Senate Standing Committee on Housing

The Senate Housing Committee will begin in sixty seconds. Good afternoon. I'd like to call to order this meeting of the Senate Standing Committee on Housing. We do not yet have a quorum, so we will operate as a subcommittee to begin our bill presentations. We do take up bills and file order.

Just a few announcements as we begin today's hearing, the consent calendar consists of file item one AB 1567 by Ta. File item four AB 1892 by Davies. File item seven AB 2058 by Harabedian. And file item 14 AB 2689 by Avila Faris. We will entertain a motion on the consent calendar when we establish a quorum.

And so with that, we'll begin with our first bill presentation in file order which of those authors that are present, I don't see Assemblymember Ward or Carrillo here. So we'll go now to File five AB 2002 by Assembly Solache. Good afternoon. If there are any principal witnesses, you're welcome to join us here at the the table. And whenever you're ready, Assemblymember, you may present on your bill.

This program ensures regional government cities and counties have the technical assistance needed to get their housing elements done right and on time.

Thank you, Chair and committee members, for the opportunity to present AB 2002. I'm grateful for the committee and staff for working with us. We gladly accept committee amendments. AB 2,002 seeks to clarify the Regional Early Action Planning Grant Program known as REAP 1.0

We are facing a severe housing crisis and the demands on our regions have grown greater and greater. Without support, local governments, especially small and under resourced communities like those in my district, will struggle to meet state's expectations. Luckily, we know that what works.

The 2019 REAP 1.0 program demonstrate one of the highest return in investment housing programs the state has ever funded. California's housing vision only works if every region has the tools to carry out the state's mandates.

AB 2002 swings the state's housing commitment and ensures to know no community gets left behind because they are under resourced. I'm joined today by Tome Ajise, Executive Director of the Southern California Council of Governments SCAG, and Vinencio Coprali, Government Affairs with the California Association of Councils of Governments.

Great. Good afternoon. Welcome. You each have two minutes to present on the bill.

Thank you. Good afternoon, Chair Aragon, and Vice Chair Seyarto. Thank you for, having us today. My name is Kome Ajise. I'm the Executive Director of the Southern California Association of Governments and a very proud cosponsor of AB 2002 by Assemblymember Solache.

REAP1, which was established in 2019 transformed how the state and regions, support local jurisdictions in the meeting of their RHNA obligations. More importantly, it allowed us to implement policies and processes that will accelerate housing production in our region and across the state.

REAP 1 funding gave SCAG and MPOs the capacity to support housing planning beyond simply administering RHNA and including taking the next necessary steps for our jurisdictions to actually build the housing.

In the SCAG region, we used our REAP dollars to provide technical assistance and resources to help our local jurisdictions to update the housing elements and build their capacity for housing production. As a result, today, 186 out of the 197 jurisdictions in the SCAG region, that's 94%, have compliant housing elements.

A prime example is a successful REAP project that includes, the City Of Los Angeles, being able to map and analyze the arena capacity that they have in their region and create a zoning program as a result.

In, as a result of the REAP 1 program as well, Orange County partnered with Ventura and Gateway Cities COGS to develop an ADU suite of programs for model ordinances websites and how to guides and these three sub regions include 71 cities where we were able to provide some capacity for them.

These are just some examples of projects and local planning efforts that we're able to build from scratch as a result of REAP program.

With AB 2002, MPOs and local jurisdictions will continue to have access to programs, that and resources that will enable critical planning work to meet the RHNA obligations that is coming upon us in the seventh cycle. So I ask your support in maintaining this critical investment and sustaining the progress that's already been made as a result of REAP 1.0.

So thank you for your time and I respectfully request your aye vote.

Thank you very much.

Thank you chair and members for the opportunity to testify today. My name is Vincenzo Caparelli and I'm here on behalf of California Association of Council of Governments or CACOG, Also a proud sponsor of the bill.

So I think at this point it goes without saying, we're facing an unprecedented housing crisis born out of inadequate supply of housing and resolving it will require everyone to do their part. Recognizing, sorry.

Still ensuring adequate supply of housing across the state starts with good planning which is why the regional housing needs assessment or arena is the foundation of everything the state does on housing.

Recognizing this fact, the legislature has invested significant effort into refining and improving it over the last four or five legislative sessions. This include tightening up housing element process, building in more time for COGS to work with HCD on the termination, providing more oversight by HCD on our methodology approvals and expanding income categories.

However, effective planning requires funding, staffing and technical capacity. And acknowledging this in 2019 legislature chose to provide funding for COGS, cities and counties through the REAP 1 program.

This was an incredibly successful program which not only gave COGS adequate funding to fulfill their RHNA obligations but also funding to help cities with housing element compliance and to help them comply with other state laws like AFFH, ADUs, infrastructure assessments and other policy toolkits.

Unfortunately the funding was one time and specifically for the sixth cycle. So RHNA has once again become unfunded mandate that COGS are expected to absorb the cost, the growing cost of. And although the funding expired the need hasn't. Given the aforementioned policy changes by the legislature and the much larger RHNDs that we are facing, we fully expect the seven through in a cycle to be one of the most complex and expensive in state history.

To understand the cost increases, we surveyed our members and by way of example, during the sixth cycle, one of our mid sized members spent roughly $350,000 or 15% of its annual budget on that cycle.

On the on compliant with RHNA. In the seventh cycle, they expect that to bloom up to nearly a quarter of their annual budget. And this type of increase was consistent across our membership. While REAP 1 was critical for our members to keep up with the growing cost arena, it was never codified as a standalone and ongoing program.

If you could please wrap up your comments, I appreciate it.

Of course. I'll just end with I respectfully ask for your aye vote. We're looking to codify this as a standalone and ongoing program. Thank you.

Thank you. Okay. Well, by any other members of the public wishing to express support for AB 2002 to please come forward and state your name, organization, and position on the bill.

Good afternoon. Lizzie Guansona here on behalf of San Mateo City County Association of Governments in support.

Good afternoon, chair and members. Kirk Blackburn here on behalf of the San Diego Association of Governments or SANDAG as well as the City Of Inglewood in support. Thank you.

Thank you.

Good afternoon, chair and members. Brady Guertin on behalf of the League of California Cities as well as the American Planning Association California chapter in support. Thank you.

Thank you.

Is there anyone else wishing to express support for AB 2002? If not, we'll now invite, up to two principal opposition witnesses if there are any.

Ben Turner with the oh, I'm sorry. Okay. There we go. Good afternoon, chair members. I'm Ben Turner with Axiom Advisors on behalf of California Building Industry Association.

We have a oppose unless amended position on AB 2002. We've been working with the author and sponsors on amendments and we thought we had a proposal that would work to eliminate the ability for funding to induce additional constraints at the local level.

However, your team pointed out that it was potentially overly broad and may have unintended consequences so we're going to continue working with the author and the sponsors to resolve our issues should this move to the next phase.

Okay. Anything else you'd like to add?

Okay. Thank you. We appreciate the work with our committee staff on this bill.

Is there anyone else wishing to express opposition to AB 2002?

Okay, seeing no one come forward. I just want to summarize the committee amendments the author had accepted, which are referenced in the committee analysis in the comments four and five.

One, the amendments would require HCD to first adopt emergency regulations consistent with the Administrative Procedures Act, followed by the adoption of permanent regulations. The second would authorize council's government to be able to sub allocate funds to sub regions to implement RHNA and their housing element work.

And then the third require fund recipients to expand their funds within three years from the date of awards and allow HCD time to provide additional time for recipients as necessary. So those are the amendments the author has accepted.

I will now turn to my fellow committee members ask if there are any questions or comments on the bill. Okay. Vice Chair Seyarto?

Well, thank you very much. And it's good to see people working to try to make the arena process a little bit more, tolerable for our local governments. And, I have concerns about the future of RHNA, which is what is the future of RHNA, once cities have produced, the amount of housing that they are producing now, you know, we keep talking about the housing crisis, and yet we have thousands and thousands of units going in my district.

And a lot of those are not the type of units that are in demand. And so they're not filling up, as fast. And yet, we keep bringing more and more online. So with this, particular bill in the arena, funding, that the local agencies need, I kinda get the BIA's concerns about this.

It's so that the because the CAGS are the ones who who help coordinate and administer through SCAG in Southern California the RHNA process. And the cities kind of sit on the sidelines and get told what they're gonna get.

They try to inter you know, they try to interact on it a little bit, but in the end, nobody's happy.

It seems like every every process, every every cycle, people are accusing the other region of shoving a bunch of stuff onto them. This isn't supposed to be money that creates an avenue for more regulatory environment or more regulatory processes to be built beyond what the RHNA process already does.

And so that's the concern. I hope you will continue to work with the BIA and, yeah, maybe shrink it down so it's a little more focused. But that's something that, for me to be comfortable with, the bill needs to be addressed.

This is supposed to make it easier and for these cities to coordinate this effort, Not more expensive and certainly not more complex to build what they're supposed to be building than it already is.

And so with that, I'm hoping that you will continue to work on these amendments to make it a little bit more give us a little more assurance that it won't turn into something it's not supposed to and that the funding won't be used for something it's not supposed to be or shouldn't have been. At least the intent wasn't there for it to be used like that. So thank you.

Thank you. Senator Cabaldon?

Yeah. Thank you, Mr. Chair. I'm carrying similarly purposed legislation that's currently pending in the Assembly, SB 1087, which seeks to modernize the SB 375 process, which is at the core of much of the work and also of REAP one and two. And so I very much appreciate the author's willingness to wade into the alligator pit on this as well. It's really critical.

We said to regions and local governments, solve the housing crisis and the climate change, don't let me wait in traffic anymore, and build an effective transit and walking and biking system, and do all of that and still get reelected as mayor or City Council member. It's a major task that we've put before California's regions. And that's the only place where that can be accomplished, really.

I mean, no matter how great our state agencies are and no matter how great our individual cities might be, we cannot accomplish those objectives without effective regional action. And that regional action does need the structure of a funding source that can be deployed in order to do it.

It does not pay for all arena, right. It doesn't pay for any of the it doesn't pay for all the projects and all of that. It is the and the Chair knows this quite well as having been a former Cog Chair as well as I was that these kinds of dollars are most important as Greece in the system that allows for great things to happen by everybody else.

To build trust, to build some things that others can build on, and to help the final 1% of a deal come together between different stakeholders and different developers and city governments at the local level. So the money is very important for the purposes that are laid out in the bill, but it's also fundamental to just being able to make regions effective and build the capacity to deliver on our bigger goals on housing, climate, air quality, congestion, and everything else.

And so this is a modest but necessary improvement to the law to make sure we have a structure that hopefully this year, but even if not into the future, that we have a structure into which money can flow and help to achieve its purposes. So at the appropriate time, when we have a quorum, Mr. Chair, I'd love to move the bill.

