act to establish the
initial rental rate for a dwelling or unit."
This bill expressly authorizes a county or city under the
Planning and Zoning Law to establish as a condition of
development inclusionary housing requirements, which may
require the provision of affordable residential units for
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low, very low, or extremely low income owners or tenants.
The bill further declares the intent of the Legislature to
supersede any holding or dicta in Palmer v. City of Los
Angeles that conflicts with this authority.
Background
The inclusionary zoning debate . The purposes of
inclusionary zoning ordinances are twofold. First,
inclusionary zoning ordinances are intended to increase the
production of affordable housing by leveraging additional
resources and opportunities. While developers often do not
build the mandated affordable units themselves or pay their
full cost, inclusionary zoning ordinances generally place
the burden on the developer to ensure construction of the
affordable units. To fulfill this obligation, developers
often donate land or make a financial contribution, or
both, towards development costs. Many ordinances also
allow a developer to fulfill his or her obligation by
paying an in-lieu fee, which the city or county uses to
help finance its own development.
The second purpose of inclusionary zoning ordinances is to
achieve "inclusion" in newly-developing communities. Over
the past few decades, development in California has
generally resulted in single-product neighborhoods, often
single-family home subdivisions. In many cases, the prices
of these new homes are affordable only to the upper end of
the market. Because inclusionary zoning results in some
homes being sold at below-market rates or in a greater mix
of housing products (duplexes, townhomes, condos,
apartments) that come at a greater variety of prices, it
increases economic diversity within neighborhoods and meets
a greater range of the community's housing needs.
In summing up the inclusionary zoning experience in
California in its 2007 report, the California Coalition for
Rural Housing states, "The single most important conclusion
is that inclusionary programs are putting roofs over the
heads of tens of thousands of Californians. These homes,
in turn, are building mixed-income neighborhoods where
houses considered 'affordable' are often indistinguishable
from those at market-rate."
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While market-rate housing developers generally do not argue
with the "inclusionary" aspect of inclusionary zoning, they
often do take issue with having to contribute their
resources for a societal benefit. They believe that if a
jurisdiction wants to promote greater affordable housing,
it should spend public resources for this purpose rather
than require a private entity to do so. Developers also
point out that theirs is one of the few industries that is
asked to provide its product at below-market prices to some
of those who cannot afford the full price.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/18/11)
California Rural Legal Assistance Foundation (co-source)
Western Center on Law and Poverty (co-source)
American Civil Liberties Union
Advocates for Affordable Housing
Alliance of Californians for Community Empowerment
Berkeley Organizing Congregations for Action
CA State Building and Construction Trades Council
Cabrillo Economic Development Corporation
California Coalition for Rural Housing
California Housing Partnership Corporation
California Labor Federation
Century Housing, Culver City
Chinatown Community Development Center
Cities of: Brea, Daly City, Salinas, Santa Monica
Coalition for Economic Survival
Communities Actively Living Independent and Free
Community Corporation of Santa Monica
Community Resources for Independent Living
Corporation for Supportive Housing
County of Los Angels
County of Mono
CSAC
EAH Housing
East LA Community Corporation
Eden Housing
Friends Committee on Legislation of CA
Greater Long Beach Interfaith Community Organization
Hollywood Community Housing Corporation
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Housing Long Beach
Independent Living Center of Southern CA
Kennedy Commission
LAANE
League of Cities
Legal Services of Northern CA
Little Tokyo Service Center Development Corporation
Loaves & Fishes
Low Income Investment Fund
Lutheran Office of Public Policy
Mammoth Lakes Housing, Inc.
McCormack Baron Salazar, Real Estate Development
Mercy Housing
Mid Pen Housing
National Community Renaissance
Non-Profit Housing Association of Northern California
Pacific West Communities
Paratransit, Inc.
Peninsula Interfaith Action
People Organized for Westside Renewal
People's Self-Help Housing
Public Counsel Law Center
Sacramento/Yolo Mutual Housing Association
San Diego Housing Federation
Self-help Enterprises
Skid Row Housing Trust
Southern California Association of Non Profit Housing
Tenants Together
Tenderloin Neighborhood Development Corporation
The Los Angeles Neighborhood-based Development Corporation
Coalition
Town of Hillsborough
Town of Mammoth Lakes
TRUST South LA
Venice Community Housing Corporation
West Angeles Community Development Corporation
Women Organizing Resources, Knowledge and Services
OPPOSITION : (Verified 5/18/11)
Apartment Association, California Southern Cities
Apartment Association of Greater Los Angeles
Apartment Association of Orange County
California Association of Realtors
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Rental Property Association of Northern Alameda County
San Diego County Apartment Association
San Francisco Association of Realtors
Santa Barbara Rental Property Association
ARGUMENTS IN SUPPORT : According to the sponsors, local
inclusionary housing programs have proven to be one of the
most effective tools for producing new homes affordable to
working families and creating strong, diverse neighborhoods
with a range of housing choices. Inclusionary ordinances
have provided quality affordable housing to over 80,000
Californians, including the production of an estimated
30,000 units in the last decade alone. While many of these
local programs have been in place for decades, the recent
Palmer decision has created uncertainty and confusion for
local governments and housing advocates regarding the
future viability of this important local land use tool.
According to the author's office, this bill resolves a
conflict between local inclusionary zoning ordinances and
the state's Costa-Hawkins Rental Housing Act, thereby
restoring the ability of local governments to use one of
the most effective tools at their disposal to promote the
production of both ownership and rental homes that are
affordable to California's lower income working families.
ARGUMENTS IN OPPOSITION : Opponents argue that
inclusionary zoning is akin to rent control and that this
bill therefore allows local governments to enact and
enforce rent control on newly constructed rental housing
units by pre-empting the Costa-Hawkins Act. They believe
that the Costa-Hawkins protections for anew construction
are appropriate and should be maintained. Moreover, they
believe that the bill will seriously hurt the construction
industry.
JJA:do 5/18/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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