Agenda Summary - Housing Opportunity Committee

Hyatt Hotel
Sacramento, California
June 7, 2006
3:00 – 4:30 PMPresiding:
Nancy Troxell, Chair
Greg Galli, Vice Chair
Cynthia Wood, Vice Chair
Heidi Rickerd-Rizzo, Committee LiaisonC.A.R. Staff:
Ron Kingston
Matthew Roberts
Natalie CardenasIII.  Dedicated Funding Source for Affordable Housing in California - An issues briefing paper was written on this issue.IV.  Proposition 1C - $2.8 billion Housing Bond – An issues briefing paper was written on this issue.V.  Status of C.A.R. Sponsored BillsA.  SB 1177 (Hollingsworth) Density Bonus - In recent years, C.A.R. has successfully co-sponsored legislation with the California Rural Legal Assistance Foundation (CRLA) to improve the use of the state’s density bonus law by passing legislation to make the law more easily understood, implemented and functional. This year C.A.R. is co-sponsoring SB 1177 with CRLA to prohibit local governments from 1) examining the books and records of housing developers who seek a density bonus and 2) limit developer profits.  Requiring developers to open their books to local government in orderto prove that a waiver or modification of development standards is necessary gives local governments the opportunity to dictate, for example, the type of appliances, marketing strategies and design styles that should be included in the development. Additionally, since local governments are NOT financially contributing to the subdivision, they should not have the right to inspect the financial records.  This bill was passed out of the Senate Transportation and Housing Committee over the objections itsChairman and recently passed out of the Senate with bipartisan support.  However, SB 1177 faces significant challenges in the Assembly as the Chairman of the Assembly Housing and Community Development Committee is urging members to “hold” all density bonus bills in committee. C.A.R. Position: SPONSOR.  Status: Assembly Rules Committee awaiting assignmentB.  SB 1330 (Dunn) Attorneys Fees – C.A.R. is co-sponsoring SB 1330 with CRLA to permit homebuilders and other interested parties (homeowners) to recover attorney’s fees should they prevail in their challenge of a local governments’ compliance with the housing element law. C.A.R. was successful in amending the state’s “anti-Nimby” law two years ago. That measure allows the successful plaintiff (developer), until December 31, 2006, to recover attorney fees when he or she prevails in court demonstrating to the court that a local government arbitrarily denied the plaintiff’s residential development that was in compliance with the local government’s development standards. SB 1330 will extend this sunset date to December 31, 2008.  It also provides that a successful plaintiff is to be awarded attorney fees if a city or county is found by a court to have its housing element out of compliance.  The bill was recently passed out of the Senate Judiciary Committee by a vote of 3 to 2.  The bill is now headed to the Senate floor.  C.A.R Position: SPONSOR.  Status: Senate Floor.C.  AB 2511 (Jones) Land Use Housing – C.A.R. is co-sponsoring AB 2511 with the California Rural Legal Assistance Foundation to amend the permit streamlining act to apply to subdivisions that have an appropriate percentage of affordable housing and requires local governments to report to the state on their housing production in an effort to make sure that they can accommodate their share of the regional housing need for the ensuing 5 years. Should a local government refuse to disclosetheir plan for meeting their share of low and moderate income housing to the Department of Housing, this measure provides for the ability to seek judicial relief for non compliance with the state housing element law. Additionally, the measure will clean-up the no-net-loss housing law by increasing enforcement options and it will rename the “anti-NIMBY” law to the “Housing Accountability Act,” while repealing the Granny Flat law (which is not used due to state law on “second” units). Further, this measure will require cities and counties to adopt and publish clear and objective development standards (e.g., zoning code requirements) and prohibits any change in those standards after the building application is completed. Developers should be able to rely on the standards throughout the local government review process and not have the rules arbitrarily changed throughout the process.  The bill was passed out of the Assembly Judiciary Committee and the Assembly Local Government Committee.  C.A.R. Position: SPONSOR.  Status: Assembly Appropriations Committee.D.  