Okay. Any other questions or comments? I'll just add before I go to you to close. I strongly support this bill and would love to be added as a coauthor if this bill moves forward today.

And as a former president of the Association of Air Governments during the regional housing needs allocation process, when the first REIT program was started, this money was absolutely critical to allow for cities and counties to be able to do the the work of identifying sites, you know, as well as preparing housing elements.

Also, the technical assistance that our COG provided local governments, including those jurisdictions that had little or no staff, was absolutely essential. And this state legislature has put a lot of mandates on local governments to have to plan for and zone for more homes, rightfully so. But we need to give local governments the tools to be able to do that work. And that's what this program would do. So with that, I'll turn it over to you to close.

Thank you, mister chair. Two the three senators that spoke, thank you for your comments. Starting with our vice chair, Oscar Eduardo, I can't tell you how much I could acknowledge your comments. I not only was I local council member and mayor myself, I sat on SCAG for about eight years and heard the 191 voices, cities represented in that in that space, the RHNA frustrations of the all the things that we already heard from your comments today, and I can't say we we understand that.

And then to our Chair and Mr. Cabaldon, I fully agree on, you know, your experiences coming from that local space and your leadership.

For us, it just codifies what the work that we already saw, we point out do for our communities as a planning agency that we are or as a SCAG, yes. I'm sorry. I'm not part of SCAG anymore, but I was part of SCAG. And to, you know, our our friends that are opposed to, we definitely are gonna keep conversations going.

I think we need to be partners in this space, and I think the more we could all work together to come up with the solutions that work for our communities.

But I definitely wanna echo last thing the chair said is, RCs wanna feel supported. And and I think this is an opportunity to have them support it while we figure out what what the next step is to our vice chair's comments earlier. So I I remain committed and I thank you for your words and I look forward to asking for it. I support today.

Thank you. Once a COG member, always a COG member.

That's right.

Okay. We don't have a quorum, but we're entertaining Senator Cabaldon's motion when we establish quorum.

Okay. Once again going in file order, I see Assemblymember Ward here. We're going to go to file item 2, AB 1684.

And then we'll go after that to file in three eighty seventeen ten file order. Whenever you're ready, assemblymember, you may present your bill.

Thank you. Good afternoon, mister chair and members. I wanna thank you for the opportunity to present AB 1684 and for the thoughtful engagement and work with the chair in the south here. AB 1684 prohibits a homeowners association from restricting a homeowner's ability to install, use, or replace a home cooling system. Today, heat waves are some of the deadliest kinds of extreme weather in the United States with children, seniors, and people with respiratory illnesses being particularly vulnerable to heat related illness and mortality.

Studies have shown that working home air conditioning is the number one protective factor against heat related mortality. Approximately sixty five percent of California homeowners belong to an HOA, many of which have governing documents that limit the kind of cooling system a homeowner may install if they can install one at all. This imposes a concerning barrier to adequate heat protection for the varied health and financial needs of California families.

Now the idea for this bill originated from a constituent who shared the following statement to read to you all today. A member of my household is particularly susceptible to heat, which makes reliable cooling a health and safety necessity. My HOA initially allowed only the use of a portable air conditioner in my home. However, the available port portable units did not fit properly in my windows and were extremely energy inefficient.

Ultimately, I was required to retain legal counsel to obtain permission to install a mini split air conditioning system so that my household's cooling needs could safely be met.

The mini split system is substantially more energy efficient, requires no window modification, and effectively maintains safe indoor temperatures. No family should be denied access to the air conditioning systems that best meet their health, safety, and energy needs. I hope my experience demonstrates why AB 1684 is an important step toward preventing other families for enduring similar hardship. I appreciate some of the ongoing conversations with the opposition, and of course, I will be accepting the committee's amendments today.

With us we have a witness in support and I would respectfully request your aye vote at the time.

Thank you very much. Just to summarize the committee amendments, clarify the bills revisions also to apply to successive owners of a separate interest not to current not just to current owners. Provide that nothing shall limit or restrict an HOA's ability to require a homeowner to engage a licensed electrical contractor. This does not apply for cooling systems that don't require permit. Provided current owner shall disclose to prospective buyers the existence of the cooling system and related responsibilities.

And to clarify an HOA may prohibit or restrict the installation of a cooling system where a permit is required but is not granted. We do have a quorum. So before we go to mister Quintana, we'll establish quorum.

[Roll Call]

Thank you. We'll now go to you to present the ball.

Cool beans. Good afternoon, chair and senators. My name is Freddie Quintana with the California Apartment Association. We support this legislation because it preserves options for homeowners serving as landlords to purchase and install cooling systems in the properties they're renting. The denial delays are restrictive, and the only recourse to a denial would be costly legal actions.

For these reasons, we are asking for your vote, your aye vote on AB 1684. Thank you.

Thank you very much. Are there any other principal witnesses in support? Okay. We'll invite anyone who would like to express support for AB 1684 to please come forward, state your name, organization and position on the bill.

Vince Wiraatmadja with MCE in support. Thank you.

Thank you. Anyone else wishing to express support for AB 1684? Seeing no one else, we'd like to invite now two principal opposition witnesses to please come forward.

They like to provide testimony.

Mr. Chairman, members of the committee, Louis Brown here today on behalf of the Community Associations Institute. We have an oppose unless amended position. I do wanna express, our sincere appreciation to the committee staff, for working with us to address some of our issues and to the author's staff. I had a conversation with the author yesterday, about his staff and and how, professional they have been in dealing with us with these issues.

Please know that, we're not trying to be cruel in saying that people shouldn't have air conditioning. What we're trying to do is protect these buildings that are owned by associations. And if we're talking about putting holes in walls or even replacing windows, there's potential damage that can be done to that and we need to ensure the protection of that. We're also just looking for consistency and code as it relates to all of these types of issues that are now coming about.

So the idea and and the committee amendments that provide for and require a licensed contractor, that provide for a permit, go a long way to addressing our concerns.

We also have just a concern about older buildings in the state of California and whether or not they actually have the power to to run air conditioners if everyone in the building wants to address those. We think that can be addressed by the author's amendment to require an electrical contractor to do an evaluation because we do not believe that an electrical contractor would move forward if in fact the addition of those units would cause harm to the overall power unit of the association.

So, we again appreciate our conversation. We're evaluating these amendments as we go forward. And thank you, mister chair.

Thank you. Anyone else wishing to express opposition to AB 1684? Seeing no one come forward, I'll bring it back to the committee for questions or comments. Senator Cabaldon and then Senator Ochoa Bogh.

Oh, although he just left. I'm sorry, would you mind? So don't know. So the the letter we have on file from the Community Associations Institute really really just references the electrical issue.

And we only have a summary, obviously, with the of the committee amendments, but they if if the HOA can require the engagement of a licensed licensed electrical clock electrical contractor to install their system and the HOA has grounds to prohibit or restrict the installation of a cooling system because there was electrical an electrical permit that was required but not granted.

How how would the HOA not have like, what's the what's the path by which a, an upgraded electrical issue would would still be present for the HOA. If they can require the the the the homeowner to to have electrician do the thing and then the electrician says, hey, it needs to have this upgrade and the homeowner doesn't do that upgrade, is that that's still not sufficient to mitigate the concerns of the associations?

Through the chair, mister Cabaldon. Yes. We actually think they might. The only issue is that our letter was due seven days before this hearing. We saw the amendments after that.

So we're now evaluating those amendments. And if they do address the concerns that we've raised in our letter, then we will be reevaluating our position as it stands with that, specific situation.

Okay. Thanks, mister chair.

Senator Ochoa Bogh.

Question has to do with the responsibility. So when we're talking about this particular bill, it was interesting because the witness mentioned that it was a structure that's owned, that wants to rent the the the unit and wants to put an AC unit in the unit. Is that what you said? I just wanna make sure that I heard correctly.

Right. So some of our members would own properties within the association. Yes. Within the individual.

So so individually owned properties with the, within that. So my question had to do with if there was an upgrade that needed to be done with the electrical system, who's responsible to upgrade that system, the electrical system within that unit? Would it be the HOA or with the homeowner?

I'd have to look into that to be honest. I don't have that answer immediately available.

I would probably pause it that it would be probably conditional whether or not it was something that was like affecting just that unit or a mix of the units. It would be on a case by case basis, and it would not be permitted if the capacity was not available to be able to provide sufficient and safe electricity to that unit. And then.

Because we're dealing with condos, right? Just to make sure.

Right. Exactly. Multifamily, so we have something where there's a lot of shared facilities, shared walls. And that probably something would be conditional and then sort of just negotiation how much should that one unit pay because they're the one pushing it over the limit, for the entire building versus, you know, an upgrade for the entire, facility.

And that's what I'm kinda wondering because then you're you're you're talking about a lot of a lot of funding and and and and per the bill, just to make sure that I, you know, if we're barring the the HOA from prohibiting or restricting the installation of a greater replacement, we have to also consider the cost to the association if they're responsible for upgrading the electrical system for the whole facility.

Of course. And then I would say two things. One, the prohibition then would not apply where a permit was not issued and the evaluation the electrical evaluation was done to say, hey, we're not able to basically accommodate something given sort of the upstream, the lack of upstream capacity. Nothing would still prohibit the unit owner and the HOA from, I think, further conversations about, well, what do we do about the capacity that we have in the building entirely and who's gonna pay.

But that, again, the bill wouldn't apply for the, kind of direct allowance, to be able to, install your unit and and and to prohibit the HOA from declining you to install that unit.

This wouldn't apply. It's a subsequent conversation that actually would apply today.

Okay. And is that? I just wanted to confirm that that's how the HOA's would probably feel through the chair. An additional question to the witness in opposition.

Yes. The amendments, and subsequent language that we worked on with the author makes it clear that the owner is responsible installation, maintenance, repairs, restoration of those units that happen within the unit. And I do believe that if if we went to the point where a a number of of members were asking for it that started to reach the capacity of the electrical unit of the building, then those permits would be denied. And then that would create yet another conversation. Right?

Would they, would that owner then need to downgrade, use something that's that's costs us less power? If the Associates Association got into some discussion about then the actual need to upgrade the entire electrical, then that would be a discussion of the board that they wouldn't be born by all members of the association, if that activity took place.

Okay. I just wanna make sure that the HOA has the ability has recourse, financially as far as, you know, if if they're going to be responsible for it. Because I agree. I wanna I wanna make sure that that it's a balance. And it's always kind of little tricky when you have an association, especially we're talking about condos and the walls that are shared, the electrical system, the water systems and who's in charge of what.

