As has become customary for at least the last five years, the state Capitol is awash in legislation concerning housing. And, as usual, much of the legislation deals with small pieces of California's housing puzzle. This year, though, the cast of characters is different, and there is serious talk about major policy changes.
New to the picture this year are the Schwarzenegger administration and state Senate President Pro-Tempore Don Perata (D-Oakland). Schwarzenegger representatives are shopping around a broad set of proposed housing policy changes. Perata is showing more interest in housing policy than any recent state Senate leader has. Additionally, the League of California Cities and the California Building Industry Association (CBIA) are trying to join forces on a compromise housing bill. In the past, the League and the builders have been adversaries.
There also is more movement toward California Environmental Quality Act “streamlining” or “reform” than Sacramento has seen since the early 1990s. Some insiders see a consensus forming around the easing of environmental review for infill development; however, that approach could run into significant opposition from environmental justice advocates in the Legislature. At the least, there are very different ideas circulating about desirable CEQA changes.
Members of the administration have been promising a big housing package since last summer (see CP&DR, August 2004), but only in recent weeks has a written plan emerged. The plan has not been publicly released, but lobbyists have received copies and are offering comments. It is unclear when or in what form the package will be introduced in the Legislature. Thus far, the plan has received mixed reactions. Environmentalists appear to be the strongest opponents, closely followed by local governments. Affordable housing advocates like some of the administration's proposals, while builders appear to be the most satisfied.
The administration's 45-page plan tackles many subjects. The common theme, though, is plain: Make it easier for developers to build housing units. The plan calls for cities and counties to designate enough land to meet 20 years of housing needs, a provision endorsed by builders but opposed by local governments. The administration would expand by-right housing development with certain minimum densities to prevent cities and counties from adding permit conditions in areas zoned for housing. Housing elements would be updated only once a decade (rather than every five years), but there would be new standards for actual affordable housing production, new by-right development provisions, additional reporting requirements and potential fines for noncompliance. The administration discourages inclusionary zoning by prohibiting local governments from using inclusionary units to meet production standards - another provision that divides builders and local governments.
The administration plan calls for cracking down on ballot measures that restrict growth, a provision that worries environmentalists. The administration would also limit environmental review of a project if there has been prior environmental analysis. The plan would strengthen anti-NIMBY laws, but would eliminate an existing prohibition against housing permit moratoriums - two measures that provide a mixed bag for affordable housing advocates.
Environmentalists say they are disappointed because Schwarzenegger campaigned on a green platform that mentioned smart growth.
“We think they are missing the big picture of smart growth,” said Bill Allayaud, state legislative director for the Sierra Club. The administration, he said, incorrectly assumes that if the market is flooded with new housing, affordable units will automatically be part of the deluge.
“They are getting down to housing, housing, housing,” Allayaud charged. “But we're just going to get traffic, traffic, traffic.”
Allayaud noted that under the plan, local governments are encouraged to protect habitat and farmland, but local governments are required to approve more by-right development projects.
Further frustrating environmentalists are the various movements to weaken CEQA.
“CEQA has been a great law. Right now it's being scapegoated by the builders,” Allayaud complained. “No one has shown that it's a significant cause of higher home prices.”
Builders, though, contend that CEQA - and CEQA abuse - can add years to the approval process, which costs developers and landowners money. And mitigations required by CEQA can add to the cost of development.
Marc Brown, of the California Housing Law Project, is among the affordable housing advocates who would like to see CEQA reform. Exemptions for infill and low-income housing projects are too narrow to be useful, he said.
“The abuse of CEQA is one of the main barriers to affordable housing that we hear about,” Brown added.
The Resources Agency has a working group leading the administration's CEQA reform effort, but no proposals have emerged publicly. League of California Cities lobbyist Dan Carrigg said that CEQA changes must be connected to infill and high-density development.
Carrigg has been a participant in the extensive talks between League representatives and the CBIA. “It's a good faith effort on both sides,” he said. “I think that we've been making some progress, working through some of the details. But we've got a ways to go. The land supply issue has a ways to go.”
The CBIA's mantra - which the administration is picking up on - is “certainty.” The industry wants cities to designate 20-year land supplies and then allow development that meets zoning regulations to proceed by right.
Designating a 20-year supply, however, raises annexation and related issues over which local agency formation commissions have jurisdiction, and could strain already difficult city-county relations, Carrigg said. Plus, development certainty cannot overrun community concerns, he said.
If developers want certainty that they can build houses, cities want certainty that they will have the funds to provide infrastructure and public services to the new units. Thus, a proposal that simply clears the way for more greenfield development that relies on Mello-Roos financing for infrastructure is not worth pursuing, Carrigg warned.
Carrigg may sound uncertain about where the League-CBIA effort is headed, but Brown is concerned about the alliance. Both the League and the CBI A want to “gut” the housing element law and eliminate state review, Brown said.
“That would be just a total jailbreak,” Brown said. “The potential to have the Folsoms of the world working together with the high-end builders is troubling.”
Then there is the effort headed by Perata and his allies, state Senate Transportation and Housing Committee Chairman Tom Torlakson (D-Antioch) and state Senate Environmental Quality Committee Chairman Alan Lowenthal (D-Long Beach). They have introduced a four-bill package of SBs 44, 521, 575 and 832 (see sidebar). It appears that SB 832 will be the centerpiece. As introduced, the bill makes modest increases to environmental review exemptions for infill projects in large cities. Bill amendments are on the way; it appears that they will have the approval of environmentalists.