AB 2526 (Arambula) Affordable Housing Developments – C.A.R. is co-sponsoring AB 2526 with the California Rural Legal Assistance Foundation to defer local government’s development fees until occupancy permits are issued for housing developments with at least 49% lower-income units in cities that offer meaningful incentives. The legislation would have enabled developers to build lower cost units at a rate that will allow them to be placed on the market with lower construction costs.  The bill passed out of the Assembly Local Government Committee on April 19, 2006 but was defeated in the Assembly Housing and Community Development committee on a 3-2 vote.  C.A.R. Position: SPONSOR.  Status: Defeated in Assembly Housing and Community Development Committee.VI.  League of California Cities Sponsored BillsA.  AB 2158 (Evans) Housing, Regional Housing Needs, LAFCOs –Current law authorizes the creation of a Local Agency Formation Commission (LAFCO) to analyze or approve the annexation or formation of a new city. As originally drafted, AB 2158 would authorize LAFCO’s to make long term growth policy decisions  and have those decisions considered when a Council of Governments (COGs) is evaluating the distribution of housing needs for its member cities and counties.  LAFCO’s are not obligated to follow the long established housing law, and could create new housing policy “on the fly.”  The bill was passed out of the Assembly Local Government Committee and the Assembly Housing and Community Development Committee.  It is now on the Assembly Floor.  C.A.R. Position:  OPPOSE.  Status: Assembly Floor.B.  AB 2307 (Mullin) Elimination of Fee Assessments to Pay for Regional Housing Needs Assessment - Existing law authorizes a Council of Governments (COGs) to assess a fee to each city and county within it’s jurisdiction to cover the costs of determining each jurisdiction’s regional housing need assessment (RHNA).  This bill repeals that authority.  Without this fee, COGs will lose this needed financial resource to determine and maintain up-to-date Regional Housing Needs Assessment numbers and housing elements will become far less important.  C.A.R. Position: OPPOSE.  Status: Assembly Appropriations Suspense file.C.  AB 2378 (Evans) Density Bonus: Resale Price Restrictions –This bill would require a 10 to 15 year price restriction on all moderate-income housing built in California if the developer applies for and receives a density bonus.  As introduced, it is almost identical to AB 1450, a measure that C.A.R. successfully defeated on January 11th.  AB 2378 undermines all of C.A.R’s efforts over the past 3 years to improve the density bonus law and would effectively end its use for first-time homebuyers.  AB 2378 puts undue burden on first-time homebuyers who benefit from the density bonus law by unrealistically freezing the sales price of housing, removing the benefits of homeownership for these units.  The bill was passed out of the Assembly Local Government Committee and the Assembly Housing andCommunity Development Committee.  It failed on its first vote on the Assembly floor.  C.A.R. Position: OPPOSE.  Status: Assembly Floor.D.  AB 2468 (Salinas) Self-Certification of Housing Elements – AB 2468 would allow local cities/counties to self-certify their Housing Elements if they provide 100% of their low and very low income housing in their land inventory and that such land is zoned for residential development.  By allowing local government to self-certify, AB 2468 removes critical state oversight of housing element compliance with no provision for the State to audit a city’s housing element, thus removing accountability of local governments to build their fair share of housing.  C.A.R. Position: OPPOSE.  Status: On the “Inactive” file the Assembly Floor.E.  AB 2484 (Hancock) Density Bonus Exemptions – Sprawl Promotion – AB 2484 exempts a city or county from granting a density bonus for projects located on parcels that meet specific higher density thresholds.  In metropolitan districts, parcels zoned for a maximum of 40 units per acre are exempt from the density bonus law; 25 units per acre for suburban districts: 20 units per acre in nonmetropolitan/suburban districts; and 15 units per acre in unincorporated areas of nonmetropolitan counties.  These higher density parcels are often infill projects and can more easily absorb the additional units granted under the density bonus law without burdening the local government with the need to build infrastructure to support these housing units.  Exempting these parcels from the density bonus law goes against efforts to increase affordable housing opportunities.  