And a lot of that is within those the HOA rules. So that's why I wanted to make sure that's clear on there. Yes. Okay. Thank you.

Vice Chair Seyarto.

Alright. Thank you. My concern on this is the same one I had with a previous bill on heat pumps. And it has to do with if you're putting an HVAC system in. You know, you you got your condenser that's outside.

Does the association still have a say where that condenser would go? Or if it can go? Because if they don't, what happens is if I'm in Unit A, I'm putting my condenser next door to Unit C, so that I don't have to listen to it. Can the?

It's absolutely a fair scenario. I think.

Can the association have control over that or do they get fined $2,000 for telling them no?

Permitting, I think would still be able to help to guide sort of the placement of physical infrastructure like that. I'll be happy to let my witnesses also elaborate.

We saw this as that to be a discretion of the whole property owner when it comes to installation. So what with the location, if we own the property or multiple units, we would work with that unit to try and make sure it has the best placement possible. However, that is a navigational point for how the HOA would react to something be adjacent and create a noise concern.

Right. Because they they have an obligation to the other homeowners as well. Right. But if we're saying in in this case because it's all about air conditioning inside this one unit, you guys don't get a say because otherwise it well, then what happens? So it sounds to me like we need to clarify that a little bit.

So the HOAs do have some say in the design and location of some of these this equipment. Because if you're gonna put an air conditioner condenser outside, you know, for for central air, you're that's a noisy piece of equipment and.

One, if I may, mister chair. One of the issue one of the issues that was raised that we had some improvement on in the assembly, was, the, I think, engagement with the HOA when it came to the common space. You're defining anything outside of that unit would be effectively common space for HOA kind of, discussions.

So there is more requirement for that unit owner to work with the HOA, whether it is a disruption of common space to be able to compensate for that, or, physical realignment. I I think that there is a little bit of improvement there from some of the work that we did in the assembly.

Happy to take a closer look at that those.

Yeah. I would like you to take a closer look at that because right now, all I see is it bars a homeowner association from prohibiting or restricting the installation. And if the installation cannot be done, or is the installation is is being proposed one way and that HOA says you can't because you're actually getting it closer to somebody else's window than it is to yours.

I don't know that I think that's the the definition of a restriction, and that restriction may cause them trigger them to be getting a fine. And and so that needs to kind of be hashed out. So that HOAs can't just like cities, local local control, you know, HOAs can't just be cut out of the the decision making process on these things and that's why. Thanks.

Okay. Any other questions or comments? If not, I'll turn turn it back over you to close.

Thank you for the discussion here today. Obviously, continued conversation. Hopefully, we'll make sure that we get our opposition removed and we would respectfully request your aye vote.

Is there a motion on the bill? There's a bill. Moved by Senator Cabaldon. Thank you. If the committee's system, please call the roll.

[Roll Call]

We'll keep that bill and call for absent members. As a similar Carrillo's coming up, I'll entertain a motion on consent. So motion on the consent calendar. Moved by Senator Durazo. If you can please call the roll on the consent calendar.

[Roll Call]

We'll keep consent on call. And then there was a motion by Senator Caballon on AB 2002. So if you can call the roll on that motion.

[Roll Call]

I'm sorry. What did we vote?

AB 2001 Solache?

Yeah. Yeah. I'm laying off of that one.

[Roll Call]

I'll keep that bill on call. Welcome, Assembly of Carrillo, and I'll turn over you to present on AB 1710.

Thank you, mister chair and senators. Thank you for allowing me to present Assembly Bill 1710. I would like to thank committee for their work on this measure, and I will be accepting the committee's amendments to make any calculation changes to the language of this bill. Thank you. AB 1710 is a bipartisan effort to address California's unprecedented housing crisis, a crisis that has left many people without a home, struggling to pay rent and unable to achieve homeownership.

This bill builds on the proven success of SB 330 in 2019 by ensuring that once a housing project begins the entitlement process, it is not subject to certain regulatory changes except for essential update related to health and safety concerns or to mitigate significant environmental impacts among others. As a former city planner, seen firsthand how your credit hurdles and inconsistent regulations stop projects for years, driving up costs and making building housing unattainable.

A 2025 study found that California is the most expensive state to build multifamily housing largely because of long approval timelines. Projects in California take over twenty two months longer to finish than those in Texas, for example, which greatly increases cost. If we don't fix our permitting system, we will continue to lose housing investments to other states that offer a more predictable and efficient approval process.

A strong, reliable housing supply is critical to keep workers in California supporting local businesses and fueling economic growth. Without enough housing, employers face hiring challenges and works commuters become longer and more costly. AB 17 addresses these challenges set on by increasing transparency, providing certainty, and ensuring fair and timely project approvals. With me to testify in support today is Audrey Ratajczek with, Cruise Strategies and Freddie Quintana with the California Permanent Association. Thank you.

Hi. Good afternoon. You have two minutes to present the bill.

Thank you. Good afternoon, chair, members of the committee. Audrey Ratajczek here today on behalf of the California Building Industry Association to express our strong support for AB 1710. And with me is Nick Cammarata, our general counsel of their technical questions. AB 1710 builds on one of the most important housing reforms California has enacted in recent years which is SB 330, the housing crisis act of 2019. SB 330 brought much needed clarity to how housing projects are evaluated by local governments by establishing clear rules of the road.

It gave developers predictability by locking in the local rules and standards that apply to a project at a time the preliminary application is submitted. And just as importantly, it clarified how those rules would be interpreted by applying a reasonable person standard to prevent arbitrary denials based on overly subjective consistency arguments. SB 330 has worked and delivered predictability, accountability, and results in moving forward much needed housing in California.

It also included strong common sense safeguards including exceptions for legitimate health and safety concerns and significant environmental impacts under CEQA. However, SB 330 only address local governments and as the select committee on permitting reform emphasized in its 2025 final report, this leaves a massive gap. In California, housing projects often require approval from a dozen or more state and regional agencies, each with their own permitting authority rules and interpretations. The same problems SB 330 solved at the local level, unpredictability, shifting standards, and subjective interpretations are now manifesting at the state and regional level and are undermining the effectiveness of SB 330 itself. So that's where AB 1710 comes in.

It applies the same pillars of SB 330 but to state and regional, agencies.

It's a practical evidence based extension of a policy we know works. So for those reasons, we urge your support today. Thank you.

Thank you very much.

Again, good afternoon chair and senators. Freddy Quintana with the California Apartment Association. I cannot overstate the importance of AB 1710. It will help lower housing costs, speed up production, speed up construction, and expand affordable housing. In California, it can take up to eight years or longer, from start to occupancy to complete a multifamily housing project.

AB 1710 is incredibly important when it comes to expediting housing and I ask for your aye vote today. Thank you.

Thank you very much. Is anyone else wishing to express support for AB 1710? You can please state your name, organization, and position of the bill.

Holly from Minneapolis at the White House Public Affairs here in support today on behalf of abandoned housing Los Angeles, circulate planning, Habitat for Humanity, California, Spur, and California Yimby.

Thank you.

Bob Naylor, one client, Fields and Company. That's Howard Osmondson Junior in strong support. Thank you.

Good afternoon. Natalie Spivak with Housing California in support. Thank you.

Good afternoon. Paul Shafer with the California Council for Affordable Housing here in support. Thank you.

Thank you. Okay. Unless there's anyone else wishing to express support for AB 1710, but now take up to two principal opposition witnesses to the bill, if there are any. Yeah. If you'd like to.

Good afternoon, chair and members. I'm Anthony Tannehill with California Special Districts Association. AB 1710 expands a list of the objectives, ordinances, policies, and standards that can be vested at the time of the application for the housing development. And specifically, for things that special districts will be most involved in are post entitlement permit standards. This will include certain materials requirements, other rules, regulations.

And our concerns are centered around the vesting portion or that it will put state and local agencies in conflict with any new rules or requirements from other local, regional, state, or federal entities. These are rules that could include efforts to improve or preserve public health, safety of the environment, say, like water conservation or other resources. So we've offered some amendments, to try to address that.

While doing so, I should point out that in the prior iteration of the measure, some of these were narrowed by the author and the stakeholders and that did carry over to this year. And I wanna acknowledge that and we're found those to be positive amendments, but did not, assuage our concerns entirely.

So so here I remain. And so I respectfully ask for your no vote unless the measure can be amended to address some of these concerns. Look forward to the continued dialogue. Appreciate you.

Thank you very much. Is there anyone else wishing to express opposition to AB 1710?

Good afternoon, chair and members. Kylie Wright with the Association of California Water Agencies. Respectfully oppose unless amended in alignment with CSDA. Thank you.

Thank you. Unless there's anyone else wishing to express opposition to the bill, I'll bring it back to the dais for any questions or comments from committee members. Senator Chobot and then Durazo.

I'm excited to see this bill. I'm excited to see this bill because, one of the biggest concerns that I hear from both developers and anybody that's trying to start any project, in any city is the fact that they're constantly coming back with more reviews and more requirements over and over and over again. And the delays, like as mentioned, eight years for some, you know, ten years. It's ridiculous.

And the cost of materials and labor that happened due to the that that those those extensive delays, it's incredibly frustrating for anybody that works in this space.

And especially in a state like California that continuously has legislation and requirements coming in from every single angle. You're in a no win situation in California. And then we wonder why the cost of housing is so darn expensive. I wanna be I wanna be added as a co author to this bill. I wish I had carried this bill.

I'm actually really excited because when you submit your plans to any, city for approval or the county per se. Anywhere that you're submitting it, you should have a reasonable time to review by all the stakeholders and say this is what you're needed. Maybe have a revision of maybe one or two. But after that, you're done. You're committed and you've you've done your job in doing everything that's you're required to do to come back over and over back again to to require more.

And I like the fact that it was mentioned by the by the witnesses that if there's a health or a safety concern, then it will be addressed within that within this the language within the amendments that have been accepted. So I think that covers the main concerns moving forward if it's a safety. And even with that, I am a little concerned about what would be considered, safety especially in California that everything becomes so incredibly, I I don't even know what the word is but What's that?

Regulated. Regulated.

It's just so I I mean, we regulate everything. Technology is constantly, you know, advancing. And so when you talk about assessing and testing for different elements in our water, for instance, you know, they're continuously going to have so many things that we're gonna be regulating because we're gonna have better technology to assess everything that is in our waters, which is a good thing or bad thing.

But if we're requiring everybody to do higher standards of, you know, of regulatory environment, we've gotta give some leeway on there. So, thank you for bringing this bill forward.

It is much much overdue in the state of California. And if you don't mind, I would love to be a co author in this bill and I'm happy to move this bill when appropriate, mister chair.

Thank you. Senator Durazo?

