BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2556


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          2556 (Nazarian)


          As Amended  June 14, 2016


          Majority vote


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          |ASSEMBLY:  | 76-0 | (May 19,      |SENATE: | 37-0 |(August 11,      |
          |           |      |2016)          |        |      |2016)            |
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          Original Committee Reference:  H. & C.D.


          SUMMARY:  Requires, in cases where a proposed development is  
          replacing affordable housing units, a jurisdiction to apply a  
          rebuttable presumption regarding the number and type of  
          affordable housing units necessary for density bonus  
          eligibility.  Specifically, this bill:


          1)Requires, if the income of the household that occupies the  
            unit is not known, it to be rebuttably presumed that  
            lower-income renter households occupied these units in the  
            same proportion of lower-income renter households to all  
            renter households within the jurisdiction, as determined by  
            the most recently available data from the United States (U.S.)  
            Department of Housing and Urban Development's (HUD)  
            Comprehensive Housing Affordability Strategy database.  
          2)Requires, in cases where all dwelling units have been vacated  
            or demolished within the five-year period preceding the  
            density bonus application and the incomes of the occupants at  








                                                                    AB 2556


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            the high point of the affordable units is not known, that it  
            be rebuttably presumed that low-income and very low-income  
            renter households occupied these units in the same proportion  
            of low-income and very low-income renter households to all  
            renter households within the jurisdiction, as determined by  
            the most recently available data from HUD's Comprehensive  
            Housing Affordability Strategy database.  


          3)Allows a city or county, in cases where a proposed development  
            is replacing existing affordable units, for any dwelling unit  
            that is or was subject to a form of rent or price control  
            through a local government's valid exercise of police power  
            and that is or was occupied by persons of families above lower  
            income, to do either of the following:


               a)     Require that the replacement units be made available  
                 at affordable rent or affordable housing cost to, and  
                 occupied by low-income persons or families.  If the  
                 replacement units will be rental dwelling units, these  
                 units shall be subject to a recorded affordability  
                 restriction for at least 55 years.  If the proposed  
                 development is for-sale units, the units replaced shall  
                 be subject to existing law.


               b)     Require that units be replaced in compliance with  
                 the jurisdiction's rent- or price-control ordinance,  
                 provided that each affordable rental unit, including  
                 those that were vacated or demolished in the five years  
                 leading to the application, is replaced. 


          4)States that no reimbursement is required 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.


          









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          The Senate amendments:


          1)Require, if a unit must be replaced and the income of the  
            occupant is not known, it to be rebuttably presumed that  
            lower-income renter households occupied these units in the  
            same proportion of lower-income renter households to all  
            renter households within the jurisdiction, as determined by  
            the most recently available data from HUD's Comprehensive  
            Housing Affordability Strategy database.  
          2)Require, in cases where all dwelling units have been vacated  
            or demolished within the five-year period preceding the  
            density bonus application and the incomes of the occupants at  
            the high point of the affordable units is not known, that it  
            be rebuttably presumed that low-income and very low-income  
            renter households occupied these units in the same proportion  
            of low-income and very low-income renter households to all  
            renter households within the jurisdiction, as determined by  
            the most recently available data from HUD's Comprehensive  
            Housing Affordability Strategy database.  


          3)Make technical, clarifying changes.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  To help address California's affordable housing  
          shortage, the Legislature enacted density bonus law to encourage  
          the development of more affordable units.  Under current law, a  
          city or county must grant a density bonus, concessions and  
          incentives, prescribed parking requirements, as well as waivers  
          of development standards upon a developer's request when the  
          developer includes a certain percentage of affordable housing in  
          a housing development project.  









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          Density bonus law was originally enacted in 1979, but has been  
          changed numerous times since.  SB 1818 (Hollingsworth), Chapter  
          928, Statutes of 2004, made significant changes to the law,  
          including reducing the number of housing units required to be  
          provided at below market rate in order to qualify for a density  
          bonus.  


          AB 2222 (Nazarian), Chapter 682, Statutes of 2014, encouraged  
          the preservation of existing affordable units by prohibiting an  
          applicant from receiving a density bonus, incentive, or  
          concession if a proposed housing development or condominium  
          project is located on property where dwelling units have, at any  
          time in the five-year period preceding the application, been  
          occupied by very low- or lower-income households or subject to  
          rent control.  An applicant may overcome this prohibition by at  
          least replacing all of the existing affordable units with units  
          of equivalent affordability, size and/or type. 


          In implementing the provisions of AB 2222, cities, housing  
          advocates, and developers have discovered several places where  
          the law needs clarification.  AB 2222 did not address how to  
          determine the number of units that have to be replaced when  
          resident income information is not known.  This bill provides a  
          method for making this determination, and Senate amendments  
          require that local governments use a rebuttable presumption  
          based on the most recently available data from HUD's  
          Comprehensive Housing Affordability Strategy database.   
          According to HUD, "Each year, HUD receives custom tabulations of  
          American Community Survey (ACS) data from the U.S. Census  
          Bureau.  These data, known as the "CHAS" data, demonstrate the  
          extent of housing problems and housing needs, particularly for  
          low income households.  The CHAS data are used by local  
          governments to plan how to spend HUD funds, and may also be used  
          by HUD to distribute grant funds."


          Additionally, AB 2222 did not provide guidance on what the rent  
          level for the replacement unit should be in cases where the  
          current occupant of the rent-controlled unit is not  








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          lower-income, for example due to wage increases.  AB 2556 allows  
          cities to require that these units be replaced either with a  
          deed-restricted unit affordable to low-income families or with  
          another rent-controlled unit.  Although a jurisdiction cannot  
          mandate that rent control apply to new developments, in this  
          case developers may voluntarily choose to comply and offer units  
          rent-controlled units if they are seeking a density bonus for  
          their project.  For developers, one benefit of rent-controlled  
          units relative to affordable units is that the former generally  
          include an escalator for rent increases. 


          Purpose of the bill:  According to the author, "There is a need  
          to clarify language in AB 2222.  This bill maintains the intent  
          of AB 2222 in requiring developers to replace affordable units  
          while providing greater clarity for developers and local  
          governments in meeting replacement requirements.  AB 2556  
          recognizes that adequate affordable housing is an issue of  
          statewide concern.  This bill preserves and promotes the supply  
          of affordable units for years to come."


          Analysis Prepared by:                                             
                          Rebecca Rabovsky / H. & C.D. / (916) 319-2085     
                                                                  FN:  
          0004114