BILL ANALYSIS Ó AB 2442 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2442 (Holden) As Amended August 19, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |63-8 |(May 19, 2016) |SENATE: | 39-0 |(August 23, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: H. & C.D. SUMMARY: Requires local agencies to grant a density bonus, when an applicant for a housing development agrees to construct housing for transitional foster youth, disabled veterans, or homeless persons. Specifically, this bill: 1)Requires a local agency to grant one density bonus, when an applicant for a housing development seeks and agrees to construct a housing development that contains 10% of the total units for transitional foster youth, disabled veterans, or homeless persons, as those terms are defined in code. 2)Requires the units to be subject to a recorded affordability restriction of 55 years and to be provided at the same affordability level as very low-income units. AB 2442 Page 2 3)Specifies, for housing developments meeting the criteria of 1) above, that the density bonus shall be 20% of the number of the type of units giving rise to a density bonus, as specified, thus making the density bonus for 1) above, consistent with density bonus that a developer receives for senior housing units. 4)States that no reimbursement is necessary because a local agency has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act. The Senate amendments make conforming changes to avoid chaptering conflicts with AB 2556 (Nazarian) and AB 2501 (Bloom), both of the current legislative session. FISCAL EFFECT: According to the Assembly Appropriations Committee, no state fiscal impact. Local agencies have the authority to levy fees for related costs and thus, any local costs are not reimbursable. COMMENTS: Density bonus law was originally enacted in 1979, but has been changed numerous times since. The Legislature enacted the density bonus law to help address the affordable housing shortage and to encourage development of more low and moderate income housing units. Density bonus is a tool to encourage the production of affordable housing used by both market rate and affordable housing developers. In return for inclusion of affordable units in a development, developers are given an increase in density over a city's zoned density and concessions and incentives. The increase in density and concessions and incentives are intended to financial support the inclusion of the affordable units. All local governments are required to adopt an ordinance that provides concessions and incentives to developers that seek a density bonus on top of the city's zoned density in exchange for AB 2442 Page 3 including extremely low-, very low-, low-, and moderate-income housing. Failure to adopt an ordinance does not relieve a local government from complying with state density bonus law. Local governments must grant a density bonus when an applicant for a housing development of five or more units seeks and agrees to construct a project that will contain at least any one of the following: 1)Ten percent of the total units for lower income households; 2)Five percent of the total units of a housing for very low income households; 3)A senior citizen housing development or mobilehome park; and, 4)Ten percent of the units in a common-interest development (CID) for moderate-income households. A developer can submit a request to a local government as part of their density bonus application for incentives and concessions. Developers can receive the following number of incentives or concessions: 1)One incentive or concession for projects that include at least 10% of the total units for lower income households, at least 5% for very low income households, or at least 10% for moderate income households in a common interest development. 2)Two incentives or concessions for projects with at least 20% lower income households, at least 10% for very low income households, or at least 20% for moderate income households in common interest developments. 3)Three incentives or concessions for projects with at least 30% AB 2442 Page 4 lower income households, at least 15% for very low income households, or at least 30% for moderate income households in common interest developments. Typically, housing developments that serve special needs populations are financed using public funding to reduce the debt service on the projects. It's unclear whether or not market rate developers would opt to dedicate at least 10% of the units in development to transition age foster youth, disabled veterans, and homeless persons in return for increased density and concessions and incentives. In addition, these populations would be captured under the existing percentages for very low- and low-income households Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0004844