Yes. I just wanna say I'm gonna be supporting the bill today to move it along. I look forward to talking to you in this next committee in my local gov committee to try to address what the water agencies are saying about the state and local state and federal laws.

Thank you, Senator. Senator Cabaldon.

Yeah. Thank you. The author and I've been going around and around and around on this. Not this year but last year on the same issue and my heart is in the bill. I still I continue to have concerns about how it will work operationally particularly given the passage of 8,130, Ministry 131 last year. And the the the issue really is it is the extension of the definition of public agency, which is quite quite broad and policies quite broadly.

So the, you know, under existing law, you know, essentially what's happening is that the LA County Board of Supervisors and when it's considering a a project in East LA is able they have to they have to get their act together and say, here, this is the whole project and all of our policies and procedures requirements, you're done and you're really done now. That's I mean that's what this law is supposed to say. So exactly what Senator Otopo mentioned. You can't come back year after year.

Oh, one more thing.

We just came over the or we just passed new ordinance or something. You can't do that. That process works because the LA County Board of Supervisors controls itself. And and and so it's able to account for everything that is in its general plans and its specific plans and its zoning ordinance and everything else. And so it it can credibly say we are committing to this and the people who show up at the board meeting testify.

They know it's it's taken all of that. But this bill is it's it's pretty radical in the sense that it says no no. All all public agencies including the state and all the state agencies that now applies to too. The difference is they're not at the table. Right?

There's nobody from CalEPA or the the regional water quality board or the or the LA air district or LAMTA sitting in the room when those commitments are being made. So essentially, we're saying the local agency has not just the right but the ability to say that it is on behalf of all state agencies we're as of today cutting off any future changes.

With the with the caveats about CEQA and about health and safety but the CEQA caveats really a lot less important now that many projects are going to have various CEQA exemptions including the broad housing CEQA exemption that we passed last year. So even compared to the last year's version of the bill, the CEQA piece that doesn't meet all the issues around water and air and everything else. I served on the regional water quality board for the Central Valley and, you know, we're not independent operators.

We regulate water quality in California other than, by into a a very significant extent by delegation from the Federal Government. It's a state it's a state action by the regional water board. We found to say waste discharge requirement for a housing project, but, or for an MPDS permit for the sewer project for sewer, installation for a major project. But that is undertaken by the as a delegation from EPA.

So when EPA says, hey, we are we have a new policy or we're we're we are sending out new guidance about the existing policy.

You have to do it. No matter what the city of Rosemead said, you know, a year and a half ago in a vesting map agreement, it doesn't matter that Rosemead cannot like you're legally mandated to do that thing. And we can't and so this bill would at least purport to say no. You don't have to comply with the regional water board because it is a public agency under the definition of public agency.

And it it is that standard is a rule, regulation, determination, or other requirement implemented by the regional water board, as one example.

But the same thing is true if we passed a law during that vesting period that said that that, you know, all the projects will be, I'm not gonna pick on skilled and trained as we're from, but, you know, if we passed a labor requirement or like laws that passed by this legislature would also be somehow suspended by by a statute in that space.

And that to me seems like that's a very large leap from vesting Senator subdivision maps to suddenly everything that this entire government of the state of California does being held in suspend in suspension. I'm not I'm there's no notwithstanding clause. I don't know how this overcomes the constitutional. So I'm I'm still very very concerned about how it operates and and I was last year too.

So no big surprise. I I the idea I'm supportive of for sure. I think getting to a world that's closer to what Senator Ochoa Bogue has described is a is a very important objective to get to. To me though, this the the language, the current language is so overbroad. And too simple in some respects that it does bring in all the water districts and everything else but it also includes every state policy and every state agency and that's, for me that's a road too far.

So, thank you. Okay. Any other questions or comments? Now I'll turn it back over to close.

Well, thank you all for your your comments and and your support. This is a bill designed to bring consistency and certainty to the house and approval process. I respectfully ask for an aye vote. Thank you.

And once again, you did accept the committee

I do accept committee amendments. Yes.

In your earlier comments. Okay. Is there a motion on the bill? But it show a vote. That's right.

Okay. We have a motion at the committee's system. Please call

Motion do passes amended to Senate local government. Senator Arreguin.

Arreguin, aye. Seyarto. Aye. Seyarto, aye. Caballero.

Aye.

Cortesi. Aye. Cortesi, aye. Durazo. Aye.

Gonzales. Greyson. Ochoa Bogh. Aye. Ochoa Bogh.

Aye for the a.

We'll keep that bill and call for absent members.

Thank you, mister chair. Okay. Next in file order is file item 10 AB 2263 by Assembly Kalra. And I'm gonna briefly pass the gavel over the vice chair.

Alright. So we're on AB 2263. Call you when you are ready. Go ahead and begin your presentation.

Thank you, Mr. Chair. I wanna thank the committee for the work with us on this bill and I'll be, I will be accepting the committee amendments. AB 2263 will give the Santa Clara Valley Transportation Authority of the statutory authority to build affordable housing for their employees. VTA is a transit agency that serves Santa Clara County.

It's approximately 2,300 employees manage and operate the county's bus and light rail services as well as paratransit, congestion management and other services. While VTA workers may be making competitive middle class wages, they are living in one of the most expensive housing markets in the nation.

The high cost of housing has priced many of the VTA workers out of the area, leading leading them to live outside of the immediate work area or outside of the county and creating long commutes for them, which is ironic for folks working for a transit agency.

AB 2263 will give VTA the authority to build affordable housing for its employees, ensure their ensure their workers will live closer to work, increase their commutes, reduce driver fatigue, and improve the overall safety for all drivers and pedestrians on the road. The bill has enjoyed bipartisan support and no opposition.

With me to revise supporting testimony is Beverly Greene, chief government affairs officer at VTA. And for technical questions, we also have Jesse O'Malley Solis, director of multimodal planning and real estate.

Thank you vice chair Seyarto and members of the committee. Thank you assembly member Kalra for authoring AB 2263 and also to state Senator Cortese for your support of VTA and our employees. We'd also like to thank the committee and staff for amendments that have strengthened this bill. VTA has a very robust transit oriented development program. This bill would enable VTA to designate a percentage of the housing units we provide with a preference for our employees.

A majority of the housing units proposed under AB 2263 would be open to the general public and would serve a mix of households focused on low and moderate income residents consistent with VTA's existing transit oriented development communities program. This legislation would help VTA to attract and retain a talented workforce by offering a transit commute alternative to people dedicating their careers to public service.

In doing so, we will continue serving the broader community and complying with federal and state fair housing principles and encouraging transit use that mitigates congestion on our roads. With Harabedian rent nearly double the national average, VTA employees often choose more affordable commuters rather that are farther from work. One in four VTA employees commute more than an hour each way and 10% commute more than two hours each way.

In a survey of our employees, 90% indicated an interest in an employee housing program. By offering opportunities for employees to live close to work, we hope to contribute to their quality of life and allow more opportunities to ride our public transit system. I want to thank Assemblymember Kalra and State Senator Cortese and this committee for hearing AB 2263 and respectfully request your approval of this bill.

Thank you.

And just confirming you're here for, did you wanna make a presentation?

I'm gonna give a few brief

You're gonna give a few brief comments. Okay. Very good. You have two minutes.

Okay. Thank you, vice chair Seyarto and members of the housing committee. My name is Jesse O'Malley Solis, and I'm VTA's director of multimodal planning and real estate. And I wanna share, a few background stats about our workforce. 50 per 52% of our workforce households qualify for 80% of area median income and below affordable units.

90% of our workforce is, can qualify for a 120% of area median income and below. And these stats were before Santa Clara County's area median income was just increased, to 205,000 per year. The median home price in Santa Clara County is $1,500,000 for a purchase. The average VTA household can afford a home at the $400,000 level, which provides a 1,000,000 affordability gap for housing in our community. This effort has broad support from our employees and employee unions.

And we're thankful to Assembly Member Kalra for your authorship. And on behalf of VTA employees, we hope to have your support today. And I'm also here to help answer any technical questions.

Okay. Thank you very much. At this time, we can, take Me Too's in, support of the bill. Anybody in support of the bill out there wanna come up and state so? If not, we'll go to opposition witnesses.

If anybody wants to speak as a, primary witness in opposition. No? Does anybody wanna come up to the microphone and say they oppose the bill? Oh, it looks like a popular bill. Okay.

We're gonna bring it back to the diocese. Any comments, questions, concerns?

Thank you, Sheriff. Just appreciate the author taking the leadership role on this on behalf of our county and if it wasn't emphasized, Valley Transportation Authority is is actually a county wide transit operator. One of the few that you see in the Bay Area that that isn't balkanized all over the place. So they have a very cohesive strategy and a very strong management team and and employees that carry out their their mission.

And I know that the author and I and most of our delegation is very confident about that and I'm sure they will continue to succeed at at these endeavors as well.

So, I'm happy to move the bill.

Okay. Any other questions or comments from committee? Yes. Senator Ochoa Bogh.

Thank you. Not my area but I will be supporting the the bill because I think it's a good it's a good effort towards ensuring that families are have housing. So thank you for moving that forward. I just had a question about being that you are a public funded. How are you going to finance the the the purchase of the land and the construction for these families.

How are you gonna facilitate the financing part of it?

Yeah. VTA has a very robust transit oriented development program. We have over a 140 developable acres in our ownership today. Transit oriented development is a transit use because any development we do on our own property, increases ridership. And so we own a tremendous amount of the assets and holdings that these properties, and improvements will be built upon.

Financing and funding of these efforts really happen on the private side. So we partner with developers on to build out development on our land. There's funding that occurs at the state and local level for affordable housing units. As you know, affordable housing takes a whole financial village to bring together and move forward. So we will continue that model of working with our p three partners and having them secure the funding necessary for the vertical build on our sites.

This bill, provides for a preference of the units being built to go to VTA employees. Okay. So we exclusive to them.

Not not necessarily. Not necessarily.

The units are open to the public and in line with fair housing law. There'll be certain percentages that align with the demographics of our county to make sure that, we're not exceeding fair housing law allocations of of, aligning with the with the county population. So the the units will be open both to the public and to VTA employees with a preference to VTA employees.

So will it be market housing, market rate housing with an allocation that meets the the ability for your employees

to be able to purchase them? We our program does both market rate and affordable housing. Every site that we build has a minimum percentage of 25% of our builds need to have units that are affordable to households earning 60% of area median income and below. We have historically done a tremendous amount of build out in affordable rental product. We are piloting right now an affordable for sale product on ground lease land which is something that's new to our area.

But we would like to, if we're successful in that endeavor, open up more affordable home ownership on VTA land as well.

Okay. So just for, because it says here, this bill would allow you or authorizes you to purchase or acquire property to construct affordable housing but you already have the land.

