CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1763

Author:(Chiu)

As Amended Ver:August 13, 2019

Majority vote

SUMMARY:

Revises Density Bonus Law (DBL) to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to lower income households.

The Senate Amendments:

1. Delete the option for developers to request an enhanced density bonus within one-half mile of a "high quality transit corridors."
2. Allow for 20% of the units in a qualifying development to be for moderate income households.
3. Provide that if a development provides 100% units affordable to lower-income households, and is either a special needs housing development or a supportive housing development, then the local government shall not impose any minimum parking requirements. A development that is special needs housing development shall have either paratransit service or unobstructed access, within 1/2 mile, to fixed-bus route service that operates at least eight times a day.
4. Clarify that if a development receives a waiver from maximum density controls as specified, the development shall not be eligible for a waiver or reduction of any other additional development standards under density bonus law.

COMMENTS:

Density bonus law: Density bonus law was originally enacted in 1979, to help address the affordable housing shortage and to encourage development of more low- and moderate income housing units. All local governments are required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus on top of the cities' zoned density in exchange for including extremely low, very low, low, and moderate income housing. Local governments must grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least any one of the following:

1. Ten percent of the total units for lower income households;
2. Five percent of the total units of a housing for very low income households;
3. A senior citizen housing development or mobilehome park;
4. Ten percent of the units in a common-interest development for moderate-income households; or
5. Ten percent of the total units of a housing development for transitional foster youth, disabled veterans, or homeless persons.

As part of the density bonus application, a developer may also request incentives, concessions and parking ratio reductions. The number of incentives and concessions, and the parking ratio reduction, vary depending on the percentage and type of affordable housing included in a project.

Maximum density: A developer can access a 35% density bonus and three concessions and incentives under existing law. To qualify for a 35% density bonus, a developer must restrict either 11% of the units in a development to very-low income (50% of AMI) or 20% to lower income (households at or below 80% of AMI). If a developer restricts 100% of the units to lower income households they receive no additional density bonus. A city can provide a developer additional density beyond the 35% if it chooses. Zoning often constrains the size of developments and even with a density bonus of 35% , a developer is not able to include enough units to make an affordable housing development financial feasible. This bill would give all 100% affordable developments an 80% density bonus and would give 100% affordable developments near transit an unlimited density bonus as well as an increase of up to three stories in height or an increase in the floor area ratio (FAR) of up to 55% or 4.25. The additional density will make it easier for affordable housing developers to compete against market-rate developments for housing sites. The additional density they can access under density bonus will increase the number of units on the site and help reduce the per-unit cost of the development.

According to the Author:

According to the author, "In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer We need to act quickly to increase the supply of affordable housing.

Arguments in Support:

According to supporters, an affordable home is the foundation that allows each of us to care for our families; to be able to get ready to each day and to go our jobs; to live with dignity. While we have made progress over the last two years in addressing the housing and homelessness crises, there are still many steep challenges and barriers to building homes for people surviving on low- and moderate-incomes, which is why we are pleased to co-sponsor your bill. The changes in the bill will increase the number of affordable units available to ensure that a maximum number of units are being built to help California reach its goal of adding 1.5 million affordable units.

Arguments in Opposition:

The League of Cities writes that this bill "would alter existing land use policies based on transit service that is not under the authority of local jurisdictions" and that "granting a developer an unlimited density bonus and three additional stories is too extreme in many communities…such an expansion of [density bonus law] will undermine a city's state-certified housing element and community-based housing plans."

FISCAL COMMENTS:

According to the Assembly Committee on Appropriations, local costs are not reimbursable by the state because local agencies have authority to levy fees to cover these changes.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0

YES: Chiu, Diep, Gabriel, Gloria, Kiley, Limón, Maienschein, Quirk-Silva

ASM LOCAL GOVERNMENT: 7-0-1

YES: Aguiar-Curry, Lackey, Bloom, Ramos, Luz Rivas, Robert Rivas, Voepel

ABS, ABST OR NV: Boerner Horvath

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Friedman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Jones-Sawyer, Robert Rivas

ASSEMBLY FLOOR: 72-0-8

YES: Aguiar-Curry, Berman, Bigelow, Bloom, Bonta, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, O'Donnell, Obernolte, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

ABS, ABST OR NV: Arambula, Bauer-Kahan, Boerner Horvath, Brough, Burke, Frazier, Gloria, Smith

SENATE FLOOR: 28-11-1

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Lena Gonzalez, Hertzberg, Hill, Hueso, Jackson, Leyva, McGuire, Mitchell, Monning, Moorlach, Pan, Portantino, Roth, Rubio, Skinner, Umberg, Wieckowski, Wiener

NO: Bates, Borgeas, Dahle, Glazer, Grove, Hurtado, Jones, Morrell, Nielsen, Stone, Wilk

ABS, ABST OR NV: Stern

UPDATED:

VERSION: August 13, 2019

CONSULTANT: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0001893

 THIRD READING  

Bill No: AB 1763

Author: Chiu (D)

Amended: 8/13/19 in Senate

Vote: 21

SENATE HOUSING COMMITTEE: 8-1, 6/18/19

AYES: Wiener, Caballero, Durazo, Moorlach, Roth, Skinner, Umberg, Wieckowski

NOES: Bates

NO VOTE RECORDED: Morrell, McGuire

SENATE GOVERNANCE & FIN. COMMITTEE: 5-0, 7/10/19

AYES: McGuire, Moorlach, Beall, Hertzberg, Wiener

NO VOTE RECORDED: Hurtado, Nielsen

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 72-0, 5/13/19 - See last page for vote

SUBJECT: Planning and zoning: density bonuses: affordable housing

SOURCE: California Housing Consortium

DIGEST:

This bill revises density bonus law (DBL) to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to low- and moderate-income households.

ANALYSIS:

Existing law:

1. Defines a “major transit stop” as a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with service intervals of 15 minutes or less during the morning and afternoon peak commute periods.
2. Defines “high quality transit corridor” as a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.
3. Requires all cities and counties to adopt an ordinance that specifies how they will implement state DBL. Requires cities and counties to grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least one of the following:
   1. 10% of the total units of a housing development for lower income households.
   2. 5% of the total units of a housing development for very low-income households.
   3. A senior citizen housing development or mobile home park.
   4. 10% of the units in a common interest development (CID) for moderate-income households.
   5. 10% of the total units for transitional foster youth, disabled veterans, or homeless persons.
   6. 20% of the total units for lower-income students in a student housing development.
4. Requires the city or county to allow an increase in density on a sliding scale from 20% to 35% over the otherwise maximum allowable residential density under the applicable zoning ordinance and land use element of the general plan, depending on the percentage of units affordable low-income, very low-income, or senior households.
5. Provides that upon the request of a developer, a city, county, or city and county shall not require a vehicular parking ratio, inclusive of disabled and guest parking, that meets the following ratios:
   1. Zero to one bedroom — one onsite parking space.
   2. Two to three bedrooms — two onsite parking spaces.
   3. Four and more bedrooms — two and one-half parking spaces.
6. Provides that if a project contains 100% affordable units and is within ½ mile of a major transit stop, the local government shall not impose a parking ratio higher than 0.5 spaces per unit. Provides that if a project contains 100% affordable units and houses persons with special needs or persons who are 62 years or older, the ratio shall not exceed 0.3 spaces or .5 spaces per unit, respectively. The development shall have either paratransit service or unobstructed access, within one-half mile, to fixed bus route service that operates at least eight times per day.
7. The applicant shall receive the following number of incentives or concessions:
   1. One incentive or concession for projects that include at least 10% of the total units for lower income households or at least 5% for very low income households.
   2. Two incentives or concessions for projects that include at least 20% of the total units for lower income households or least 10% for very low income households.
   3. Three incentives or concessions for projects that include at least 30% of the total units for lower income households or at least 15% for very low income households.

