With the debate over infrastructure crashing to a halt, state lawmakers have turned their attention to housing legislation. In recent weeks, lawmakers have introduced and debated numerous housing bills, several of which chip away at local governments’ regulatory authority.
Perhaps the most divisive bill is SB 1177 (Hollingsworth), the latest change to the density bonus law. The bill would prohibit local governments from requiring that developers show a requested waiver of development standards or zoning is economically necessary. Proponents of the bill argue that some cities are requiring developers to submit profit and loss statements and tax returns to prove that a waiver of development standards is economically necessary for a housing project. Local government representatives say that a waiver of community standards should require a showing of economic necessity.
The Senate Transportation and Housing Committee approved SB 1177 after a sometimes heated hearing during late March. The hearing, in part, demonstrated confusion over the density bonus law, which lawmakers amended with SB 1818 in 2004, and with SB 435 in 2005 to make the statute more favorable to builders.
Under the existing law, developers may build 25% more housing units than a property is zoned for if 10% of the units are affordable to low- or moderate-income residents. Developers also are eligible for one “regulatory incentive,” such as a reduction in site development standards, a modification of zoning requirements, or approval of mixed-use zoning. Developers who build a slightly greater percentage of affordable units are eligible for a density bonus of up to 35% and up to three waivers of local regulations.
The existing law also lets developers request additional waivers of regulations. To get the additional waivers, though, developers must show that the waivers are necessary to make the housing units economically feasible. SB 1177 would change the economic necessity standard to one of physical necessity.
Sen. Dennis Hollingsworth (R-Murrieta) said during the committee hearing that cities are abusing the economic necessity standard. He said there is “a growing recognition that the density bonus law is not being used as intended.”
The California Building Industry Association, the California Association of Realtors (CAR), the California Federation of Labor and affordable housing developers are among more than 100 supporters of the bill. Ron Kingston, a CAR lobbyist, said it was impossible to quantify how an exception to architectural standards or setback requirements would make a project economically feasible. Marc Brown, of the Western Center on Law and Poverty, contended that cities use the economic necessity requirement to harass developers.
Planning and local government representatives strongly oppose the bill.
“Four years ago, this law [the density bonus law] worked pretty well,” said Daniel Carrigg, a lobbyist for the League of California Cities, which opposed the 2004 and 2005 amendments. “It’s become a disaster, a mess. This bill simply makes it worse.”
Under the current law, if requested waivers are not granted, a developer may sue a local government, said Sande George, lobbyist for the California Chapter of the American Planning Association. Cities and counties end up granting waivers simply to avoid litigation, she contended.
Several senators expressed skepticism at local government’s opposition. Sen. Denise Ducheny (D-San Diego) said economic feasibility of a development project is not a city’s concern. Besides, she said, a city could still decline to approve a requested waiver if it makes required findings.
The committee approved SB 1177 on a bipartisan 10-2 vote, and the bill’s chances for approval appear good. Although authored by a conservative Republican, SB 1177 has a liberal Democrat, Assemblyman Dave Jones (D-Sacramento), as an Assembly sponsor.
Local governments are supporting a competing bill, AB 2484 (Hancock), that would prohibit density bonuses for parcels already zoned for high-density development.
Other housing bills under consideration:
• AB 1387 (Jones) streamlines environmental review of infill housing projects near transit stops.
• AB 2158 (Evans) requires councils of government, when establishing fair-share housing requirements, to consider cities’ and counties’ adopted spheres of influence and local agency formation commission policies.
• AB 2331 (Villines) exempts projects funded by local governments, including redevelopment agencies, from prevailing wage labor requirements.
• AB 2468 (Salinas) allows local governments to self-certify their housing elements in certain situations.
• AB 2511 (Jones) places numerous restrictions on local governments’ ability to regulate and approve housing development. Among other things, the bill would remove cities’ and counties’ ability to attach conditions or require a variance for second units, and limits local governments’ ability to place conditions on certain housing proposals.
• AB 2526 (Arambula) requires cities and counties to defer local fees until the issuance of a certificate of occupancy if at least 49% of a project is affordable.
• AB 2562 (Saldaña) and SB 1676 (Ducheny) increase notification requirements to residents of rental properties being converted to condominiums.
• AB 2922 (Jones) would increase redevelopment agencies’ housing set-aside from 20% to 50%.
• AB 3042 (Evans) provides a new way for cities and counties to transfer shares of regional housing needs.
• SB 1754 (Lowenthal) establishes a pilot project for formation of housing and infrastructure financing districts.
• SB 1798 (Perata) expands a California Environmental Quality Act exemption for infill residential developments to projects of up to 10 acres and 200 units.
• SB 1800 (Ducheny) requires cities and counties to designate a 20-year land supply for housing.