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HomeMy WebLinkAboutItem 5.1 - 1683 Overview of New Housing Legislation Page 1 of 6 STAFF REPORT CITY COUNCIL DATE: November 7, 2017 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager SUBJECT: Overview of New Housing Legislation Prepared by: Lindsey F. Zwicker, Associate Attorney EXECUTIVE SUMMARY: The City Council will receive a report summarizing the Legislature’s recently-enacted package of housing legislation and its impacts on the City. In Staff’s judgment, the new laws are likely to have a limited impact on Dublin’s existing practices. STAFF RECOMMENDATION: Receive the report. FINANCIAL IMPACT: None. DESCRIPTION: The Legislature approved a package of more than a dozen bills focused on housing on September 15, and the Governor signed them all. These bills constitute a legi slative response to a perceived state-wide housing crisis. With this package of legislation, the Legislature took several different approaches to the housing issue, approving bills to provide more funding for affordable housing development, bills aimed to streamline local government approval of housing projects, bills designed to restore local government authority to impose inclusionary housing requirements on private housing developers, and bills strengthening the state’s anti-NIMBY laws. The following describes each of the approved housing bills and discusses its impact on the City, if any. SB 2: The “Permanent Source” of Funds for Affordable Housing. SB 2 was designed to provide a “permanent source” of funds for affordable housing development through the imposition of a $75 fee on most recorded documents (except for home sales). The recording fee is expected to generate approximately $200 - $300 million per year for affordable housing. Half of the funds generated in 2018 will be made available to local governments for updating planning documents and zoning ordinances in order to streamline housing production, and the other half would go to the state for homeless Page 2 of 6 assistance programs. Beginning in 2019, 70% of the funds will be directly allocated to local governments by the same formula used for the federal Community Development Block Grant program, to be used for a variety of affordable housing projects and programs, and the other 30% will be used by the state for farmworker housing, mixed income multifamily housing, and other programs. SB 3: $4 Billion Housing Bond. This bill will place a bond act on the November 2018 state ballot, with bond proceeds to be used to fund various existing housing programs. $1.5 billion of the funds would go to the stat e’s Multifamily Housing Program for affordable housing development loans, $1 billion of the funds would go to the state’s CalVet veteran’s home loan program, with the remainder of the funds allocated for farmworker housing, the CalHome down payment and mor tgage assistance program, transit oriented development and infrastructure supporting infill housing. The last state housing bond (Proposition 1C) was approved in 2006. Those funds have long since been allocated. SB 35: Streamlined Approval Process for Housing Projects. SB 35 creates a streamlined approval process for certain housing projects. SB 35 requires local agencies to ministerially approve multifamily housing projects that meet a long list of standards. Its requirements apply if the Department of Housing and Community Development (“HCD”) determines that the local agency has issued building permits for fewer housing units than its share of the regional housing need, by income category. Unlike housing elements, demonstrating that zoning allows for the creation of the required number of units would be insufficient. SB 35 is intended to increase the supply of market rate and affordable housing in California by requiring local governments to promptly approve eligible projects. In order to qualify for streamlined processing, the applicant must propose a multifamily project that deed restricts a specified percentage of the project's units to be affordable to households making below 80% of the area median income. In Dublin for the foreseeable future, because the City has exceeded its regional housing needs obligations for above-moderate income units, a developer attempting to use SB 35 would be required to dedicate 50% of the units to households making below 80% of the area median income. In addition to satisfying these affordability requirements, the proposed housing development must satisfy numerous other standards established by SB 35. A partial list of these standards includes: Density & Zoning: The proposed project must be consistent with ob jective zoning and design review standards and not exceed the maximum density allowed within the general plan land use designation. Site Location: The project may not be located on a site that is in a coastal zone, a high fire severity zone, within an earthquake fault zone, on a flood plain, prime farmland or wetlands, or on certain other areas designated in the statute. Projects located in these areas may still qualify for streamlined review if they meet certain additional requirements. The project site must have at least 75% of the perimeter developed with urban uses. Page 3 of 6 Existing Housing: The project may not require the demolition of existing affordable housing or housing subject to rent control or be on a site previously used as rental housing within the previous 10 years. Labor Standards: The applicant must certify, for projects greater than 10 units that are not otherwise considered a public work, that it will pay prevailing wage or the equivalent of