This bill:

1. Allows a project that includes 100% units affordable to low-income households, except that up to 20% may be for moderate-income households, to be provided the following:
   1. Four incentives or concessions.
   2. 80% density bonus.
   3. If the development is located within 1/2 mile of a major transit stop, the city, county, or city and county shall not impose any maximum controls on density and shall allow a height increase of up to three additional stories, or 33 feet.
2. Provides that, if a development receives a waiver from maximum controls as specified under (1) above, the development shall not be eligible for a waiver or reduction of any other additional development standards under density bonus law.
3. Provides that if a development provides 100% units affordable to lower-income households, and is either a special needs housing development or a supportive housing development, then the local government shall not impose any minimum parking requirements. A development that is special needs housing development shall have either paratransit service or unobstructed access, within 1/2 mile, to fixed-bus route service that operates at least eight times a day.

Comments

1. Housing near transit. Research has shown that encouraging more dense housing near transit serves not only as a means of increasing ridership of public transportation to reduce greenhouse gases (GHGs), but also a solution to our state’s housing crisis. The Legislature subsequently allocated 20% of the ongoing Cap and Trade Program funds to the Affordable Housing and Sustainable Communities Program, which funds land use, housing, transportation, and land preservation projects to support infill and compact development that reduce GHGs. At least half of the funds must support affordable housing projects.

A 2016 McKinsey Report, A Toolkit to Close California’s Housing Gap: 3.5 Million Homes by 2025, found that increasing housing demand around high-frequency public transit stations could build 1.2 – 3 million units within a half-mile radius of transit. The report notes that this new development would have to be sensitive to the character of a place, and recommends that local communities proactively rezone station areas for higher residential density to pave the way for private investments, accelerate land-use approvals, and use bonds to finance station area infrastructure.

Research has also demonstrated a positive relationship between income and vehicle miles traveled (VMT). A study by the Center for Neighborhood Technology, entitled Income, Location Efficiency, and VMT: Affordable Housing as a Climate Strategy, created a model to isolate the relationship of income on VMT. This model found that lower-income families living near transit were likely to drive less than their wealthier neighbors.

This bill incentivizes denser housing near transit by reducing zoning controls such as density, parking, height, as specified, on projects that contain 100% units affordable to lower-income households, except that the project may also include up to 20% units affordable to moderate-income households.

1. DBL. Given California’s high land and construction costs for housing, it is extremely difficult for the private market to provide housing units that are affordable to low- and even moderate-income households. Public subsidy is often required to fill the financial gap on affordable units. DBL allows public entities to reduce or even eliminate subsidies for a particular project by allowing a developer to include more total units in a project than would otherwise be allowed by the local zoning ordinance in exchange for affordable units. Allowing more total units permits the developer to spread the cost of the affordable units more broadly over the market-rate units. The idea of DBL is to cover at least some of the financing gap of affordable housing with regulatory incentives, rather than additional subsidy.

Under existing law, if a developer proposes to construct a housing development with a specified percentage of affordable units, the city or county must provide all of the following benefits: a density bonus; incentives or concessions (hereafter referred to as incentives); waiver of any development standards that prevent the developer from utilizing the density bonus or incentives; and reduced parking standards.

To qualify for benefits under DBL, a proposed housing development must contain a minimum percentage of affordable housing. If one of these five options is met, a developer is entitled to a base increase in density for the project as a whole (referred to as a density bonus) and one regulatory incentive. Under DBL, a market rate developer gets density increases on a sliding scale based on the percentage of affordable housing included in the project. This helps developers reduce costs while enabling a local government to determine what changes make the most sense for that site and community.

1. Maximum density. Zoning often constrains the size of developments and even with a density bonus of 35 percent, a developer is not able to include enough units to make an affordable housing development financially feasible. This bill gives all 100% affordable developments an 80% density bonus and would give 100% affordable developments near transit an unlimited density bonus as well as an increase of up to three stories in height. The additional density will make it easier for affordable housing developers to compete against market-rate developments for housing sites. The additional density they can access under density bonus will increase the number of units on the site and help reduce the per-unit cost of the development.
2. Low- and Moderate-Income Housing Requirements. The Mixed-Income Loan Program (MIP), created by SB 2 (Atkins, Chapter 364, Statutes of 2017), which allocates 15% of ongoing real estate transaction fee revenues to creating mixed-income housing for low- to moderate-income households. This program provides competitive long-term financing for newly constructed multifamily housing projects restricting units between 30% and 120% AMI. Projects that restrict 10% of the units in a development to moderate income (or 81% to 120 percent of AMI), receive a priority over other projects. The Governor’s Budget proposes to invest an additional $500 million to this program for 2019-2020. This bill encourages developers to pair with the MIP program and build moderate-income housing units in projects with low-income units, the author has agreed to allow up to 20% of the units in the project to be dedicated to households of moderate-income.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 8/19/19)

California Housing Consortium (source)

Abode CommunitiesAffirmed

American Planning Association, California Chapter

Burbank Housing

C&C Development

California Apartment Association

California Institute For Rural Studies

California Rural Legal Assistance Foundation

California YIMBY

Center For Sustainable Neighborhoods

City and County of San Francisco

City of Oakland

City of San Diego

City of Santa Monica

Corporation For Supportive Housing

Councilmember Dan Kalb, City Of Oakland

EAH Housing

Eden Housing

Eric Garcetti, Mayor Of Los Angeles

Habitat for Humanity California

Housing California

HousingAids Healthcare Foundation

Kennedy Commission

Many Mansions

MidPen Housing

North Bay Leadership Council

Pacific Companies, The

Palm Communities

Pueblo Unido CDC

San Francisco Housing Action Coalition

Silicon Valley At Home

Silicon Valley Leadership Group

Southern California Association of Nonprofit Housing

TELACU

Wakeland Housing and Development Corporation

Western Center on Law and Poverty

OPPOSITION: (Verified 8/19/19)

City of Beverly Hills

City of Burbank

City of Chino Hills

City of Clovis

City of Encinitas

City of Garden Grove

City of La Palma

City of Los Alamitos

City of Morgan Hill

City of Palmdale

City of San Carlos

City of San Dimas

City of San Marcos

City of San Mateo

City of Thousand Oaks

City of Torrance

League of California Cities

ARGUMENTS IN SUPPORT: According to the author, “In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. [This bill] gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. [This bill] gives developers additional density which equals more units.”

ARGUMENTS IN OPPOSITION: Several cities are opposed to this bill because it would prohibit them from implementing their respective goals and priorities to address housing goals and objectives. Some cities have taken steps to plan for their communities’ housing needs and write that this bill would undermine those plans. Some are working with local non-profits to use existing state and federal resources to build affordable housing. Others write that this bill is a one-size-fits-all approach that may not work for suburban cities.

ASSEMBLY FLOOR: 72-0, 5/13/19

AYES: Aguiar-Curry, Berman, Bigelow, Bloom, Bonta, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Arambula, Bauer-Kahan, Boerner Horvath, Brough, Burke, Frazier, Gloria, Smith

Prepared by: Alison Hughes / HOUSING / (916) 651-4124

8/21/19 16:30:54

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Planning and zoning: density bonuses: affordable housing

Revises density bonus law to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to moderate- or lower-income households.

Background

Planning and Zoning Law. The Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. A general plan must include specified mandatory “elements,” including a housing element that establishes the locations and densities of housing, among other requirements. Cities’ and counties’ major land use decisions—including most zoning ordinances and other aspects of development permitting—must be consistent with their general plans. The Planning and Zoning Law also establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself. Cities and counties must provide a path to appeal a decision to the planning commission and/or the city council or county board of supervisors.

Local governments enact zoning ordinances that shape development, such as setting maximum heights and densities for housing units, minimum numbers of required parking spaces, setbacks to preserve privacy, lot coverage ratios to increase open space, and others. These ordinances can also include conditions on development to address aesthetics, community impacts, or other particular site-specific considerations.

Density bonus law. Given California’s high land and construction costs, it can be difficult for developers to provide housing units that are affordable to low- and moderate-income households. In order to improve the financial viability of developments that provide housing at a cost below the market rate, the Legislature enacted the Density Bonus Law in 1979, which allows a development that meets certain criteria to include more total units in a project than would otherwise be allowed by local zoning. Each city and county must adopt an ordinance that provides concessions and incentives to developers that seek a density bonus. Failure to adopt an ordinance does not mean a city or county does not have to comply with the law.

Density bonus law requires cities and counties to grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least one of the following:

• 10 percent of the total units of a housing development for lower-income households;
• 5 percent of the total units of a housing development for very low-income households;
• A senior citizen housing development or mobile home park;
• 10 percent of the units in a common interest development (CID) for moderate-income households;
• 10 percent of the total units for transitional foster youth, disabled veterans, or homeless persons; or
• 20 percent of the total units for lower-income students in a student housing development.