Due to concerns about further changes to the density bonus law, the bill is being held in the Assembly Housing and Community Development Committee per the request of the Chairman.  C.A.R. Position: OPPOSE.  Status: Assembly Housing and Community Development Committee.F.  AB 3042 (Evans)Creation of Program for No-Growth Cities to Offload their Low and Very Low Income Housing Obligations – AB 3042 allows cities/counties to transfer a percentage of their regional housing needs assessment (RHNA) to another city/county within their Council of Governments (COGs) provided that the transfer is consistent with an adopted regional growth plan.  Any city/county receiving the regional housing needs assessment of another city/county shall be given priority for discretionary housing and infrastructure funds from the Council of Governments.  By allowing local governments to play a “shell game” with their regional housing needs assessments, AB 3042 helps cities avoid being accountable for their “fair share” production of affordable housing and in fact, rewards local governments for playing  “musical chairs” with their housing numbers, the result of which will be to act as a no-growth tool.  C.A.R. Position: OPPOSE.  Status: Assembly Floor

G.  SB 1754 (Lowenthal) Creation of Infill Infrastructure Districts – This bill would create 100 voluntary housing/infrastructure investment districts statewide.  The districts may use tax increment financing to fund developments, such as housing and infrastructure, within the district.  These districts may have up to 500 units of housing with a 20% inclusionary zoning requirement for very low, low, and moderate income housing.  Further, SB 1754 requires developersto meet design standards of the local government when building their housing units.  C.A.R. Position: Not Rated File.  Status: Senate Appropriations Committee.VII.  Status of Other Bills of InterestA.  AB 2572 (Emmerson) On-Campus Student Housing to Count as Low Income Housing for Housing Elements – As introduced, this bill would have required the Department of Housing and Community Development (HCD) to count student dormitories as permanent housing units in their evaluation of ahousing element to determine whether the city/county has met its regional housing need for moderate, low and very low-income housing.  By counting college dorms as permanent housing, this bill would have “double-counts” college studentsand thus undermines the housing element law’s objective to ensure local government’s plan and zone for enough housing for its residents at all income levels.  Due to C.A.R.’s opposition, the bill was amended to require Councils of Governments to add the housing needs generated by the presence of a university to a list of factors a COG must consider in the development of its RHNA allocation methodology.  This new factor would carry no more weight than any of the other factors. C.A.R. Position: WATCH.  Status: Assembly Floor.B.  AB 2763 (Nava) Farmworker Housing – This bill seeks to increase the supply of housing for migrant farmworkers by creating a new housing option called relocatable housing (i.e. Mobilehomesand manufactured housing).  AB 2763 prohibits local governments from requiring a conditional use permit or zoning variance for relocatable farmworker housing on agriculturally zoned parcels.  Relocatable housing will be used on site during the harvest season and removed in the off-season.  This bill was passed out of the Assembly Housing and Community Development Committee on Wednesday, April 05, 2006.  C.A.R. Position: FAVOR.  Status: Assembly Appropriations Suspense File.C.  SB 521 (Torlakson) Contra Costa County Transfer Tax to Pay for Affordable Housing – SB 521 was recently amended to authorize the Contra Costa County Board of Supervisors to assess a document recording fee (transfer tax) of $1.00 per page after thefirst page of all real estate documents recorded in the county.  The money raised would be used by the County to fund affordable housing programs for very low, low, and moderate income households.  Details on using document recording fees to pay for affordable housing are available in the C.A.R. Issues Briefing Paper called Dedicated Funding Source for Affordable Housing in California that is before this committee.  C.A.R. Position: OPPOSE.  Status: Assembly Housing and Community Development Committee.D.  SB. 1432 (Lowenthal) Imposing a Mello Roos Tax to Pay for Affordable Housing – Current law allows local governments to create Mello Roos Districts to pay for infrastructure and public services within a development.  