We do have a tremendous amount. So, one of the things that the VTA, TOD policy allows for as we build capital projects in our county, meaning as we build extensions of our rail lines and transit service, we do purchase new property. And any property that is no longer utilized for construction staging or transit facilities automatically transfers into our transit oriented development portfolio.

And this is what this bill is going to authorize you to be able to do for those particular pieces of land that you're gonna be

We are currently authorized and allowed to do transit oriented development on our holdings today. What this bill authorizes is the ability to provide a preference for VTA employees on our preference for VTA employees on our land.

Okay. Thank you.

Thank you. Any other questions or comments? Just to summarize the amendments which are, discussed on pages five and six of the committee analysis. One, provide a preference for VTA employees and also, require compliance with existing federal and state fair housing laws. Two, revert VTA's TOD authority to sites identified in existing law.

Three, define lower and moderate income households consistent with existing law. And four, require VTA to submit an annual report to the legislature about the bill implementation. So unless there are any other questions or comments, I'll turn it back over to you as similar call or close.

Thank you, mister chairman. Thank you for the questions. And appreciate senator Cortese. We actually were at different times chair of of of ETA over the years and it's wonderful to see how this kind of idea has now evolved from many many years ago of identifying vacant land to now actually using that land in in in its best use in my opinion.

Next to transit, next to light rail, You have these massive parking lots, you have these kind of old school kind of shopping centers, the massive parking lots.

There's a much better use of that land especially as we're trying to densify, in in our bigger cities so that we can alleviate some of some of the the kind of unintended consequences of folks having to go into the Central Valley or or commute for long distances, raising housing prices in those areas. We we need to build more. And I think in this case, so many of our transit employees do qualify for affordable housing.

And this would give us an opportunity to, again, give a preference for a certain percentage of those units, most of which are gonna go to market rate, But anyway, to ensure that there's an opportunity for some of these employees to actually live where they work, and and take advantage of of the investments that are being put in, not just by VTA, but the private sector developers that are partnering with VTA to to eventually make this happen. Respectfully ask for an aye vote.

Thank you. I'm reaching a motion on the bill moved by Senator Cortese. Thank you. The committee assistant could please call the roll.

Motion do passes amended to Senator appropriations. Senator Zaregine. Aye. Arregine, aye. Ciarto.

Ciarto, aye. Covalton, aye Caballero. Cortezi, aye. Cortezi, aye. Durazo, aye.

Aye.

Gonzales. Aye. Gonzales, Aye. Grayson. Ocho Bog.

Aye. Ocho Bog. Aye. Badia.

We'll keep that bell on call for absent members. Okay. Assemblymember Hoover, good to see you. Assemblymember Rambo has been waiting for like an hour to present. Is it okay if he just goes first?

Okay. Thank you very much for your flexibility. So we'll now, proceed to file item 11 Assembly bill 2270 by Assembly member Arambula.

Thank you, mister chair and members. I'd like to begin by thanking the committee for their hard work on this bill and will be accepting the amendments that are on page six of your analysis. Senators, California's farm workers are essential to our state's economy and our food supply, yet they face some of the most severe housing instability in the state. Tax credits, such as the Low Income Housing Tax Credit program, represent one of the best uses to encourage affordable housing development.

But currently, the California Tax Credit Allocation Committee evaluates eligibility based on the credit based on a scoring criteria prioritizing proximity to amenity dense areas.

This approach does not sufficiently take into account the land use realities of our rural regions where farm workers most often live be because where farm workers most often live is where farm worker housing is located next to agricultural land. Often miles from those same amenities such as public transit, libraries, or pharmacies. The result is that farmworker housing projects are consistently less competitive for the funding opportunities that the low income housing tax credit program provides.

And despite these demonstrated needs for these communities to have expanded access to quality and affordable living situations. AB 2270 resolves the scoring disadvantages that farmworker housing projects have been facing by requiring the California tax credit allocation committee to consider a scoring system that recognizes the geographic realities of farmworker communities.

With me here to testify in support of the bill is Alejandro Solis on behalf of La Cupertiva Campesina De California.

Thank you. Great. Good afternoon. You have two minutes to present on the bill.

Thank you, mister chair. Chair and members, Alejandro Solis with California Advocacy on behalf of La Coperativa Campesina California in support of AB 2270. La Coperativa and its members are the federally designated farmworker agencies. La Coperativa and its members provide education, training, job placement, housing, energy, and other services to California's migrant and seasonal farm workers and rural poor.

La Coperativa's members members network serves over a 153,000 clients per year. We would like to request your support on this legislation to ensure that farmworker housing projects can fairly compete for tax credits in the low income housing tax credit program. As mentioned by assembly member doctor Arambula, farmworker housing by necessity must be located near agricultural jobs often in rural areas far from these amenities. While farmworkers have become more mobile, many times they do not have transportation to travel long distances to their jobs.

As a result, these projects are disadvantaged, not because they are lower quality, but because the scoring criteria do not reflect rural realities.

This creates a structural barrier to housing projects in agricultural regions. To be eligible for the low income housing tax credits, a project must receive at least 10 points in amenities. To be competitive, it must receive 15 points. Currently, farmworker projects have a difficult time receiving even the 10 points. This is a fairness and equity bill ensuring that farmworker housing is evaluated based on the realities of where farmworkers live and work.

We respectfully ask for your aye vote. Thank you.

Thank you very much. Is anyone else wishing to express support for AB 2270?

Hello. Good afternoon, chair and members. Karen Stout here on behalf of v e n d s u s in support. Thank you.

Thank you very much. Unless there's anyone else, wishes to express support for AB 2270, will now take up to two principal witnesses in opposition. Are there any opposition witnesses? Seeing no, I'll bring it back to the dais for questions, comments, or a motion.

I move the bill. Okay. I I just wanna thank also Assembly member, Rambla, and and everyone who who moves this forward. You you think about the terminology, the term rig system, you know. The system does not allow the way it's built to give people who need it the most to give them the housing.

So gotta unrig it, Change the terminology because that has a big impact on who is who's available and you know, who can be served. So thank you very much. I move the bill.

Okay. Thank you. Any other questions or comments from committee members? Thank you very much for bringing this bill forward. I strongly support it and I'll turn it over to Cliffs.

Thank you, mister chair and senators for allowing me to present AB 2270 today and I respectfully ask for an aye vote.

Thank you. We have a motion by Senator Durazo. If the committee assistant completes the call.

Two passes amended to center appropriation. Senators Arreguin. Aye. Arreguin, aye. Seyarto.

Cabaldon. Aye. Caballero, Cortese. Aye. Cortese, aye.

Durazo, aye. Gonzales. Aye. Gonzales Aye. Grayson.

Ochoa Bogh.

I'm not voting right now.

Padilla.

Thank you. Keep that billing call for absent members. Thank you very much. Okay. Let's go to file eight AB 2118 by Semler Hoover and then we'll go to file item six AB 2050 by Senator Caloza.

Thank you, mister chair, members. appreciate the opportunity to present AB 2118. California continues to face a severe housing crisis with rising home prices and rents making it increasingly difficult for residents to find affordable housing. Despite ongoing efforts to develop affordable and mixed income housing, developers still face regulatory hurdles that slow the construction of new units.

AB 2118 simply refines the streamlined pathway created by AB 2011 in 2022 by prohibiting objective development standards imposed by local government from limiting or prohibiting mixed use projects.

With me today is Kate Rogers, Chair of the Student Homes Coalition in support. Thank you.

Good afternoon, chair members. My name is Kate Rogers. I'm the Chair of the Student Homes Coalition. Holmes is sponsoring AB 2118 because we believe that it will not only build on our previous work to bring more student housing to campus development zones, but because it will deliver much needed affordable units for all Californians. AB 2011 created a streamlined pathway for a 100% affordable and mixed income housing projects along commercial corridors near transit stops.

These types of developments have multiple advantages. They create affordable housing for low income households near high quality jobs in transit while simultaneously revitalizing struggling commercial districts. Last year, Student Home sponsored AB 893 to expand those opportunities to students by extending those pathways to campus development zones. But despite the benefits that AB 2011 projects can bring to cities, local governments still look for ways to avoid approving affordable projects and deny applicants their right to ministerial review.

As of 2024, thousands of proposed AB 2011 units were stuck in the approval pipeline.

AB 2118 was drafted to help get these units built. AB 2118 does not expand AB 2011, but rather it closes loopholes that cities use to block projects by clarifying the original intent of the law. Student Homes has worked to strengthen AB 2011 because we believe it can be a powerful tool to help reduce housing costs in California.

But if we do not close these loopholes the cities are using to block projects now, the work that we have done on AB 893 and the work the legislature has done on AB 2011 is at risk. For those reasons, a vote for AB 2118 is a vote to support low income tenants, a vote to support students, and a vote for more affordable California.

So on behalf of the students that are members of the Student Homes Coalition and all low income Californians, I urge you to vote aye on AB 2118 today. Thank you.

Thank you very much. Okay. Invite anyone else who'd like to express support for AB 2118 to please come forward.

Good afternoon, mister chair, members. Michael Gunning, Lighthouse Public Affairs here on behalf of Abundant Housing LA, Circulate Planning, Spur, and California YIMBY in support, and urge an aye. Thank you.

Bob Naylor for Fields Citizen Company. That's Howard Ominasen Junior in support.

Thank you very much. Unless there's anyone else wishing to express support for AB 2118, we'll now take any opposition witnesses to the bill. I don't see anyone coming forward. So I'll bring it back to the dais for any questions, comments, or emotion. Senator Cabaldon.

Yeah. Thanks, mister mister chair. I strongly support the policy here. This is a very important and well thought out change. I wanna flag something.

I'd flag it for one author each, on the and the chair can cover his ears because he's heard me say this a million times. The the, the bill has, minor cost to local governments, but they're but they are flagged in the bill by the Ledge Council as as appropriate as state mandate.

And the bill then includes an all too common disclaimer that says those those costs are not reimbursable despite the fact that the constitution says that they're supposed to be because the local government can charge a fee or a fine in order to recover the cost. If you could identify the fear, the fear of the fine that could be increased, I'd love to hear it.

But I suspect there isn't one because we're shifting projects into ministerial review, which makes it less likely that they will pay any additional fee to cover the cost of the bill.

So it's likely to be a de minimis cost in the end. But there is a normal procedure in the constitution which is that we simply say, if you have cost City Of Rancho Cordova and it was $8,000, you're welcome to submit a claim. Yeah. But too many of our bills are have this like waiver that no, you're not even eligible. So I would just encourage you to take a look at this.

Appreciate it. Yeah. It moves forward that we're not we're not we're not creating an unfunded state mandate where it's really not necessary. This is not super costly but it does have a cost to and there is no possible fee or fine that I can imagine, that you could charge at the municipal level in order to recover that that modest cost.