These affordable housing units must remain affordable for at least 55 years. Developers that meet the requirements in density bonus law receive several other benefits in addition to higher allowable densities, including “incentives or concessions,” such as regulatory exemptions that result in cost reductions, and waivers of development standards that would physically prevent the development from being constructed. These benefits are intended to support the inclusion of affordable housing units in a project, which otherwise might not be financially feasible. Cities and counties must grant the incentives or concessions unless they find that the incentive or concession wouldn’t result in cost reductions that allow the construction of affordable units, it would be contrary to state or federal law, or it would have a specific, adverse impact on: the public health or safety; the physical environment; or a historic resource.

Developments that include higher percentages of low- or very low-income households get higher allowable housing densities and other benefits, up to maximum percentages of 20% low-income or 11% very low-income. For example, a housing project with only 5% of very low-income housing is entitled to a 20% increase in density, one concession, unlimited waivers from development standards, and reduced parking standards for the entire project. A housing project with 11% very low-income units receives a 35% increase in density, two concessions, and the same access to waivers and reduced parking standards.

Density bonus law also caps the parking ratio that a local government may require at:

• 1 parking space per unit with zero or one bedroom;
• 2 parking spaces per unit with two or three bedrooms; or
• 2.5 parking spaces per unit with four or more bedrooms.

Certain senior housing and developments for individuals with special needs get additional reductions in parking requirements.

Transit-oriented development. A number of state policies encourage new developments near public transit in order to reduce vehicle miles traveled. Senate Bill 375 (Steinberg, 2008) linked transportation planning and land use planning by state, regional, and local agencies by providing metropolitan planning organizations and their constituent cities and counties with, among other things, incentives to promote development near transit priority areas, including:

• Major transit stops, which are sites containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods; and
• High quality transit corridors, which are corridors with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

To provide further incentives for developments near transit, density bonus law prohibits local governments from requiring more than 0.5 spaces per unit for a development that receives a density bonus and is located within ½ mile of a major transit stop. Affordable housing advocates want the Legislature to further encourage affordable housing developments, including developments near transit.

Proposed Law

Assembly Bill 1763 revises density bonus law to require a city or county to award a developer additional benefits if 100 percent of the units in a development are restricted to moderate- or lower-income households. Specifically, AB 1763 grants:

• Four incentives or concessions (current law allows a maximum of three); and
• 80 percent increase over the otherwise allowable residential density (current law allows a maximum of 35 percent).

AB 1763 grants additional benefits to 100 percent affordable developments near transit, specifically:

• If the development is located within ½ mile of a major transit stop, the city, county, or city and county cannot impose any maximum controls on density and must allow a height increase of up to three additional stories, or 33 feet, and an increase in the allowable floor area ratio up to 55 percent relative to the underlying limit, or 4.25, whichever is greater.
• If the housing development is located within ½ mile of a high quality transit corridor, the city, county, or city and county cannot impose any maximum controls on density and must allow a height increase of up to two additional stories, or 22 feet, and an increase in the allowable floor area ratio up to 50 percent relative to the underlying limit, or 3.75, whichever is greater.

If the development is also a special needs housing development or a supportive housing development, AB 1763 prohibits a city or county from imposing any parking requirements.

To qualify for the bill’s enhanced density bonus, a development must be 100 percent affordable to moderate- and lower-income households, excluding managers’ units, with no more than 20 percent affordable to moderate-income households.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. AB 1763 gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. AB 1763 gives developers additional density which equals more units.”

2. One size fits all? California is a geographically and demographically diverse state, and that is reflected in its 482 cities and 58 counties. Local elected officials for each of those municipalities are charged by the California Constitution with protecting their citizens’ welfare. One chief way local governments do this is by exercising control over what gets built in their community. Local officials weigh the need for additional housing against the concerns and desires of their constituents. Where appropriate, those officials enact ordinances to shape their communities based on local conditions and desires. In addition, there are physical differences across California’s communities that have bearing on the types of development that should be located in one area or another. Some schools of thought in land use planning argue that development should be shifted away from areas such as the coastal zone, so as to maintain the California coast’s appeal to tourists and residents, or fire hazard severity zones, so as to not put new residents in areas vulnerable to wildfire. By allowing 100% affordable developments to be bulkier and taller than is allowed by local zoning or other features of the surrounding area, AB 1763 doesn’t take into account these sorts of variations in the physical environment and community character. On the other hand, California’s density bonus law is already in place and applies statewide, without apparent harm to community integrity or the public health and safety. Density bonus law also provides offramps if such impacts are identified. Should the Committee wish to tailor AB 1763 to the differences among communities and the physical environment, the Committee may wish to consider amending AB 1763 to provide different levels of increased density based on the characteristics of each community, based on factors such as population or physical surroundings.

3. Almost there. Transportation and land use are intimately connected—land use patterns influence the distance traveled and mode of transportation used. These factors in turn affect whether the state will achieve its greenhouse gas emissions targets or other environmental goals. AB 1763 attempts to enable affordable housing development near transit, including both buses and passenger rail, by allowing 100 percent affordable developments near major transit stops and along high quality transit corridors to go bigger and taller than developments elsewhere. However, tying project size to bus routes poses some practical challenges. Because most bus routes have little fixed infrastructure relative to rail, building near bus corridors that currently exist doesn’t ensure that transit will be available in the long term. Some local jurisdictions are eliminating bus stops as new modes of transportation, such as ride-sharing, become more prevalent and bus routes become less viable, and routes can move as transit needs change. Moreover, AB 1763 grants increased height and size to projects along bus corridors that have 15-minute service intervals. However, some bus routes, particularly in Los Angeles, have relatively high frequencies but also have distances of some miles between stops. As a result, a development along such a corridor might not have practical access to transit. To ensure that residents of the developments that are eligible for AB 1763’s enhanced density bonus have access to viable transit, the Committee may wish to consider amending AB 1763 to more precisely identify bus routes that are more permanent.

4. Incoming! The Senate Housing Committee approved AB 1763 at its June 18^th meeting on a vote of 8 to 1. The Senate Governance and Finance Committee will hear AB 1763 as the committee of second reference.

5. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 1763 imposes new duties on planning officials with respect to the award of density bonuses, Legislative Counsel says that it imposes a new state mandate. But AB 1763 disclaims the state's responsibility for providing reimbursement by citing local governments’ authority to charge for the costs of implementing the bill's provisions.

Assembly Actions

Assembly Housing and Community Development Committee: 8-0

Assembly Local Government Committee: 7-0

Assembly Appropriations Committee: 18-0

Assembly Floor: 72-0

Support and Opposition

(7/5/19)

Support: Abode Communities; Affirmed Housing; Aids Healthcare Foundation; C&C Development; California Apartment Association; California Housing Consortium; California Institute for Rural Studies; California Rural Legal Assistance Foundation; California Yimby; Center for Sustainable Neighborhoods; City of Oakland; City of San Diego; Corporation For Supportive Housing; Councilmember Dan Kalb, City of Oakland; Eah Housing; Eric Garcetti, Mayor of Los Angeles; Habitat for Humanity California; Housing California; Many Mansions; Midpen Housing; The Pacific Companies; Palm Communities; Pueblo Unido CDC; Silicon Valley At Home (Sv@Home); Silicon Valley Leadership Group; Sv@Home; Telacu; The Kennedy Commission; Wakeland Housing and Community Development Corporation; Western Center on Law & Poverty, Inc.

Opposition: City of Beverly Hills; City of Burbank; City of Clovis; City of Garden Grove; City of La Palma; City of Los Alamitos; City of Palmdale; City of San Carlos; City of San Dimas; City of San Marcos; City of Thousand Oaks; City of Encinitas; City of Palmdale; City of Thousand Oaks; League of California Cities

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Planning and zoning: density bonuses: affordable housing

Revises density bonus law to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to moderate- or lower-income households.