“While we all agree that technical improvements can be made to the California Environmental Quality Act,” Lowenthal said, “we must ensure that these changes do not weaken the act or encourage poorly planned developments that Californians do not want and cannot afford.”
It is difficult to see how the Democrat's cautious approach will jibe with the administration's stated plan to reduce barriers to all types of housing. Finding common ground could become even more difficult because partisan differences over a variety of issues, including the budget, are becoming more overt.
Key Pieces of Housing Legislation Introduced This Session
AB 237 (Arambula). Authorizes the Department of Housing and Community Development (HCD) to forgive farmworker housing loans under certain circumstances.
AB 350 (Matthews). Authorizes local governments in Alameda, Contra Costa, Santa Clara, San Joaquin and Stanislaus counties to create infrastructure finance districts in jobs-housing opportunity zones.
AB 517 (Hancock). Extends the life of the Berkeley Redevelopment Agency exclusively for the purpose of carrying out affordable housing projects.
AB 549 (Salinas). Creates a pilot program in which a local government may self-certify its housing element based on production criteria.
AB 590 (Walters). Allows cities and counties to designate senior-only mobile home park zones and grant conditional use permits for senior-only mobile home parks.
AB 712 (Canciamilla). Strengthens the “no let loss” law that limits density reductions. The bill tightens the standards for findings necessary for density reductions.
AB 890 (Cogdill). A spot bill that could be amended to contain the Schwarzenegger administration's housing package.
AB 906 (Houston). Provides tax credits for brownfield and mixed-use developments, and projects near transit stations.
AB 912 (Ridley-Thomas). Exempts from tax the interested that financial institutions earn on loans to fund the redevelopment of brownfields in blighted areas.
AB 921 (Daucher). Authorizes redevelopment agencies to extend the life of project areas by 25 years without a finding of blight. An agency would get only 50% of tax increment, and 60% of that would have to be devoted to market-rate and affordable housing.
AB 939 (Mullin). Expands the area where pooled redevelopment housing set-aside funds may be expended to include sites near BART stations and along El Camino Real on the Peninsula.
AB 1087 (Florez). Requires local governments to reject a development application if the government finds that the water or sewer provider has failed to provide services for affordable housing.
AB 1192 (Villines). Exempts nonprofit housing construction from prevailing wage requirements.
AB 1203 (Mullin). Authorizes local governments to create “greyfield housing and investment zones,” in areas where job growth and high-density housing is desired. The zones could use tax-increment financing and would have access to infrastructure and housing funds.
AB 1233 (Jones). Requires the unmet housing need to be included in the regional housing needs assessment.
AB 1259 (Daucher). Allocates additional tax revenue to cities and counties that produce housing equal to at least 80% of the jurisdiction's regional housing need allocation over 5 years.
AB 1352 (Baugh). Permits redevelopment agencies to transfer housing funds to other agencies within the same council of governments region.
AB 1367 (Evans). Requires the state to consider local growth control initiatives when calculating fair-share housing requirements.
AB 1387 (Jones). Carves a loophole in CEQA for urban infill projects that comply with the transportation policies in a general plan or zoning ordinance.
AB 1390 (Jones). Expands enforcement of a redevelopment agency's low- and moderate-income housing requirements, and amends certain replacement and rehabilitation housing requirements.
AB 1491 (Calderon). Gives the City of Industry control over half of its redevelopment housing set-aside funds. Los Angeles County now has control over the money.
AB 1702 (Frommer). Extends by-right development rights to planned unit developments.
SB 44 (Kehoe). Requires all jurisdictions to adopt air quality elements that account for development patterns.
SB 223 (Torlakson). Establishes a new program in which the Department of Housing and Community Development would offer forgivable loans to cities and counties for the preparation of specific plans that provide for additional infill housing opportunities of at least 500 units in metropolitan areas and 200 units in non-metropolitan areas.
SB 253 (Torlakson). Authorizes a council of governments to charge a fee to local governments for the cost of the regional housing needs allocation process.
SB 326 (Dunn). Amends a two-year-old law prohibiting cities from requiring use permits for certain multi-family housing developments. The bill would extend the by-right provision to development of single-family units.
SB 435 (Hollingsworth). Clarifies last year's SB 1818 regarding density bonuses for projects that have an affordable component. Bill sponsors want to devise a list of incentives from which developers may choose, and limit developers to one incentive, unless a developer uses less than half of the density bonus to which the developer is entitled.
SB 521 (Torlakson). Permits redevelopment agencies to use tax increment financing to develop high-density projects near transit stations.
SB 565 (Migden). Increases the set-aside in the low-income housing tax credit program for small developments.
SB 575 (Torlakson). Strengthens anti-NIMBY law relating to affordable housing projects by preventing cities and counties from concluding that a project is not needed or that it is an incompatible use, unless the jurisdiction has a certified housing element.
SB 588 (Runner). Permits redevelopment agencies to spend “surplus” housing funds for purposes other than housing.
SB 832 (Perata/Torlakson/Lowenthal). Expands the CEQA exemption for urban infill projects. Major amendments are likely.
SB 948 (Murray). Requires a local government to prepare a “short form environmental impact report” for certain residential developments that are consistent with local land use requirements.
SB 950 (Torlakson). Increases the types of housing that are considered “at risk” for the purpose of awarding tax credits.
SB 968 (Torlakson). Requires cities and counties to identify in a general plan's land use element sufficient land to accommodate the jurisdictions' housing need for the duration of the general plan's planning period. This bill could be amended to include measures endorsed by the League of California Cities-California Building Industry Association Housing General Plan Task Force.
SB 1026 (Perata). Spot bill regarding housing elements. The bill will likely address land supply for residential development.