prevailing wage. Applicants located in jurisdictions meeting certain population and geographic requirements will also need to certify that the project will meet “skilled and trained workforce” requirements specified in the bill. A checklist outlining the process for determining if a project qualifies f or streamlined review is attached as Attachment 1. A local agency must notify the applicant within 60 days of submittal if the proposed housing development conflicts with any of the applicable “objective standards” (or 90 days if the development is more than 150 units). If the local agency does not provide a written determination to the applicant within the required time period, the proposed development is deemed to satisfy all of the required standards. Similarly, any objective design review or public oversight of the development must be conducted by the local agency within 90 days of the project submittal (or 180 days if the development is more than 150 units). Project approvals under SB 35 last a minimum of three years. We do not anticipate that many developers in Dublin will avail themselves of the streamlined ministerial approval process, due to the limited availability and its burdensome requirements. First, there are limited sites in Dublin that would be eligible, since the site must be designated for multifamily development and 75% of the perimeter of the site must be adjoin parcels developed with urban uses. Second, any developer relying on SB 35 would be subject to costly requirements, including dedicating 50% of the units to below-moderate income households, paying prevailing wage, and employing a “skilled and trained workforce.” Based on our discussions with developers, it seems very unlikely that they will take advantage of the opportunity offered by SB 35. AB 1505: The Return of Inclusionary Housing. This bill overturns a 2009 appellate court ruling. Palmer/Sixth Street Properties, L.P. v. City of Los Angeles ruled that cities and counties were not permitted to require private developers to restrict rent levels under the State’s Costa Hawkins Rental Housing Act. Costa Hawkins limits local governments’ ability to establish rent control. Dublin’s inclusionary zoning ordinance requires developers of residential rental projects to make 12.5% of the units affordable to very low-, low-, and moderate-income households. The ordinance requires that affordable units be occupied by households meeting both the income standards in the ordinance (income restrictions) and that the rents be affordable to those households (rent restrictions). The City has addressed the Palmer case by continuing to require developers to set aside affordable units but refraining from imposing the ordinance’s rent restrictions. While the rents are not restricted, and therefore Palmer is not violated, the rents that building owners can charge is below market rates because of the reduced demand from tenants. This bill authorizes (but does not mandate) local governments to require, as a condition of development of residential rental homes, that new rental housing developmen ts Page 4 of 6 include a specified percentage of affordable units for moderate, low, very low and extremely low income households. This bill does not limit the percentage of units that a jurisdiction may require to be affordable. However, if an inclusionary rental ordinance that is adopted or amended after September 15, 2017 requires that more than 15% of the total number of units in the development be affordable to low-income households, the Department of Housing and Community Development has the authority to review the ordinance if the jurisdiction has either: (1) failed to meet at least 75% of its share of its regional housing need allocation for the above-moderate income category over a five-year period, or (2) failed to submit its annual housing element report for two consecutive years or more. An economic feasibility study will be needed to determine whether the ordinance unduly constrains the production of housing. Based on the study, HCD can require that the ordinance require no more than 15% low income units. Going forward, AB 1505 will allow the City to implement the ordinance as written and as it had previous to the Palmer decision. AB 678, SB 167 and AB 1515: Strengthening Anti-NIMBY Law. These bills strengthen the State’s Housing Accountability Act (“the Act”), often referred to as the “Anti-NIMBY Law,” which limits the ability of cities and counties to disapprove proposed housing developments unless specified findings are made. The Act applies to housing applications that meet the following criteria: Meet a city's “objective general plan and zoning standards.” The development would not cause a “significant, adverse impact” to public health, or take water from bordering farms or preserved resources. The development meets the standards of the California Environmental Quality Act and the California Coastal Act. AB 678 and SB 167 impose a higher standard of proof on local governments when they make findings to support a disapproval of a housing project, award attorneys’ fees to housing advocates (in addition to project applicants) that successfully challenge local disapprovals, and allow courts to vacate local disapprovals and impose fines of $10,000 or more per unit for violation of the Housing Accountability Act. AB 1515 directs courts to give less deference to local government determinations of a project’s consistency with local zoning and general plans. SB 540 and AB 73: Workforce Housing and Housing Sustainability Districts. Under SB 540, which is sponsored by the League of California Citi es, local