Background

Planning and Zoning Law. The Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area covered by the plan. A general plan must include specified mandatory “elements,” including a housing element that establishes the locations and densities of housing, among other requirements. Cities’ and counties’ major land use decisions—including most zoning ordinances and other aspects of development permitting—must be consistent with their general plans. The Planning and Zoning Law also establishes a planning agency in each city and county, which may be a separate planning commission, administrative body, or the legislative body of the city or county itself. Cities and counties must provide a path to appeal a decision to the planning commission and/or the city council or county board of supervisors.

Local governments enact zoning ordinances that shape development, such as setting maximum heights and densities for housing units, minimum numbers of required parking spaces, setbacks to preserve privacy, lot coverage ratios to increase open space, and others. These ordinances can also include conditions on development to address aesthetics, community impacts, or other particular site-specific considerations.

Density bonus law. Given California’s high land and construction costs, it can be difficult for developers to provide housing units that are affordable to low- and moderate-income households. In order to improve the financial viability of developments that provide housing at a cost below the market rate, the Legislature enacted the Density Bonus Law in 1979, which allows a development that meets certain criteria to include more total units in a project than would otherwise be allowed by local zoning. Each city and county must adopt an ordinance that provides concessions and incentives to developers that seek a density bonus. Failure to adopt an ordinance does not mean a city or county does not have to comply with the law.

To be eligible for a density bonus, a development must do one of the following:

• Reserve at least 10 percent of the units for lower-income households;
• Reserve at least 5 percent of the units for very low-income households;
• Be either a senior citizen housing development or a mobile home park for older persons; or
• Reserve at least 10 percent of the units in a common interest development for people of moderate income, as long as all units are available for purchase by the general public.

These affordable housing units must remain affordable for at least 55 years. Developers that meet the requirements in density bonus law receive several other benefits in addition to higher allowable densities, including “incentives or concessions,” such as regulatory exemptions that result in cost reductions, and waivers of development standards that would physically prevent the development from being constructed. These benefits are intended to support the inclusion of affordable housing units in a project, which otherwise might not be financially feasible. Cities and counties must grant the incentives or concessions unless they find that the incentive or concession wouldn’t result in cost reductions that allow the construction of affordable units, it would be contrary to state or federal law, or it would have a specific, adverse impact on: the public health or safety; the physical environment; or a historic resource.

Developments that include higher percentages of low- or very low-income households get higher allowable housing densities and other benefits, up to maximum percentages of 20% low-income or 11% very low-income. For example, a housing project with only 5% of very low-income housing is entitled to a 20% increase in density, one concession, unlimited waivers from development standards, and reduced parking standards for the entire project. A housing project with 11% very low-income units receives a 35% increase in density, two concessions, and the same access to waivers and reduced parking standards.

Density bonus law also caps the parking ratio that a local government may require at:

• 1 parking space per unit with zero or one bedroom;
• 2 parking spaces per unit with two or three bedrooms; or
• 2.5 parking spaces per unit with four or more bedrooms.

Certain senior housing and developments for individuals with special needs get additional reductions in parking requirements.

Transit-oriented development. A number of state policies encourage new developments near public transit in order to reduce vehicle miles traveled. Senate Bill 375 (Steinberg, 2008) linked transportation planning and land use planning by state, regional, and local agencies by providing metropolitan planning organizations and their constituent cities and counties with, among other things, incentives to promote development near transit priority areas, including:

• Major transit stops, which are sites containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods; and
• High quality transit corridors, which are corridors with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

To provide further incentives for developments near transit, density bonus law prohibits local governments from requiring more than 0.5 spaces per unit for a development that receives a density bonus and is located within ½ mile of a major transit stop. Affordable housing advocates want the Legislature to further encourage affordable housing developments, including developments near transit.

Proposed Law

Assembly Bill 1763 revises density bonus law to require a city or county to award a developer additional benefits if 100 percent of the units in a development are restricted to moderate- or lower-income households. Specifically, AB 1763 grants:

• Four incentives or concessions (current law allows a maximum of three); and
• 80 percent increase over the otherwise allowable residential density (current law allows a maximum of 35 percent).

AB 1763 grants additional benefits to 100 percent affordable developments near transit, specifically:

• If the development is located within ½ mile of a major transit stop, the city, county, or city and county cannot impose any maximum controls on density and must allow a height increase of up to three additional stories, or 33 feet, and an increase in the allowable floor area ratio up to 55 percent relative to the underlying limit, or 4.25, whichever is greater.
• If the housing development is located within ½ mile of a high quality transit corridor, the city, county, or city and county cannot impose any maximum controls on density and must allow a height increase of up to two additional stories, or 22 feet, and an increase in the allowable floor area ratio up to 50 percent relative to the underlying limit, or 3.75, whichever is greater.

If the development is also a special needs housing development or a supportive housing development, AB 1763 prohibits a city or county from imposing any parking requirements.

To qualify for the bill’s enhanced density bonus, a development must be 100 percent affordable to moderate- and lower-income households, excluding managers’ units, with no more than 20 percent affordable to moderate-income households.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. AB 1763 gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. AB 1763 gives developers additional density which equals more units.”

2. One size fits all? California is a geographically and demographically diverse state, and that is reflected in its 482 cities and 58 counties. Local elected officials for each of those municipalities are charged by the California Constitution with protecting their citizens’ welfare. One chief way local governments do this is by exercising control over what gets built in their community. Local officials weigh the need for additional housing against the concerns and desires of their constituents. Where appropriate, those officials enact ordinances to shape their communities based on local conditions and desires. In addition, there are physical differences across California’s communities that have bearing on the types of development that should be located in one area or another. Some schools of thought in land use planning argue that development should be shifted away from areas such as the coastal zone, so as to maintain the California coast’s appeal to tourists and residents, or fire hazard severity zones, so as to not put new residents in areas vulnerable to wildfire. By allowing 100% affordable developments to be bulkier and taller than is allowed by local zoning or other features of the surrounding area, AB 1763 doesn’t take into account these sorts of variations in the physical environment and community character. On the other hand, California’s density bonus law is already in place and applies statewide, without apparent harm to community integrity or the public health and safety. Density bonus law also provides offramps if such impacts are identified. Should the Committee wish to tailor AB 1763 to the differences among communities and the physical environment, the Committee may wish to consider amending AB 1763 to provide different levels of increased density based on the characteristics of each community, based on factors such as population or physical surroundings.

3. Almost there. Transportation and land use are intimately connected—land use patterns influence the distance traveled and mode of transportation used. These factors in turn affect whether the state will achieve its greenhouse gas emissions targets or other environmental goals. AB 1763 attempts to enable affordable housing development near transit, including both buses and passenger rail, by allowing 100 percent affordable developments near major transit stops and along high quality transit corridors to go bigger and taller than developments elsewhere. However, tying project size to bus routes poses some practical challenges. Because most bus routes have little fixed infrastructure relative to rail, building near bus corridors that currently exist doesn’t ensure that transit will be available in the long term. Some local jurisdictions are eliminating bus stops as new modes of transportation, such as ride-sharing, become more prevalent and bus routes become less viable, and routes can move as transit needs change. Moreover, AB 1763 grants increased height and size to projects along bus corridors that have 15-minute service intervals. However, some bus routes, particularly in Los Angeles, have relatively high frequencies but also have distances of some miles between stops. As a result, a development along such a corridor might not have practical access to transit. To ensure that residents of the developments that are eligible for AB 1763’s enhanced density bonus have access to viable transit, the Committee may wish to consider amending AB 1763 to more precisely identify bus routes that are more permanent.

4. Incoming! The Senate Housing Committee approved AB 1763 at its June 18^th meeting on a vote of 8 to 1. The Senate Governance and Finance Committee will hear AB 1763 as the committee of second reference.

5. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 1763 imposes new duties on planning officials with respect to the award of density bonuses, Legislative Counsel says that it imposes a new state mandate. But AB 1763 disclaims the state's responsibility for providing reimbursement by citing local governments’ authority to charge for the costs of implementing the bill's provisions.