This bill expands the use of Mello Roos to allow their use to finance affordable housing programs.  This bill was barely approved by Senate by a vote of 21-12. C.A.R. Position: OPPOSE.  Status: To Assembly.G.  SB 1800 (Ducheny) Calif. Building Industry Assoc. Sponsored Bill - 20 Year Land Supply - This measure is sponsored by the California Building Industry Association and the California Major Builders Council.  While C.A.R. is supportive of the direction of the bill, amendments will be needed to comport with C.A.R. policy. These amendments include: the elimination of the self certification of the housing element, deletion of the proposed change in law allowing parties to sue a city for violations of housing law, and striking provisions allowing cities to redistribute housing needs. C.A.R. Position: AMEND OPPOSE.  Status: Senate Transportation and Housing Committee.VIII.  Report from HOC Working Group on Alternative Efforts for the Committee - A report on the Working Group’s recommendations will be presented. IX.  Federal Issues

A. Discussion/Reporting Items:1. FHA Reform -H.R. 5121, the Expanding Homeownership Act of 2006 was introduced by Reps. Ney (R-OH), Waters (D-CA), Miller(R-CA) and Tiberi (R-OH). This bill would reform the FHA program to make it a more viable mortgage alternative for homebuyers. The bill would increase the FHA loan limits nationally and in high-cost areas, would eliminate the 3% downpayment requirement, would allow FHA to extend loan terms to up to 40 years, and would allow FHA to price loans depending on borrower’s risk.  The House Financial Services Committee marked-up H.R. 5121 on May 24.  The bill now waits for a floor vote.Also introduced was S. 2597, the Federal Housing Fairness Act of 2006, by Senator Clinton (D-NY). This bill would raise the FHA loan limits nationwide to the lesser of the conforming loan limit, or the median single-family homeprice in the area.2. Qualified Veteran Mortgage Bonds -As home prices have risen in California, only a few select veterans in California and four other states have benefited from low-interest rate mortgages secured by Qualified Veterans’ Mortgage Bonds (QVMB).  The bonds are tax exempt government obligation and are backed by the full faith and credit of the issuing state.  Veterans who finance their homes through QVMBs can receive an interest rate of.50-.75 percentage points less than that of a conventional loan. Under current law, to qualify for a QVMB a veteran must have served on active duty prior to January 1, 1977 and applied for financing before their thirty-yearanniversary of leaving the service.  This prohibits veterans of more recent or ongoing military conflicts such as Operation Iraqi Freedom, Operation Enduring Freedom, Kosovo, Somalia, and the 1991 Persian Gulf War from being able to benefit from these loans.The new tax law signed by President Bush in May included a provision that allows veterans in Alaska, Oregon and Wisconsin to qualify for the loans if they apply anytime within 25 years of leaving the service, regardlessof when they served.  California’s Cal Vet chose not to be included in this fix due to the new lower dollar limit they would have been given.  Cal Vet may currently issue up to $340 million in QVMB.  If they had been included in the new law that number would have dropped to $16 million this year and increased to $66 million in 2010.  Cal Vet has stated that they may still service veterans that didn’t serve prior to 1977 using “unrestricted” funds (money from prepaid mortgages secured by bonds that are not yet due).3. Affordable Housing Tax Credit -In order to encourage the construction of affordable housing, proposed legislation has been introducedto create a tax credit for developers and investors.  Representative Thomas Reynolds (R-NY) and Senator Rick Santorum (R-PA) have introduced legislation designed to increase affordable housing.  H.R. 1549 and S. 859, the Renewing the Dream Tax Credit Act, would allow developers and investors who construct or substantially rehabilitate housing for low- and moderate-income families for purchase to claim up to 50% of the cost over a five year period.  H.R. 1549 has 192 cosponsors, including 28 California cosponsors, and is currently in the House Committee on Ways and Means, and S. 859 has 16 cosponsors and is currently in the Senate Committee on Finance.  C.A.R. and NAR support these bills and have asked members of Congress to cosponsor this legislation; however, with the short election year calendar both of these bills might not be voted out of Committee.X.  OtherXI.  Adjournment