governments can identify Workforce Housing Opportunity Zones within their boundaries and conduct necessary environmental reviews and public engagement at the “front end,” possibly eliminating time-consuming environmental reviews for specific projects later proposed within the zones. Local governments would need to act on the proposed developments within 90 days of application, and would not be able to turn down development that satisfies the plan’s criteria. The environmental review and streamlining process within these Workforce Housing Opportunity Zones will be in effect for 5 years, and development will need to be completed within that time frame. AB 73 authorizes local governments to establish Housing Sustainability Districts, and provides incentive funds for upfront zoning and environmental review to localities that issue Page 5 of 6 permits for residential units on infill sites within the district. Under AB 73, local governments must allow residential use within each district by ministerial permit. Incentive payments must be returned if no construction begins within 3 years. AB 1397 and SB 166. No Net Loss Zoning. These bills will modify the existing “No Net Loss Zoning” law. That existing law ensures that local governments do not downzone sites or approve new housing at significantly lower densities than is projected in their housing elements without identifying other sites that could accommodate the local need for housing sites at specified income levels. The bills modify the No Net Loss Zoning law to require local governments to maintain adequate housing sites at all times throughout the planning period for all levels of income. It would also require agencies to make specified findings when they approve a project that would be developed at fewer units by income category than were identified in the jurisdiction’s housing element. AB 72 and SB 879: Housing Elements. AB 72 authorizes the Department of Housing and Community Development to review actions by cities and counties for compliance with their adopted housing elements, and allows the Department to revoke housing element compliance for inconsistent actions. AB 879 makes changes to housing element requirements and directs the Housing and Community Development Department to conduct a study evaluating the reasonableness of local fees charged to housing developments. AB 1521: Expiring Affordability Restrictions. This bill strengthens the law regarding the preservation of assisted housing developments by requiring an owner of an assisted housing development to accept a bona fide offer to purchase from a qualified purchaser, if specified requirements are met. For assisted housing developments, SB 1521 (1) requires the owner to provide notice of use restrictions that are expiring after January 1, 2011 to all prospective tenants and existing tenants within 3 years of the scheduled expiration of rental restrictions; (2) expands potential remedies for failure to provide notice to include the imposition of prior restrictions, restitution of imprope r rent increases, and award of attorney’s fees and costs to a prevailing plaintiff; (3) requires HCD to certify persons or entities that are eligible to purchase the development and to receive notice of the expiring restrictions based on their experience w ith affordable housing; (4) revises the procedure regarding the owner’s ability to accept an offer to purchase; and (5) requires HCD to monitor compliance and provide an annual report to the legislature beginning in 2019. AB 571: Farmworker Housing. AB 571 makes several changes to the farmworker state low income housing tax credit program to make the historically underutilized program more flexible. Only 50% (rather than 100%) of the units funded under the program must be occupied by farmworker households. In addition, the bill also makes several changes to the law regarding migrant farm labor centers for advance payments up to 20 percent of annual operating costs and measures. These changes to the farmworker housing are intended to make the projects more feasible and increase the supply of farmworker housing. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. Page 6 of 6 ATTACHMENTS: 1. Senate Bill No. 35 Eligibility Checklist meyers i nave Senate Bill No. 35 Eligibility Checklist (prepared by Meyers Nave on October 10, 2017) Senate Bill No. 35 becomes law on January 1, 2o18 and creates a streamlined and ministerial approval process for certain housing projects. After January i, 2oi8, if the answers to all of the n questions in the checklist below are "yes," then a project is eligible for the new approval process under Government Code section 65913.4. (See process notes on page two.) If any of the answers to the n questions is "no," then the project is not eligible for the new streamlined, ministerial review. This checklist provides an overview of SB 35's requirements. Please contact legal counsel for additional information and assistance. Eligibility 1. Has HCD has determined that the local agency is subject to SB 35 (subd. (a)(4)(A))? ❑ -HCD determination is based on whether the agency has issued fewer building permits than its share of the regional housing needs, by income category, for the reporting period. -The "reporting period" is either the first half or the second half of the regional housing needs assessment period. (subd. (h)(7)•) -The determination remains in effect until HCD's determination for the next reporting period. 