Assembly Actions

Assembly Housing and Community Development Committee: 8-0

Assembly Local Government Committee: 7-0

Assembly Appropriations Committee: 18-0

Assembly Floor: 72-0

Support and Opposition

(6/28/19)

Support: Abode Communities; Affirmed Housing; Aids Healthcare Foundation; C&C Development; California Apartment Association; California Housing Consortium; California Institute for Rural Studies; California Rural Legal Assistance Foundation; California Yimby; Center for Sustainable Neighborhoods; City of Oakland; City of San Diego; Corporation For Supportive Housing; Councilmember Dan Kalb, City of Oakland; Eah Housing; Eric Garcetti, Mayor of Los Angeles; Habitat for Humanity California; Housing California; Many Mansions; Midpen Housing; The Pacific Companies; Palm Communities; Pueblo Unido CDC; Silicon Valley At Home (Sv@Home); Silicon Valley Leadership Group; Sv@Home; Telacu; The Kennedy Commission; Wakeland Housing and Community Development Corporation; Western Center on Law & Poverty, Inc.

Opposition: City of Beverly Hills; City of Burbank; City of Clovis; City of Garden Grove; City of La Palma; City of Los Alamitos; City of Palmdale; City of San Carlos; City of San Dimas; City of San Marcos; City of Thousand Oaks; City of Encinitas; City of Palmdale; City of Thousand Oaks; League of California Cities

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: AB 1763 Hearing Date: 6/18/2019

SUBJECT: Planning and zoning: density bonuses: affordable housing

DIGEST: This bill revises density bonus law (DBL) to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to lower-income households.

ANALYSIS:

Existing law:

1. Defines a “major transit stop” as a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with service intervals of 15 minutes or less during the morning and afternoon peak commute periods.
2. Defines “high quality transit corridor” as a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.
3. Requires all cities and counties to adopt an ordinance that specifies how they will implement state DBL. Requires cities and counties to grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least one of the following:
   1. 10% of the total units of a housing development for lower income households;
   2. 5% of the total units of a housing development for very low-income households;
   3. A senior citizen housing development or mobile home park;
   4. 10% of the units in a common interest development (CID) for moderate-income households;
   5. 10% of the total units for transitional foster youth, disabled veterans, or homeless persons.
   6. 20% of the total units for lower-income students in a student housing development.
4. Requires the city or county to allow an increase in density on a sliding scale from 20% to 35% over the otherwise maximum allowable residential density under the applicable zoning ordinance and land use element of the general plan, depending on the percentage of units affordable low-income, very low-income, or senior households.
5. Provides that upon the request of a developer, a city, county, or city and county shall not require a vehicular parking ratio, inclusive of disabled and guest parking, that meets the following ratios:
   1. Zero to one bedroom — one onsite parking space
   2. Two to three bedrooms — two onsite parking spaces
   3. Four and more bedrooms — two and one-half parking spaces
6. Provides that if a project contains 100% affordable units and is within ½ mile of a major transit stop, the local government shall not impose a parking ratio higher than 0.5 spaces per unit. Provides that if a project contains 100% affordable units and houses persons with special needs or persons who are 62 years or older, the ratio shall not exceed 0.3 spaces or .5 spaces per unit, respectively. The development shall have either paratransit service or unobstructed access, within one-half mile, to fixed bus route service that operates at least eight times per day.
7. The applicant shall receive the following number of incentives or concessions:
   1. One incentive or concession for projects that include at least 10% of the total units for lower income households or at least 5% for very low income households.
   2. Two incentives or concessions for projects that include at least 20% of the total units for lower income households or least 10% for very low income households.
   3. Three incentives or concessions for projects that include at least 30% of the total units for lower income households or at least 15% for very low income households.

This bill:

1. Allows a project that includes 100% units affordable to lower income households to be provided the following:
   1. Four incentives or concessions.
   2. 80% density bonus.
   3. If the development is located within ½ mile of a major transit stop, the city, county, or city and county shall not impose any maximum controls on density and shall allow a height increase of up to three additional stories, or 33 feet, and an increase in the allowable floor area ratio up to 55% relative to the underlying limit, or 4.25, whichever is greater.
   4. If the housing development is located within ½ mile of a high quality transit corridor, the city, county, or city and county shall not impose any maximum controls on density and shall allow a height increase of up to two additional stories, or 22 feet, and an increase in the allowable floor area ratio up to 50% relative to the underlying limit, or 3.75, whichever is greater.

COMMENTS

1. Purpose of the bill. According to the author, “In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. [This bill] gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. [This bill] gives developers additional density which equals more units.”
2. Housing near transit. Research has shown that encouraging more dense housing near transit serves not only as a means of increasing ridership of public transportation to reduce greenhouse gases (GHGs), but also a solution to our state’s housing crisis. As part of California’s overall strategy to combat climate change, the Legislature began the process of encouraging more transit oriented development with the passage of SB 375 (Steinberg, Chapter 728, Statutes of 2008). SB 375 is aimed at reducing the amount that people drive and associated GHGs by requiring the coordination of transportation, housing, and land use planning. The Legislature subsequently allocated 20% of the ongoing Cap and Trade Program funds to the Affordable Housing and Sustainable Communities Program, which funds land use, housing, transportation, and land preservation projects to support infill and compact development that reduce GHGs. At least half of the funds must support affordable housing projects.

A 2016 McKinsey Report, A Toolkit to Close California’s Housing Gap: 3.5 Million Homes by 2025, found that increasing housing demand around high-frequency public transit stations could build 1.2 – 3 million units within a half-mile radius of transit. The report notes that this new development would have to be sensitive to the character of a place, and recommends that local communities proactively rezone station areas for higher residential density to pave the way for private investments, accelerate land-use approvals, and use bonds to finance station area infrastructure.

Research has also demonstrated a positive relationship between income and vehicle miles traveled (VMT). A study by the Center for Neighborhood Technology, entitled Income, Location Efficiency, and VMT: Affordable Housing as a Climate Strategy, created a model to isolate the relationship of income on VMT. This model found that lower-income families living near transit were likely to drive less than their wealthier neighbors. More specifically, in metro regions, home to two-thirds of California’s population, identically composed and located low-income households were predicted to drive 10% less than the median, very low-income households 25% less, and extremely low-income households 33% less. By contrast, middle income households were predicted to drive 5% more and above moderate-income households 14% more. The patterns are similar for the other two Regional Contexts, although the differences are slightly reduced in Rural Areas. This research demonstrates the value of encouraging lower-income people to live near transit who are more likely to increase transit ridership.

This bill incentivizes denser housing near transit by reducing zoning controls such as density, parking, height, and floor area ratios, as specified, on projects that contain 100% units affordable to lower-income households. The author has agreed to eliminate the parking requirements for special needs and supportive housing developments that contain 100% of the units affordable to lower-income households. This will align with existing law that removes parking for supportive housing developments, that include target populations such as persons with disabilities and persons experiencing homelessness, that are eligible for streamlined, ministerial approval and within ½ a mile from transit.

1. DBL. Given California’s high land and construction costs for housing, it is extremely difficult for the private market to provide housing units that are affordable to low- and even moderate-income households. Public subsidy is often required to fill the financial gap on affordable units. DBL allows public entities to reduce or even eliminate subsidies for a particular project by allowing a developer to include more total units in a project than would otherwise be allowed by the local zoning ordinance in exchange for affordable units. Allowing more total units permits the developer to spread the cost of the affordable units more broadly over the market-rate units. The idea of DBL is to cover at least some of the financing gap of affordable housing with regulatory incentives, rather than additional subsidy.

Under existing law, if a developer proposes to construct a housing development with a specified percentage of affordable units, the city or county must provide all of the following benefits: a density bonus; incentives or concessions (hereafter referred to as incentives); waiver of any development standards that prevent the developer from utilizing the density bonus or incentives; and reduced parking standards.

To qualify for benefits under DBL, a proposed housing development must contain a minimum percentage of affordable housing. If one of these five options is met, a developer is entitled to a base increase in density for the project as a whole (referred to as a density bonus) and one regulatory incentive. Under DBL, a market rate developer gets density increases on a sliding scale based on the percentage of affordable housing included in the project. At the low end, a developer receives 20% additional density for 5% very low-income units and 20% density for 10% low-income units. The maximum additional density permitted is 35% (in exchange for 11% very low-income units and 20% low-income units). The developer also negotiates additional incentives and concessions, reduced parking, and design standard waivers with the local government. This helps developers reduce costs while enabling a local government to determine what changes make the most sense for that site and community.