So, this bill, obviously, I appreciate the the flag and I do do think that's something we will definitely take a closer look at. It's my understanding that, under AB 2011, while it did shift things to ministerial approval, it actually does continue to allow local governments to charge impact fees. And so, you know, it's my understanding that those these costs could be recovered via impact fees. Under this particular bill, I can't obviously speak for all the different legislation where this, provision is.

But I think under this bill, we're not trying to change any of the existing impact fees that can be charged under AB 2011.

Understood. And and and I know our officers have been communicating.

Okay. Perfect. Yeah.

But the impact fee is actually not the point of making it this. There is a real issue too, which is but the I'm talking about a much narrower set of costs which is why I don't think it's actually an issue it wouldn't be an issue to correct.

Okay. Yeah.

Happy to edit it. So the bill says you can't apply a certain set of objectives and subjective standards to these projects which is the right policy. But that does mean the city of Rancho Cordova or the city of Folsom will then be required to update and change their their their standards and policies. They should be doing that. We that's what we want them to do and we are in this bill ordering them to do that.

So the cost of that is not huge. It's a couple, you know, staff hours to prepare an agenda item. But it is almost by definition of what our constitution says is a state mandate initiative. They should be eligible to file a complaint a a claim.

Understood. Thank you. Yeah. We'll definitely take a closer look at that. Appreciate that.

Okay. Are there any other questions or comments from the committee? Motion by Senator Ochoa Bogh. Thank you.

I'll turn it back for the author to close.

Disrespectfully ask for an aye vote and happy to continue looking at it as we move forward. Thank you.

Okay. We have a motion by Senator Chobot. The committee's consent to please call the roll.

Can I

I'm sorry? Senator Dawson. Sorry.

I'm sorry. Just I just wanted to say this is gonna be going to a local bill of committee. So I'll be looking at some of the unintended consequences that have been raised.

Thank you. Look forward

to looking working with you on that.

Appreciate that. Thank you so much.

Okay. Any other questions or comments? If not, let's call the roll of the motion.

Do you pass to local government senators Aye. Aye. Aye. Aye. Cortezi Aye.

Cortezi Aye. Cortezi Aye. Dorazio Aye. Dorazio Aye. Gonzales.

Aye. Gonzales Grayson. Otrobo. Aye. Otrobo.

Aye. Otrobo. Aye. Okay.

We'll keep keep that bill on call for Thank you so much. Thank you Assembly member. Okay. We'll now proceed to file item six. Assembly bill 2050 by Assembly member Carlosa.

And, good afternoon.

Oh.

Good afternoon, mister chair and members. I appreciate the opportunity to present AB 2050, also known as HOA Rainy Day Fund. First, I'd like to thank the committee consultants for all their hard work on this bill. I will be accepting the committee amendments that give proper notification to residents, ensure the reserve funds hold a minimum percentage, and allow for a resident vote when necessary. AB 2050 is a measured and thoughtful proposal aimed at promoting fairness and transparency for California residents living in common interest developments, also known as HOAs.

This bill has also received bipartisan support, in the assembly. Today, more than 13 million Californians live in 55,000 common interest developments. Condominiums continue to be an affordable option for many first time homebuyers. And while, in both houses, we have focused a considerable amount of time on new housing, and rightfully so, we also cannot forget about our existing housing stock and how it's aging.

More than 50% of the condominium associations in California are twenty years or older. In my district alone, 70% of associations are more than 20 years old, and 73% are condominiums, meaning many communities are managing aging buildings that require significant long term maintenance. Deferred maintenance can also create serious safety risks. Recent building failures across the country highlight the dangers of inadequate reserve funding and the importance of responsible long term planning. Also, many lenders are now refusing to write mortgages for condominiums if associations have underfunded reserves.

Fannie Mae and Freddie Mac require an association to have a minimum of 10% in reserves and will increase that level to 15% starting in 2027. Current law requires associations to conduct reserve studies every three years to assess the cost of maintenance, repair, and replacement of the major components like roofs, elevators, balconies, and other structural elements. However, there is no requirement to fund for reserves, which means many associations are not prepared to address these issues when they do happen.

The absence of a required formula to fund reserves penalizes homeowners because the only remaining option to address these maintenance issues is a special assessment, which is neither fair nor affordable. Additionally, current law strengthens protections for HOA reserve funds by requiring dual authorization for withdrawals, ensuring reserves are used only for their intended purpose: major repairs, maintenance, and related litigation.

Any funds withdrawn must be paid back within a year. It also increases transparency by requiring homeowner notification and regular accounting when reserve funds are used for litigation related expenses, helping homeowners better understand how their association's funds are being managed. AB 2050 provides associations with a formula to achieve a sustainable level of funding and reserves, and it also provides a ramp up of six years to help get them there.

Predictability and transparency are essential for a well functioning marketplace by setting clear standards and AB 2050 reduces disputes and improves compliance. With me today, to testify in support is Stacy Donnelly, Chair of the Community Associations Institute California Legislative Action Committee and an expert in the field.

And Louie Brown representing the Community Associations Institute.

Hey. Good afternoon. You should have two minutes to present on the bill.

Thank you, Mr. Chair and members of the committee. I am Stacy Donnelly. Professionally, I'm the CFO of Condominium Financial Management in Walnut Creek. We are sponsors of AB 2050 and thank you to Assemblymember Caloza for authoring this bill.

I wanna reiterate the very important point made that reserve studies are currently required in the law, but the funding that the study recommends is not required. And that is what we are trying to get achieved with AB 2050. Adequate funding helps protect affordability by spreading the the cost more equitably for home ownership. It provides for stable and gradual planned reserve funding over thirty years, rather than surprise special assessments anytime a project comes up. I did a review of my own client database.

We have a 157 associations that we provide financial management services for. In the last year, 32 of them, which is 20%, had a special assessment that represents 2,648 homes. And if I were to extrapolate that across the number of homeowners in California living in CIDs or HOAs, it's 2.6 million homeowners.

To give you a couple actual examples in that are happening currently live right now in my, clients, I have a 792 unit condo association in Walnut Creek that just passed a $6 million special assessment due to balcony refurbishment. And that is going to equate to about $7,600 special assessment to each homeowner.

Another example is I have a 12 unit condominium complex in Oakland that had a $900,000 special assessment due to underfunded reserves, which equates to $75,000 to each homeowner. Assemblymember Caloza discussed the Importance of this bill relative to mortgage financing. I want to reiterate that because it limits homeowner financing options. Insurance is another consideration. You know, insurance has been a crisis in California for a number of years.

And insurance companies are looking at deferred maintenance and inadequate funding is increased risk factors, which translates to increased premiums. I've read some correspondence relative to the opposition of this bill indicating that it contributes to the affordability crisis. I would argue that it's actually the opposite. What we're trying to achieve is an equitable affordability rather than these spikes that happen with special assessments.

So, with the six year ramp up period that's afforded in this bill, we're funding at a level that will gradually increase rather than these spikes in special assessments.

And I've been doing financial management for homeowners associations for over thirty years. Special assessments used to be not very common. And now, we're setting up special assessments on a monthly basis in our database.

If you could please wrap up your comments. We appreciate it.

You bet. We need a solution for the sustainability of this housing model. On behalf of our members and the millions of Californians that live in HOAs, including myself, I respectfully ask for your aye vote.

Thank you.

Mister chair, members of the committee, Louis Brown here today on behalf of Community Associations Institute and is also asked to express support on behalf of the Community Association California Association of Community Managers, by, Miss Jennifer Wada. I thought I would just, kind of briefly just explain the amendments, that we were able to work with the committee and, again, express our appreciation to the committee. Previous version of the bill had no cap, on the reserve special assessment that was originally in the bill.

The amendments place a 5% cap, on that reserve special assessment, same as the special assessment currently provided for in law. What it does in the alternative is it allows or requires an association that does project that it will be below zero at some point during that thirty year window of its reserve study to then set aside a percentage of its operating budget, 15%, because that's what we're hearing out of the, Federal Government for Fannie Mae and Freddie Mac.

Also, veteran affairs has limitations on loans, if there's not adequate reserves. That 15% then is spread out, through regular assessments over a period in between those special assessments, which was in the bill is nine years. So as an example, Assemblymember Caloza's district. The average operating budget of the associations in her district is $117,500. The average size of the associations in her districts is 29.

And you heard her say that most of the associations in her district are 20 years or older. If you follow the formula that we have now agreed to with the committee, that will come out to $5.60 a month that an an individual homeowner would be paying in addition so that they could put the money aside necessary to keep their reserve funds above zero and then contemplate for these maintenance issues that we all know are coming.

So we believe we worked out an extremely affordable and a very transparent process that will hopefully avoid some of the drastic consequences that we're now seeing across associations statewide like we heard with these special assessments. And with that, we ask for an aye vote.

Thank you very much. Is there anyone else wishing to express support for AB 2050?

Vanessa Chavez with the California Building Industry Association in support and I just appreciate the author's leadership in this space. Thank you.

Okay. Is there anyone else wishing to express support for AB 2050? Seeing no one come forward, we'll now take up to two principal opposition witnesses.

Good afternoon. Nice to be here Senator and Members of the committee. I'm Marjorie Murray, Senator for California Homeowner Association Law. And even though we have been identified as opponents of the bill, we are in something of a unique position in that we were members of the working group twenty years ago that worked on AB 2718 that required associations to create reserve accounts and to create a funding plan and to make sure that the money got set aside in reserves.

So what has happened in the intervening years?

Associations simply have not done that. So our first concern about AB 2050 is that again, there is no enforcement mechanism in this bill. There is no way to ensure or force or require. It's again relying on the goodwill and the scout's honor, we're gonna save the money and put it in reserves. The other enforcement issue that we are very concerned about is that there is an enforcement issue, but it's laid on homeowners.

And that enforcement issue is going to be foreclosure. We have talked extensively this afternoon about the fact that there is an, there's a home ownership and housing crisis in California. Couldn't agree with you more. But it's not enough to put people in housing, they have to be able to keep the housing. And what's happening in homeowner associations and we know because homeowners report it to us.

There is an extraordinary use of the special assessment as was just described. So last week it was a $15,000 special assessment. Again, it was a $32,000 assessment onto Alameda County homeowners. A $35,000 assessment. And homeowners have no way to come up with this cash because the associations have not methodically put the money in reserves and most important left it there.

One of the issues addressed here is the movement of money out of the reserve accounts into the operating accounts. And again, there is existing law requiring that that money be restored through reserves, but it isn't. Again, it's a scout's honor. I'm gonna do it, but it doesn't happen. And so when it comes time to fix the elevator or fix the reserves and to reach into the reserve accounts, the money is simply not there.