2: Is the project a multifamily housing development (2 or more units) (subd; (a)(1))? ❑ 3. Has the applicant dedicated the applicable minimum percentage of units in the project to households ❑ making below 80% of the area median income (subd. (a)(4)(13))? io %: If the project contains more than 10 units and the agency's latest "production report" (first due April i, 2o18) reflects that the agency approved fewer above moderate- income units "than were required by the regional housing needs assessment cycle for that reporting period." 50 %: If the agency's latest "production report" reflects that the agency issued buildingpermits for fewer below moderate - income units "than were required by the regional housing needs assessment cycle for that reporting period." 100/b or 50% at applicant's option: If the agency has not submitted its latest production report by deadline or if the agency's latest production report reflects that the agency issued buildingpermits for fewer units of either category of households "than were required by the regional housing needs assessment cycle for that reporting period." 4. If the site is in a city, is a portion of the city designated by the Census as either an "urbanized area" or "urban cluster," or, if the site is in an unincorporated area, is the parcel entirely within the boundaries ❑ of "urbanized area" or "urban cluster" (subd. (a)(2)(A))? 5. Does at least 75% of the perimeter of the site adjoin parcels currently or formerly developed with ❑ El "urban uses" (subds. (a)(2)(B), (h)(8))? 6.` Does the site have either zoning or ,a general plan designation that allows for residential use or' ❑ residential mixed -use development (subd. (a)(2)(C))? For property designated for mixed use, the designation must require at least "two- thirds of the square footage of the development" to be residential. 7. Does the project not involve a subdivision of land {subd. (a)(9))? ❑ Projects can involve subdivisions if (a) they are financed with low- income housing tax credits and the applicant certifies that prevailing wages will be paid or (b) if the development is subject to a requirement that prevailing wages will be paid and a skilled and trained workforce will be used. 8. Does the project meets density requirements, "objective zoning standards," and "objective design ❑ El review standards" (subd. (a)(5))? - Objective standards are those that are "involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official prior to submittal." -A project is deemed to meet housing density standards if the project density, excluding any density bonuses, is within the maximum density allowed within the general plan land use designation. -Any local policies that limit maximum unit allocations must be ignored. - Offsite parking standards cannot be more than 1 space per unit; and, in certain cases, the local agency may not impose parking standards at all. (subd. (d).) - Coastal zone -A site that would require demolition of (a) housing subject to recorded -Prime farmland or farmland of statewide rent restrictions, (b) housing subject to rent control, (c) housing occupied importance by tenants within past io years, or (d) an historic structure placed on a - Wetlands as defined under federal law local, state, or federal register - Earthquake fault zones -A site that previously contained housing occupied by tenants within past -High or very high fire hazard severity zones to years -A parcel of land governed by the Mobilehome Residency Law, the - Hazardous waste site Recreational Vehicle Park Occupancy Law, the Mobflehome Parks Act, or -FEMA designated flood plain or floodway the Special Occupancy Parks Act. - Protected species habitat -Lands under a conservation easement -Lands designated for conservation in a habitat conservation plan This requirement is not applicable to projects of io units or less and that are not a "public work for purposes of the prevailing wage law. -The requirement applies to Bay and Coastal counties of more than 225,000 in population (excludes Del Norte, Humboldt, Mendocino, and Napa) and to jurisdictions of less than 550,000 in population that are not in Bay and Coastal Counties. -In Bay and Coastal counties, the requirement only applies to projects of 75 or more until 2022; and projects of 50 or more thereafter. -In applicable non -Bay and Coastal jurisdictions, the requirement only applies to projects of 75 or more until 2020; 50 or more units until 2022; and 25 or more thereafter. Process Notes: • The first "production report" (a new requirement added to Government Code section 6540o by SB 35) is not due until April 1, 2018. Therefore, agencies can argue that the third requirement cannot be met until either an agency submits its first production report or it fails to do so by the deadline. • If a local ordinance requires more units to be affordable households making below 80% of the area median income, the local ordinance's requirement applies. • Because the section 65913.4 process is ministerial, eligible projects are exempt from CEQA. • A local agency has 6o days from project submittal to determine if the project conflicts with any "objective planning standards" (90 days if project is more than 150 units). If the agency fails to respond within the timeframes, the project is deemed to satisfy the standards. (subd. (b).) • A local agency has go days from project submittal to complete any "design review or public oversight" (18o days if the project is more than 150 units). The review or oversight "shall be objective and be strictly focused on assessing compliance with criteria required for streamlined projects, as well as any reasonable objective design standards." (subd. (c).) Contact. John Bakker, Chair, Municipal and Special District Law Practice, Meyers Nave, 510 - 808 -2000, meyersnave.com