1. Maximum density. Zoning often constrains the size of developments and even with a density bonus of 35 percent, a developer is not able to include enough units to make an affordable housing development financially feasible. This bill would give all 100% affordable developments an 80% density bonus and would give 100% affordable developments near transit an unlimited density bonus as well as an increase of up to three stories in height or an increase in the floor area ratio (FAR) of up to 55% or 4.25. The additional density will make it easier for affordable housing developers to compete against market-rate developments for housing sites. The additional density they can access under density bonus will increase the number of units on the site and help reduce the per-unit cost of the development.
2. Density vs. FAR: Density is the allowable number of dwelling units that are allowed per unit of lot area – for example, twenty dwelling units per acre. It is a commonly used metric for residential development. FAR, on the other hand, measures building intensity. It is the ratio of a building or a project’s floor area to its lot area, and is typically used to measure the intensity of commercial, office, industrial, and mixed-use projects. To calculate FAR, the gross square footage of a building is divided by the total area of its lot. A FAR of 1.0 means that floor area may equal lot area. A one-story building that covers an entire lot has an FAR of 1.0. A FAR of 2.0 means that the floor area may be up to twice as large as the lot area- for example a 20,000 square foot building on a 10,000 square foot lot has a FAR of 2.0, regardless of the number of stories.
3. Low- and Moderate-Income Housing Requirements. The Mixed-Income Loan Program (MIP), created by SB 2 (Atkins, Chapter 364, Statutes of 2017), which allocates 15% of ongoing real estate transaction fee revenues to creating mixed-income housing for low- to moderate-income households. This program provides competitive long-term financing for newly constructed multifamily housing projects restricting units between 30% and 120% AMI. Projects that restrict 10% of the units in a development to moderate income (or 81% to 120 percent of AMI), receive a priority over other projects. The Governor’s Budget proposes to invest an additional $500 million to this program for 2019-2020.

This bill is intended to create incentives to encourage the construction of housing affordable to lower-income households. Few if any jurisdictions in the state, however, are permitting enough moderate-income units to keep up with population growth. In order to encourage developers to pair with the MIP program and build moderate-income housing units in projects with low-income units, the author has agreed to allow up to 20% of the units in the project to be dedicated to households of moderate-income.

1. Opposition. Several cities are opposed to this bill because it would prohibit them from implementing their respective goals and priorities to address housing goals and objectives. Some cities have taken steps to plan for their communities’ housing needs and write that this bill would undermine those plans. Some are working with local non-profits to use existing state and federal resources to build affordable housing. Others write that this bill is a one-size-fits-all approach that may not work for suburban cities.
2. Double referral. This bill was also referred to the Governance and Finance Committee.

Related Legislation:

SB 1227 (Skinner, Chapter 937, Statutes of 2018) — required cities and counties to grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least 20% of the total units for lower-income students in a student housing development, as specified.

SB 2 (Atkins, Chapter 364, Statutes of 2017) — established the Building Homes and Jobs Act and imposed a $75 fee on real estate transaction documents, excluding commercial and residential real estate sales, to provide funding for affordable housing.

AB 2501 (Bloom, Chapter 758, Statutes of 2016) — made changes to density bonus law regarding the submission, review, or approval of an application for a density bonus.

AB 1934 (Santiago, Chapter 747, Statutes of 2016) — created a development bonus for commercial developers that partner with an affordable housing developer to construct a joint project or two separate projects encompassing affordable housing.

AB 2442 (Holden, Chapter 756, Statutes of 2016) — required local agencies to grant a density bonus when a developer agrees to construct housing for transitional foster youth, disabled veterans, or homeless persons.

AB 2556 (Nazarian, Chapter 761, Statutes of 2016) — required a jurisdiction, in cases where a proposed development is replacing existing affordable housing units, to adopt a rebuttable presumption regarding the number and type of affordable housing units necessary for density bonus eligibility.

AB 2222 (Nazarian, Chapter 682, Statutes of 2014) — made an applicant ineligible for a density bonus if the proposed housing development will displace units that are affordable to, or occupied by, lower income households.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 12, 2019.)

SUPPORT:

California Housing Consortium (Sponsor)
Abode Communities
Affirmed Housing
Aids Healthcare Foundation
C&C Development
California Apartment Association
California Rural Legal Assistance Foundation
Corporation For Supportive Housing
Councilmember Dan Kalb, City Of Oakland
EAH Housing
Eric Garcetti, Mayor Of Los Angeles
Housing California
Kennedy Commission
Many Mansions
Pacific Companies
Palm Communities
San Diego; City Of
Silicon Valley At Home
TELACU
Wakeland Housing And Development Corporation
Western Center On Law And Poverty

OPPOSITION

Beverly Hills; City Of
Burbank; City Of
Clovis; City Of
Encinitas; City Of
Garden Grove; City Of
La Palma; City Of
Los Alamitos; City Of
Palmdale; City Of
San Carlos; City Of
San Dimas; City Of
San Marcos; City Of
Thousand Oaks; City Of

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1763

Author:(Chiu)

As Amended Ver:March 28, 2019

Majority vote

SUMMARY:

Revises Density Bonus Law (DBL) to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to lower income households.

Major Provisions

1. Provides that when a developer seeks and agrees to construct a housing development that will contain 100% of the total units for lower income households a city or county shall award the following density bonus:
   1. Four incentives and concessions;
   2. A density bonus that is 80% of the number of units for lower income households;
   3. For housing development within one-half mile of "a major transit stop," the city, county, or city and county, shall:
      1. Not impose any maximum controls on density;
      2. Allow a height increase of up to three additional stories or 33 feet; and,
      3. Allow an increase in the allowable floor area ratio of up to 55% relative to the underlying limit or 4.25, whichever is greater.
   4. For a housing development within one-half mile of "a high quality transit corridor" a city, county, or city and county, shall:
      1. Not impose any maximum controls on density;
      2. Allow a height increase up to two additional stories, or 22 feet; and,
      3. Allow an increase in the floor area ratio of up to 50% relative to the underlying limit or 3.75, whichever is greater.
2. Defines a "major transit stop" to mean a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.
3. Defines a "high quality transit corridor" means a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

COMMENTS:

Density bonus law: Density bonus law was originally enacted in 1979, to help address the affordable housing shortage and to encourage development of more low- and moderate income housing units. Nearly 40 years later, the state faces the same affordable housing challenges. Density bonus is a tool to encourage the production of affordable housing by market rate developers, although it is used by developers building 100% affordable developments as well. In return for inclusion of affordable units in a development, developers are given an increase in density over a city's zoned density and concessions and incentives. The increase in density and concessions and incentives are intended to financially support the inclusion of the affordable units.

All local governments are required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus on top of the cities' zoned density in exchange for including extremely low, very low, low, and moderate income housing. Failure to adopt an ordinance does not relieve a local government from complying with state density bonus law. Local governments must grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least any one of the following:

1. Ten percent of the total units for lower income households;
2. Five percent of the total units of a housing for very low income households;
3. A senior citizen housing development or mobilehome park;
4. Ten percent of the units in a common-interest development for moderate-income households; or
5. Ten percent of the total units of a housing development for transitional foster youth, disabled veterans, or homeless persons.

As part of the density bonus application, a developer may also request incentives, concessions and parking ratio reductions. The number of incentives and concessions, and the parking ratio reduction, vary depending on the percentage and type of affordable housing included in a project.

Maximum density: A developer can access a 35% density bonus and three concessions and incentives under existing law. To qualify for a 35% density bonus, a developer must restrict either 11% of the units in a development to very-low income (50% of Area Median Income (AMI)) or 20% to lower income (households at or below 80% of AMI). If a developer restricts 100% of the units to lower income households they receive no additional density bonus. A city can provide a developer additional density beyond the 35% if it chooses.

Zoning often constrains the size of developments and even with a density bonus of 35%, a developer is not able to include enough units to make an affordable housing development financial feasible. This bill would give all 100% affordable developments an 80% density bonus and would give 100% affordable developments near transit an unlimited density bonus as well as an increase of up to three stories in height or an increase in the floor area ratio (FAR) of up to 55% or 4.25. The additional density will make it easier for affordable housing developers to compete against market-rate developments for housing sites. The additional density they can access under density bonus will increase the number of units on the site and help reduce the per-unit cost of the development.