So we have these concerns about giving associations the authority to levy more special assessments when the money is unprotected, when homeowners simply do not have the cash in the first place, and when money is moved out of reserves into operating accounts.

And never lose your pardon.

Thank you.

Please don't direct your comments.

So again, what we would like to see bottom line, Senator, is that this board sorry, the legislation be sent back to the drawing boards. We do have ideas about how to fix this, but the the legislation as currently written is not the solution. It's a risk to associations and it's a risk to homeowners.

Thank you very much.

Thank you.

Good afternoon, Mr. Chair and Members. Robert Herrell, I'm the Executive Director of the Consumer Federation of California. We have a respectful opposed position at this time on the bill. We have had a couple of productive conversations with the author's office. We expect those conversations to continue.

I'll be quite brief. You've heard from miss Murray about the lack of enforcement, the twenty year history that they were supposed to be doing this this whole time, but many of them haven't been. And let's be clear, there's a lot of HOAs out there when you have 55,000 of these. Some are really big. We heard a couple of examples from the lead witness for the proponents of the bill of some of the, what I refer to as sticker shock that people are facing.

And remember, HOA boards have the authority to foreclose on their members and some do. And some are quite aggressive in that space in a shocking way. So there's lack of enforcement. You know, the author in in making a summary case for the bill said quote, a special assessment is neither fair nor affordable. We agree.

But between regular assessments and this committee's already seen bills to try to limit the increases in regular assessments about Bassano and Menjivar, for example. And emergency assessments, which I think are being ease they're easier to do now than they used to be. And then special assessments, that's where you get into the place where especially your older, your low and moderate income folks in HOAs, they are struggling to hang on. And that is the challenge here.

We appreciate the work of the committee and you and your staff, mister chairman, in trying to improve the bill and set forth a pathway.

That it those are improvements from the where the bill was at. But I'll close with the notion that, you know, where the money goes and how it's being properly looked for now becomes I think a real focus. And when we've raised that issue that it ought to be part of this legislation, we've been told that should be another bill.

But we actually think it's incumbent that it be included in this bill because as you heard from Mr. Brown himself and testifying in support, you're now gonna start seeing this six year ramp up. Money's going to start being collected.

It's going to start being accumulated. Is it being looked over properly? Is it being watched carefully enough? DAs have brought cases where folks have either absconded or misappropriated the money. That I think now becomes the other focus.

I would just also note that, unable to attend today is HERA, Housing and Economics Rights Advocates and they oppose the bill as well. Continue to work with the author. I think you're headed slowly in the right direction but, a lot of more work to be done. Thank you.

Thank you. So anyone else wishing to express opposition to AB 2050? Seeing no one come forward, I'll bring it back to the day as for any questions or comments. Senator Gonzales.

Thank you. Thank you, Mr. Chair. And I wanna thank, the author. We spoke about this. I think I absolutely agree with you on the bill's merits and ensuring that there are reserve accounts.

We wanna make sure every HOA has accountability built into their financials and ensuring that there are reserves for that rainy day that could be used only for deferred maintenance. And that is the question, I think, in alignment with what the opposition is stating. You know, how do we ensure that that is these reserve, funds are intended solely for deferred maintenance versus, you know, meddling in and and and dipping into these operating expenses.

As I've shared, you know, in Long Beach, I have a large resident group, very vocal, in a historic district that, is very, very much, opposed to this bill. And I understand, you know, that where they're coming from.

But I also want them to get the full understanding of, you know, you're continuing to work on this bill. And and you've also shared you're willing to, like, sit down with them, which I think

is also great. But can you explain a little bit about the deferred maintenance versus the operating expenses? And then I have a follow-up question.

Thank you, Senator. I'm gonna turn it to my witness, Mr. Brown, to talk about some of the guardrails that are in this bill.

Thank you, Mr. Chair. Senator Gonzales, there has been and and has been stated, section 5510 of the civil code specifically states that a board shall not expend fund designated as revert reserve funds for the purposes other than repair, restoration, replacement. Now it does also, in section 5515, allow for a temporary transfer of those monies to operating if and when those operating that operating revenues are just not enough.

I think this was, you know, one of those issues dealt with just like we see ever in our real life situations is that if you don't have enough money in your checking account, but you have some in savings, you can go ahead and move that over just for those short term purposes. It is required by law to be paid back within a year.

Now the enforcement on that right now is just like the enforcement throughout the Davis Sterling Act, is that any member of a homeowners association can bring a claim against an a board for a violation of the act. And if they prevail, they get attorney's fees, for that action. So it is a self governing community, and the association members are given notice if that short term transfer takes place. It's required. It happens at a board meeting.

If there's other specifications that come, more notice goes back to the homeowners, members. And so they are involved. We're providing some additional notice in the six year ramp up with the committee amendments to start January of next year so that the annual disclosure that goes to every member of the association states, starting in 2032, we are going to be required to put money into our reserves account if we can't sustain above a zero balance.

So we are hopefully utilizing that so that these associations do have enough runway to plan accordingly, can start putting that money in reserves so that they don't have to use that borrowing technique.

Our goal overall with the ramp up and with the now the distance the the years between the special assessments is to prevent a special assessment at all costs and allow for this more measured approach so that members of the association are better prepared and can plan more financially smart to actually participate in this process.

And I wanna thank you for that explanation because I think that's what, was absolutely needed in conjunction with the the amendments, which I think were really good amendments, to ensure that there are minimums and that you aren't dipping into the operating expenses. And that it truly is gonna be used for reserves, for deferred maintenance when needed, and as well as the six year ramp up, which I think is great. I'm going to continue to sort of listen to my colleagues.

I don't know if there's any other, issues or questions that are gonna be raised. But this is a really big issue back home for me, I will tell you.

And I know the the author understands that. And I need to just address my community before I vote on anything. And so I'm gonna I'm gonna lay lay back, hang back, and ensure that, you know, they have adequate information and that they're understanding, what's going on before I vote on this. So thank you.

Thank you, Senator Oacha Bogh. And then Cabaldon.

Oh, I wish I would let Cabaldon speak first because he has better insights. Probably will address some of mine. I really appreciate the the premise behind the bill because I think it's important to ensure that we have the ability to finance these condos as a former realtor. I should say former. I'm still a realtor.

I still have my license. But I'm not full on practicing. But, as a realtor, we really it's difficult to find, especially when it comes to condos which usually are within the the entry level of home ownership. And the fact that this is addressing the ability to finance those properties is incredibly important to note and I'm glad that that has been highlighted. I think some of the the there's two two things that I wanna just, ask and and get a little further clarification on it.

And one has to do with, the concerns raised by CAR with the letter of opposition that we had that, has to do with the, zero minimum. The balance is to say the reserve balance above zero. Why do we have that particular above zero and not just give like a minimum? And I'm assuming because of local control depending the needs will be different from association to association.

But I think that kind of raises a red flag for folks that are thinking about having the ability to ensure those properties and ensure that they have a the ability to replace those properties.

Or do a replacement of the of the the facilities. So if you could address the concern by the, by the the realtors and how this is going to be addressed or if you're thinking about how you're gonna be addressing this within the bill. And number two, I think the opposition made a great point. The fact that it's actually really really, I'm honored to see someone who is here legislating on behalf of the minimum reserves or the reserves for homeowners twenty years ago.

So it's great to see you back ma'am and be working in this capacity.

But the teeth, how do we enforce? If this is already a requirement that has existed, what are the teeth in order to ensure that these homeowner associations are actually fulfilling? And mind you, I'm coming from a mindset that when my when I've spoken to my colleagues about local, or homeowners association boards, you know, they're locally elected usually, by the homeowners.

And it in it we've had many at times, bills address the inability to engage the homeownership, in in in moving forward with with approving ordinances within the homeowners association. So there's a lack of civic engagement that should be happening at every community.

And unfortunately, how do you get we have that in in in in just in government, just in general. So how do we how how do you enforce, the ability for these HOA's to be able to to fulfill the this this requirement?

Thank you for your question, Senator. I did not know you're a realtor. So thank you for that insight. You know, as we mentioned, you know, existing law requires associations to study the reserve needs and and not necessarily fund them. And so that's really the gap that AB 2050 is working to close.

Because we can study things all day long, if we want. But unless we actually require the funding of a reserve, that's why a lot of these really costly special assessments, are happening overnight. And paying a little over time is more affordable than being hit with a $5.06 figure assessment, overnight. And we've been working with the realtors as well on their opposition. I'm going to turn to Mr.

Brown to speak to that.

Before I speak the teeth, the requirement of the enforcement part is what's really I think, it is is needed and

Only if she asked you a question. I'm sorry. Mister, if you can briefly respond to the question, we have other authors waiting to present.

Yes, Mr. Chair. As for the teeth, AB 2050 says if you're projected to go below zero, you shall. And prior law says that you shall conduct a study, but there's there's nothing on the back end of it about funding that study. And so this will be the first time in the David Sterling Act where we actually see the requirement for an association to to put money into that account if they're projected to go below zero.

Now the issue of zero is that one size fits all doesn't work for the percentage.

We looked at that. And and we we have, associations throughout the state that have lots of money in in reserves, but that may only account for 25% of what they actually would need. The idea with zero is that you're given a thirty year time span by your reserve study specialist that says in fifteen years, you're gonna pay so much for payment. In twenty years, you're gonna pay so much for a roof, etcetera.

So you know that if you only have $5,000 in your reserve account, but at in ten years, your paving job is gonna cost you 10,000.

That's gonna take you $5,000 below zero. So, by utilizing that total time span and knowing what those projected expenditures are, we're just given the baseline.

But the actual goal is to keep that that line going forward so that when you get to that expenditure, your asphalt, your clubhouse, your whatever it is, and you make that expenditure, you can make that expenditure without drawing your reserve account all the way down into a negative, which often happens now, which results in the special assessments that the associations have to do to afford these types of projects.

So zero is a baseline, but as they start to work with the reserve specialists, they'll see that they have to keep that line going forward in order to prevent to ever go below zero when a major, expenditure is required.

Who makes them do that?

The board and then the association members. By saying shall, if an association refuses to follow that, any member of the association can enforce the CCNRs and enforce the Davis Sterling Act of civil code. They can they can take, they can take a board to court and if they prevail, they get attorney's fees. Homeowners get attorney's fees when they prevail for violations of an association, not vice versa.

Thank you.

Senator Cabaldon.

Yeah. Thank you. Thank you, Mr. Chair. And thanks for taking on a big challenging, thankless issue.

I mean, look, you know, I come from local government and we have to have certain reserve policies. We also grapple with this challenge. And I love the committee members. There's only one one quibble I would have with them, but not not for today. But I think, you know, just to examine in the future where in the local government level, we will the state will tell us, hey, you you know, you need to upgrade this system.