Locating affordable housing near transit: Research supports the fact that location-efficient affordable housing is an effective climate change strategy. Statewide, extremely low-income household drive 34% less than the average income household, when located near transit that number can increase to 54%. The Legislature has taken steps to encourage the production of affordable housing near transit through SB 375 (Steinberg), Chapter 728, Statutes of 2008 which links planning for housing and transportation to support the state's AB 32 (Nunez), Chapter 488, Statutes of 2006, greenhouse gas reductions goals. In addition, 20% of cap and trade funds are dedicated the Affordable Housing and Sustainable Communities Program (AHSC) of which half of the funds must go to affordable housing near transit. This bill support the state's investment in affordable housing near transit and consequently the state's greenhouse gas reduction goals.

According to the Author:

According to the author, "In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. AB 1763 gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. AB 1763 gives developers additional density which equals more units."

Arguments in Support:

According to supporters, an affordable home is the foundation that allows each of us to care for our families; to be able to get ready to each day and to go our jobs; to live with dignity. While we have made progress over the last two years in addressing the housing and homelessness crises, there are still many steep challenges and barriers to building homes for people surviving on low- and moderate-incomes, which is why we are pleased to co-sponsor your bill. The changes in the bill will increase the number of affordable units available to ensure that a maximum number of units are being built to help California reach its goal of adding 1.5 million affordable units.

Arguments in Opposition:

According to the California League of Cities, who is opposed unless amended, writes that this bill "would alter existing land use policies based on transit service that is not under the authority of local jurisdictions" and that "granting a developer an unlimited density bonus and three additional stories is too extreme in many communities…such an expansion of [density bonus law] will undermine a city's state-certified housing element and community-based housing plans."

FISCAL COMMENTS:

According to the Assembly Committee on Appropriations, local costs are not reimbursable by the state because local agencies have authority to levy fees to cover these changes.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0

YES: Chiu, Diep, Gabriel, Gloria, Kiley, Limón, Maienschein, Quirk-Silva

ASM LOCAL GOVERNMENT: 7-0-1

YES: Aguiar-Curry, Lackey, Bloom, Ramos, Luz Rivas, Robert Rivas, Voepel

ABS, ABST OR NV: Boerner Horvath

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Friedman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Jones-Sawyer, Robert Rivas

UPDATED:

VERSION: March 28, 2019

CONSULTANT: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0000448

Date of Hearing: May 1, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1763

Author:(Chiu) – As Amended Ver:March 28, 2019

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires a city or county to award a housing developer additional density, concessions and incentives and height increases if 100% of the units in a development are restricted to lower-income households.

FISCAL EFFECT:

Local costs are not reimbursable by the state because local agencies have authority to levy fees to cover these changes.

COMMENTS:

1. Purpose. This bill seeks to encourage the production of affordable housing units by further rewarding housing developers who build 100% affordable housing developments.
2. Background. Density bonus law was created to help address the affordable housing shortage and to encourage development of more low- and moderate-income housing units. In return for the inclusion of affordable units in a development, developers receive an increase in density over a city’s zoned density, and concessions and incentives, intended to support the inclusion of affordable units.

Every local governments is required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus. As part of the density bonus application, a developer may also request incentives, concessions and parking ratio reductions, which can vary depending on the percentage and type of affordable housing included in the project.

Under existing law, the maximum density a developer can access is a 35% density bonus and three concessions and incentives. To qualify for a 35% density bonus, a developer must restrict either 11% of the units in a development to very low-income households or 20% of the units to lower-income households. There are no additional incentives for a developer who restricts 100% of the units to lower-income households.

This bill gives 100% affordable developments an 80% density bonus above the existing zoned density and four incentives and concessions. It also and gives 100% affordable developments near transit additional height increases and floor area ratio increases.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 1763 (

Author:Chiu) – As Amended Ver:March 28, 2019

SUBJECT: Planning and zoning: density bonuses: affordable housing.

SUMMARY: Requires a city or county to award a developer additional density, concessions, and incentives, if 100% of the units in a development are restricted to lower-income households. Specifically, this bill:

1. Modifies density bonus law as follows:
   1. Requires, when an applicant for a density bonus proposes a development that includes 100% of the total units, exclusive of a manager’s unit or units, to be for lower income households, as defined, the city or county to provide the following:
      1. Four incentives and concessions;
      2. A density bonus that is 80% of the number of units for lower income households;
      3. For housing developments within one-half mile of a “major transit stop,” the city or county shall:
         1. Not impose any maximum controls on density;
         2. Allow a height increase of up to three additional stories or 33 feet; and,
         3. Allow an increase in the allowable floor area ratio of up to 55% relative to the underlying limit or 4.25, whichever is greater.
      4. For a housing development within one-half mile of a “high quality transit corridor”, a city or county shall:
         1. Not impose any maximum controls on density;
         2. Allow a height increase up to two additional stories, or 22 feet; and,
         3. Allow an increase in the floor area ratio of up to 50% relative to the underlying limit or 3.75, whichever is greater.
   2. Defines the following terms:
      1. “Major transit stop” to mean a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods; and,
      2. “High quality transit corridor” to mean a corridor with a fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.

COMMENTS:

1. Density Bonus Law. Originally enacted in 1979, density bonus law was created to help address the affordable housing shortage and to encourage development of more low and moderate income housing units. It is a tool to encourage the production of affordable housing by market rate developers, although it is used by developers building 100% affordable developments as well. In return for the inclusion of affordable units in a development, developers are given an increase in density over a city’s zoned density, as well as other concessions and incentives, which are intended to support the inclusion of the affordable units.

All local governments are required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus. Failure to adopt an ordinance does not mean a city or county does not have to comply with the law. As part of the density bonus application, a developer may also request incentives, concessions and parking ratio reductions, which can vary depending on the percentage and type of affordable housing included in the project.

1. Bill Summary and Author’s Statement. Under existing law, the maximum density a developer can access is a 35% density bonus and three concessions and incentives. To qualify for a 35% density bonus, a developer must restrict either 11% of the units in a development to very low income, or 20% to lower income. If a developer restricts 100% of the units to lower income households, the developer receives no additional density bonus.

This bill gives all 100% affordable development an 80% density bonus, and would give 100% affordable developments near transit additional height increases and floor area ratio increases.

This bill is sponsored by the California Housing Consortium.

According to the author, “In the midst of our state housing crisis, AB 1763 would create more affordable housing by giving 100% affordable housing developments an enhanced density bonus. Zoning is often a barrier to housing development. Existing zoning - density and height - are often too low for affordable housing developments to pencil out. After years of no funding for affordable housing, we now have new resources and we need to make every dollar count. For affordable housing developers, more density can make a project financially feasible and give a developer the opportunity to compete for a site against a market rate developer. AB 1763 gives 100% affordable housing developments an 80% density bonus above existing zoned density and four incentives or concessions. One-hundred percent affordable housing developments near transit would be eligible for an unlimited density bonus plus an increase in height or the floor area ratios, up to a limit. We need to act quickly to increase the supply of affordable housing. AB 1763 gives developers additional density which equals more units.”

1. Arguments in Support. Supporters argue that the changes in the bill will increase the number of affordable units available to ensure that a maximum number of units are being built to help California reach its goal of adding 1.5 million affordable units.
2. Arguments in Opposition. The League of Cities writes that this bill “would alter existing land use policies based on transit service that is not under the authority of local jurisdictions” and that “granting a developer an unlimited density bonus and three additional stories is too extreme in many communities…such an expansion of [density bonus law] will undermine a city’s state-certified housing element and community-based housing plans.”
3. Double-Referral. This bill was heard in the Housing and Community Development Committee on April 10, 2019, and passed with an 8-0 vote.

REGISTERED SUPPORT / OPPOSITION:

Support

California Housing Consortium [SPONSOR]

Abode Communities
Affirmed Housing
Aids Healthcare Foundation
C&C Development

California Housing Consortium
California Rural Legal Assistance Foundation

City of San Diego
Corporation for Supportive Housing

Dan Kalb, City Councilmember, City of Oakland
EAH Housing

Habitat for Humanity California
Housing California
Many Mansions
Palm Communities

Silicon Valley at Home (Sv@Home)
Telacu

The Pacific Companies
The Kennedy Commission
Wakeland Housing And Community Development Corporation
Western Center On Law & Poverty, Inc.

Opposition

League of California Cities (unless amended)

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958

Date of Hearing: April 10, 2019

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

ABPCA Bill Id:AB 1763 (

Author:Chiu) – As Amended Ver:March 28, 2019

SUBJECT: Planning and zoning: density bonuses: affordable housing.

SUMMARY: Revises Density Bonus Law (DBL) to require a city or county to award a developer additional density, concessions and incentives, and height increases if 100% of the units in a development are restricted to lower income households. Specifically, this bill:

1. Provides that when a developer seeks and agrees to construct a housing development that will contain 100% of the total units for lower income households a city or county shall award the following density bonus:
2. Four incentives and concessions;
3. A density bonus that is 80% of the number of units for lower income households;
4. For housing development within one-half mile of “a major transit stop,” the city, county, or city and county, shall:
5. Not impose any maximum controls on density;
6. Allow a height increase of up to three additional stories or 33 feet; and,
7. Allow an increase in the allowable floor area ratio of up to 55% relative to the underlying limit or 4.25, whichever is greater.
8. For a housing development within one-half mile of “a high quality transit corridor” a city, county, or city and county, shall:
9. Not impose any maximum controls on density;
10. Allow a height increase up to two additional stories, or 22 feet; and,
11. Allow an increase in the floor area ratio of up to 50% relative to the underlying limit or 3.75, whichever is greater.
12. Defines a “major transit stop” to mean a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.
13. Defines a “high quality transit corridor” means a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

EXISTING LAW:

1. Defines a “major transit stop” to mean a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.
2. Defines “high quality transit corridor” means a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.
3. Requires all cities and counties to adopt an ordinance that specifies how they will implement state density bonus law.
4. Requires cities and counties to grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least any one of the following:
5. 10% of the total units of a housing development for lower income households;
6. 5% of the total units of a housing development for very low-income households;
7. A senior citizen housing development or mobile home park;
8. 10% of the units in a common interest development (CID) for moderate-income households; and
9. 10% of the total units for transitional foster youth, disabled veterans, or homeless persons.
10. Requires the city or county to allow an increase in density of 20% over the otherwise maximum allowable residential density under the applicable zoning ordinance and land use element of the general plan for low-income, very low-income, or senior housing, and by 5% for moderate-income housing in a CID.
11. Provides that, upon the developer’s request, the local government may not require parking standards greater than the following (the developer may, however, request additional parking incentives or concessions):
12. Zero to one bedrooms: one onsite parking space;
13. Two to three bedrooms: two onsite parking spaces; and
14. Four or more bedrooms: two and one-half parking spaces.
15. Provides that if a rental development is 100% affordable to lower income families then, upon the request of a developer, a city, county, or city and county, the following parking ratios shall apply for the development:
    1. If the development is located within one-half mile of a “major transit stop” and there is unobstructed access to the major transit stop from the development, the ratio shall not exceed 0.5 spaces per unit.
    2. If the development is a for-rent housing development for individuals who are 62 years of age or older, the ratio shall not exceed 0.5 spaces per unit.
    3. If the development is a special needs housing development, the ratio shall not exceed 0.3 spaces per unit.
16. Requires applicants to receive the following number of incentives or concessions:
17. One incentive or concession for projects that include at least 10% of the total units for lower income households.
18. Two incentives or concessions for projects that include at least 20% of the total units for lower income households.
19. Three incentives or concessions for projects that include at least 30% of the total units for lower income households.
20. Permits an applicant to submit to a local government a proposal for the specific incentives or concessions that the applicant requests, as specified, and allows the applicant to request a meeting with the local government.
21. Defines “concession or incentive” as:
22. A reduction in site development standards or a modification of zoning code requirements or architectural design requirements that exceed the minimum building standards including, but not limited to, a reduction in setback and square footage requirements and in the ratio of vehicular parking spaces that would otherwise be required that results in identifiable and actual cost reductions, to provide for affordable housing costs;
23. Approval of mixed-use zoning in conjunction with the housing project, as specified; and
24. Other regulatory incentives or concessions proposed by the developer or the local government that results in identifiable and actual cost reductions to provide for affordable housing.

FISCAL EFFECT: Unknown

COMMENTS:

Density bonus law: Density bonus law was originally enacted in 1979, to help address the affordable housing shortage and to encourage development of more low- and moderate income housing units. Nearly forty years later, the state faces the same affordable housing challenges. Density bonus is a tool to encourage the production of affordable housing by market rate developers, although it is used by developers building 100% affordable developments as well. In return for inclusion of affordable units in a development, developers are given an increase in density over a city’s zoned density and concessions and incentives. The increase in density and concessions and incentives are intended to financially support the inclusion of the affordable units.

All local governments are required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus on top of the cities' zoned density in exchange for including extremely low, very low, low, and moderate income housing. Failure to adopt an ordinance does not relieve a local government from complying with state density bonus law. Local governments must grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least any one of the following:

• Ten percent of the total units for lower income households;
• Five percent of the total units of a housing for very low income households;
• A senior citizen housing development or mobilehome park;
• Ten percent of the units in a common-interest development for moderate-income households; or
• Ten percent of the total units of a housing development for transitional foster youth, disabled veterans, or homeless persons.

As part of the density bonus application, a developer may also request incentives, concessions and parking ratio reductions. The number of incentives and concessions, and the parking ratio reduction, vary depending on the percentage and type of affordable housing included in a project.

Maximum density: A developer can access a 35 percent density bonus and three concessions and incentives under existing law. To qualify for a 35 percent density bonus, a developer must restrict either 11 percent of the units in a development to very-low income (50 percent of AMI) or 20 percent to lower income (households at or below 80 percent of AMI). If a developer restricts 100 percent of the units to lower income households they receive no additional density bonus. A city can provide a developer additional density beyond the 35 percent if it chooses.

Zoning often constrains the size of developments and even with a density bonus of 35 percent, a developer is not able to include enough units to make an affordable housing development financial feasible. This bill would give all 100% affordable developments an 80% density bonus and would give 100% affordable developments near transit an unlimited density bonus as well as an increase of up to three stories in height or an increase in the floor area ratio (FAR) of up to 55% or 4.25. The additional density will make it easier for affordable housing developers to compete against market-rate developments for housing sites. The additional density they can access under density bonus will increase the number of units on the site and help reduce the per-unit cost of the development.

Density vs. FAR: Density is the allowable number of dwelling units that are allowed per unit of lot area – for example, twenty dwelling units per acre. It is a commonly used metric for residential development. FAR, on the other hand, measures building intensity. It is the ratio of a building or a project’s floor area to its lot area, and is typically used to measure the intensity of commercial, office, industrial, and mixed-use projects. To calculate FAR, the gross square footage of a building is divided by the total area of its lot. A FAR of 1.0 means that floor area may equal lot area. A one-story building that covers an entire lot has an FAR of 1.0. A FAR of 2.0 means that the floor area may be up to twice as large as the lot area- for example a 20,000 square foot building on a 10,000 square foot lot has a FAR of 2.0, regardless of the number of stories.

Locating affordable housing near transit: Research supports the fact that location-efficient affordable housing is an effective climate change strategy. Statewide, extremely low-income household drive 34 percent less than the average income household, when located near transit that number can increase to 54 percent. The Legislature has taken steps to encourage the production of affordable housing near transit through SB 375 (Steinberg), Statues of 2008, Chapter 728, which links planning for housing and transportation to support the state’s AB 32 (Nunez), Chapter 488, Statues of 2006, greenhouse gas reductions goals. In addition, twenty percent of cap and trade funds are dedicated the Affordable Housing and Sustainable Communities Program (AHSC) of which half of the funds must go to affordable housing near transit. This bill support the state’s investment in affordable housing near transit and consequently the state’s greenhouse gas reduction goals.

Double referred: This bill was also referred to the Assembly Committee on Local Government where it will be heard should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

California Housing Consortium (sponsor)

Abode Communities

Affirmed Housing

AIDS Healthcare Foundation

C & C Development

California Rural Legal Assistance Foundation

Corporation for Supportive Housing

EAH Housing

Housing California

Many Mansions

Palm Communities

TELACU

The Kennedy commission

The Pacific Companies

Wakeland Housing and Development Corporation

Western Center on Law & Poverty

Opposition

None on file

Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085