You need to do this thing. Your water system is gonna be $27,000,000 for, you know, city of Dixon and it's 8,000 people, whatever. And they say, you'll just have to raise your rates. And you say, okay, I'm gonna go raise my rates and then somebody files a Prop two eighteen thing and says, now we have to have a public vote.

And it's universally despised in local government be3cause we have these two conflicting rules that say you must do this thing and you can't actually you don't have the legal authority to pay for it unless people that will have to pay the fees or whatever agree.

And if they say no, then what do you do? You're still legally mandated to do this thing. So I'm just I'm I'm skeptical. We've been doing a lot of HOA things. They're like, oh, you know, their their reserves or their fees or whatever it should all be based on a vote of their members.

That sounds great, but it it it at least it doesn't if if voters in HOA elections are anything like voters in every other election, it's not necessarily the path to financial sustainability and stability or to legal compliance. So I just think the the the amendments try to carve this this right. I hope they got it right the balance correct.

But we do need to make sure that that the the HOAs are making the appropriate, investments in their in their health and safety infrastructure and and what have you. So and and part of that is having reserves.

We went through the same thing on you know, we we know this game. Like, you for UC and CSU and policy I used to work on, we still I used to, like, celebrate. Hey. We blocked another tuition hike. We blocked another tuition.

Yay for us. We blocked another tuition hike. And then tuition go up by 40% overnight. And if you look at the history of it, tuition went up more during the periods of you know, if you put the whole periods where we didn't increase tuition at all and then we'd have this spike, it went up more than it's been going up since then where we said, no. No.

No. We're not doing it anymore. A little later time. A little later time. A little later time.

A little time. So the bill, I think, is really it's it's smart and it's well tailored. And in order to try to achieve that, I definitely do support it. I do think the opposition is is raised some very important issues around, I one size fits all, it doesn't make sense, but I think the next best thing after one size fits all is probably not zero. I do think a non zero reserve is a one size that should fit everybody.

I don't know what that is, but it does seem like a like a some sort of standard or whatever for what the reserve even if it's not a specific percentage or number is is to be we should be paying attention to and and the enforcement and that sort of thing are I think those those are legitimate issues given the twenty years of experience.

Whether that's this bill or not, I'm I'm not gonna speak to, but it does seem to me reasonable that this policy provides a foundation that we do wanna make sure actually actually results in meaningful reserves and reserves that are not transferred to other purposes. So I'm supportive of the bill in the in the amended form. I would encourage you to keep working on these other issues as you've committed to do.

If not, then someone else should, you know, you or somebody else should follow-up with additional work on this on on the reserve to make sure that we're actually leading towards the reserves that should should exist in every HOA.

Thanks, Mr. Chair.

Thank you. Any other questions or comments? Senator Durazo.

Yes. I apologize. I had to go and come back so I missed, the bulk of the of the conversation but at least wanna raise them. You don't have to repeat everything, but my, concerns are, what protections are there for, the funds when they are collected? And, and I say that because there's been high profile cases where Board Members or managers have mishandled funds like this.

And the second question is about and and again, I'm sure you address this is the big increases that can't that the members wouldn't be able to afford and what are the protections with those amendments. I'm prepared to support today but I have very serious concerns on those two issues.

Thank you, Senator. And you know, I think you might have stepped away when we had some of this. I'm gonna defer it back to mister Brown who referenced, some code sections, 55, 10, as well as, even some of the math that we were able to do for for my district that we share.

We share these HOA's and tackling some of those affordability questions and how these assessments and fiscal planning knowing that there's a six year ramp up to implement this is, more fiscally responsible than, a one time hit of an overnight assessment, which is what's currently happening anyway. And so I'm gonna turn it back to mister Brown.

We If you want to.

Move on to other Yes. Bill presentations. We have Members who we're waiting to present. So if you can just, in a few seconds, address that point, I'd appreciate it. Thank you, Mr. Chair.

Senator Durazo section 5510 of the civil code prohibits the use of these funds for anything but, reserve purposes. There is allowance for a short term loan that can happen but must be repaired, be prepay repaid within one year.

And then just our quick calculation of the formula that we've now agreed to with the Housing Committee and Assembly member closes district if there was an association that needed to put aside 15% of its operating funds, in order to go to reserves, it would be about $5.50 per owner, per month to help, achieve the goal of the bill.

Okay. I agree, Senator Cabaldon. This is a very difficult issue and I appreciate you bringing forward legislation to help ensure we starting to build these reserves so we can address deferred maintenance and help mitigates larger assessments that, could really impact, the affordability, of HOA members. So I'll turn over you to close.

Thank you, Senator. I really appreciate the thoughtful conversation, from everyone here on this committee. I appreciate all the feedback, and ways we can continue to work on this bill to strengthen it. I really thank the Opposition for being here today as well as for your feedback and sharing some of the work that you did, in the working group, given that we have also, as a state voted on our own state budget just last night. We know the importance of a rainy day fund.

We know the importance of reserves and, fiscally responsible planning. And that's what AB 2050 is. It's fiscally responsible so that our homeowners don't get hit with one time cost like they are now. So respectfully ask for your aye vote.

And once again, as you stated at the beginning of your presentation, you are accepting the committee amendments.

That's correct. Okay. Thank you.

Alright. I'll take a motion on the bill. Moved by Senator Cabaldon. Thank you. Please call the roll.

Motion is due passes amended to Senate Judiciary. [Roll Call]

Okay. We'll keep that bell and call for absent members. Thank you very much. We'll now proceed to file item 12, AB 2439. And it's gonna be a two for one presentation with Assemblymember Pacheco and Assemblymember Lowenthal.

Rubio. Rubio. Sorry.

No worries. No worries. At least you didn't call me Senator Rubio.

Someday.

Yep. Thank you. Thank you, Mr. Chair and Vice Chair and committee Members for giving us the opportunity to present AB 2439. Imagine paying your homeowners, your HOA dues on time only to find out find out later that HOA, your HOA has changed payment vendors and never properly notified you, and now you're facing late fees, a lien on your home, or collections. I'm here with my, joint author assembly member, Josh Lowenthal.

In conversations, we figured out that we were all, both in the same boat. It is not hypothetical. It's happening to us both. And if this is happening to assembly member Lowenthal and myself, I can't imagine all of the other Californians who don't have the elevated voice that we do who are dealing with the same situation. HOA members are also dealing with confusing, inconsistent communication where basic information like where and how to pay is unclear if changes are made.

And, I wanna give Assemblymember Llontal an opportunity to also address, the issue.

Thank you, mister chair and members. Admittedly, my participation isn't technical. It's more anecdotal. I own a condominium here in Sacramento where I live. When I'm up here and early on in this year, I received a registered mail.

And that registered mail was from a collections agency Which was a bit of a shock to me because I pride myself in getting all my bills paid. In fact, I have autopay specifically to ensure the fact that my bills will be paid on time and I don't have the bandwidth to be able to pay attention all the time. And that's the precise reason I use autopay. Well, evidently my association had changed its autopay provider and and backing bank.

And they had sent a an email blast out to all of us, which went into my spam.

I found that some months later in researching on this bill. But that is it. I didn't receive any other notification. I didn't receive a call, an email, a text. Nobody came and knocked on my door.

And when I learned about this and I reached out to the association, nobody called me back. There was no impetus or anybody on the management side to speak with me. I reached out to the president of the association. The president's association's response was, this is a matter of collections and a legal matter. You can have a hearing, but I refuse to have any conversation about this on this topic.

And that's that's a real experience that's happened over the last few months. It how I ended up remedying it was to pay the collections agency. It caught a cost of a few thousand dollars with no other real remedy in sight because the delta between taking this on in court and the cost and expense associated with it, the juice is just not worth the squeeze. Had I received any notification, informal, formal, otherwise, I would have remedied it.

As a matter of fact, it's remarkable that they could have seen a payment history absolutely perfect up until the moment that they changed autopay providers.

And then they go from there and no payments. And it still didn't occur to anybody to actually contact me and let me know about this. So clearly, there is a fault in the law. If as, the assembly member pointed out, if there are two of us experiencing this at the exact same time, how many other Californians are experiencing it as well?

Thank you, Mr. Chair.

Thank you. And, in conversations, when I was complaining about what was happening to me, that's when I found that we had a similar situation. So with me, the same different associations, not the same, did not get notification. Then eventually, got some notification through mail, and it said that I owed $1,500. And I was shocked.

I was like, well, we have auto pay. And they said, oh, well, we changed the the vendor and the same situation happened. So the remedy for me was to pay it and then deal with it later. This is exactly the same thing. The home up here, where, you know, I commute from to and from, for work.

But when I appealed the decision, the the association just sent me a notice saying my appeal was declined because they had expenses to pay as well. And we paid the fine, and then I got in the mail that they had put a lien on my house, which I think that was a violation because nobody told me that there was a lien on my house. We fixed that, and then I had to pay the reconveyance to remove the lien from the house.

And all of this was, like, without any notification. And so, in the climate that we're in in terms of housing and and affordability, I'm blessed and lucky that I was able to pay the $1,500, but what happened to to homeowners that are living paycheck by paycheck, and then all of a sudden they have this $1,500 bill, or lien on their homes or worse, a collection that really can not only, basically ruin your credit.

And so the reason for us doing this is because, again, if it's happening to us, it's happening to many Californians. And, you know, on top of that, you know, there's unequal enforcement for for me in particular, got cited in front of my house. I was literally moving the car out to pull the next car out. And they cited me, and I said, I'm moving the car. And they said, you can't park on the street.

So part of that is addressed in this bill. I know we're we have, folks waiting, but I would, appreciate, the consideration. I've worked with the committee, and I wanna thank the committee for their hard work. We have made substantial amendments, to address the issue of notification. I believe, the opposition stated that it was too much money to send certified mail.

We've since, addressed it, through the committee that if somebody has not paid in sixty days, then the the the management company is obligated to send us a certified mail. So to catch this before it's a $1,500 bill. So again, I wanna thank the committee and, the chair for working with me on this because, again, you know, we're blessed to be able to to pay the $1,500 I don't have the time to go to court and to do all of these different things.

So right now, it's just on hold. But, again, folks that are living paycheck to paycheck, that don't have the time or, worse, they haven't been notified all of a sudden they're faced with, you know, possibly losing their their homes because of, the non payment.

So, I appreciate the consideration, and thank you again for to the committee for helping, with this, with through amendments and I hope that, you know, we can, count on an aye vote.

And once again, to clarify, you are accepting the committee amendments.

A 100%. Thank you.

Just wanna get that on record.

Yes.