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AB 915 - Density Bonus Law

Opposition Letter

Committee on Housing and Community Development
California State Assembly
State Capitol, Room
Sacramento, CA 95814

RE:  AB 915 (Ting) – Density Bonus Law – Oppose

 

Dear Members of the Committee on Housing and Community Development,

The undersigned housing organizations and advocates urge members of the Committee on Housing and Community Development to oppose AB 915. The clear intent of AB 915 is effectively to repeal the State Density Bonus Law, Section 65915 of the Government Code. The State Density Bonus Law was greatly strengthened last year by AB 2501 in response to California’s severe housing crisis and to repeated efforts by certain municipalities to circumvent the State Density Bonus Law. AB 2501 passed the Assembly (50 ayes to 11 noes) and the Senate (34 ayes to 3 noes), and was signed by Governor Brown on September 28, 2016.

The State Density Bonus Law is one of the most powerful tools we have to address the chronic housing shortage in California. If AB 915 becomes law, we will watch municipalities fall further and further behind in their housing goals and housing prices will continue to escalate. This bill undermines the State Density Bonus, which is a critical part of solving California’s chronic housing shortage.

AB 915 simply states as follows:

SECTION 1.

Section 65915.4 is added to the Government Code, to read:

65915.4.

If a city, county, or city and county has adopted an ordinance requiring an affordable housing minimum percentage for housing developments, the city, county, or city and county shall apply that ordinance to the total number of housing units in the development, including any additional housing units granted pursuant to Section 65915, unless the city, county, or city and county exempts those additional housing units from the ordinance.

The effect of this amendment is to:

  1. Reduce significantly the economic incentives to use the State Density Bonus Law by automatically imposing a local on-site inclusionary requirement or in lieu inclusionary fee on the units awarded under the State Density Bonus Law.
  1. Force municipalities that support the State Density Bonus Law to pass new laws. Under AB 915, localities that support the current density bonus program must specifically exempt density bonus units to local on-site inclusionary requirements or in lieu inclusionary fees.
  1. Create huge financial, legal and political uncertainties for developers who have State Density Bonus Law projects already in the pipeline, in many instances for several years.
  1. Permit municipalities that are hostile to the Density Bonus Law to make density bonus units economically infeasible. Cities like San Francisco could evade the Density Bonus Law by imposing on-site inclusionary requirements or in lieu inclusionary fees specifically on units awarded under the State Density Bonus Law that would make construction of such units economically infeasible. For example, nothing would stop such a hostile municipality from requiring that all units awarded under the State Density Bonus law be 100% affordable at a 50% AMI, thus forcing their sale or rental below a developer’s cost.
  1. Reduce the supply of new housing by making financially infeasible, delaying, and increasing the cost of many projects. In cities with high inclusionary zoning requirements, like San Francisco, many proposed housing development projects are only financially feasible if they receive density bonus units under the current law program.
  1. Eliminate the State Density Bonus Law as a tool that can be used by developers to offset the power of anti-development politicians, bureaucrats and NIMBY groups.
  1. Completely circumvent the spirit, intent and function of the State Density Bonus Law, which is: “to be interpreted liberally in favor of producing the maximum number of total housing units.”

 

The person behind AB 915 is Peter Cohen of the San Francisco Council of Community Housing Organizations. To quote Peter Cohen’s email of March 28, 2017 to Todd David, Executive Director of the San Francisco Housing Action Coalition: “Since AB915 is functionally our bill, we’d like the opportunity to explain it to your leg committee or board, as the case may be, and answer any questions about its intent or its technical specs.” Many assembly members, senate members and staff know Peter Cohen, as he has lobbied extensively in Sacramento for the exclusion of San Francisco from the State Density Bonus Law. Peter is a primary actor in San Francisco’s anti-development community, constantly working to delay, obstruct and make more expensive the construction of anything but 100% affordable housing. AB 915 is simply his latest effort to circumvent the State Density Bonus Law.

As evidence of this intent, the original version of AB 915 (since amended) stated as follows:

“It is the intent of the Legislature to enact legislation that would authorize local governments to require an applicant for a permit for a housing development to include affordable housing units in that development without receiving a density bonus or other incentives or concessions provided pursuant to Section 65915 of the Government Code.”

Further, despite the specific requirement in the State Density Bonus Law that “A city, county, or city and county shall adopt an ordinance that specifies how compliance with this section will be implemented”, San Francisco has refused to adopt such an ordinance, despite the State Density Bonus Law having been in place since 1979.

The State Density Bonus Law was first passed as a means of increasing the production of affordable housing and of removing the impediments to such production. It has been strengthened numerous times to eliminate ambiguities that allowed hostile municipalities to contest its use, and has been litigated extensively. Only with a July 2013 appeals court decision in the case LATINOS UNIDOS DEL VALLE DE NAPA y Solano et al., Plaintiffs and Appellants, v. COUNTY OF NAPA was the law sufficiently clarified that developers in San Francisco began to explore its use. Since then, the first and, so far, the only project in San Francisco relying on the State Density Bonus Law, a 200-unit project at 333 12th St., was approved by the San Francisco Planning Commission on December 8, 2016.[1] More than a dozen other San Francisco developers have State Density Bonus Law projects in the pipeline, all of which would be severely affected by the passage of AB 915.

To place this local opposition to the State Density Bonus Law into perspective, in April 2017 San Francisco had the highest rents of any city in the United States, with a monthly median one-bedroom rent of $3,470 and a monthly median two-bedroom rent of $4,560.[2] Further, according to a February 10, 2017 New York Times article, San Francisco’s land use restrictions added $500,000 to the cost of producing each housing unit, far more than in any other city in the United States.[3]

Housing affordability in San Francisco and in much of coastal California will continue to worsen unless the rate of home building increases. AB 915 attempts to gut the Density Bonus Law and runs contrary to the recommendations of recent LAO reports. Please vote “no” on AB 915.

The following San Francisco housing groups strongly oppose AB 915:

Laura Clark
Executive Director
YIMBY Action

 

Todd David
Executive Director
San Francisco Housing Action Coalition

 

Laura Fingal-Surma
Co-Founder
Progress Noe

 

Brian Hanlon
Co-Executive Director
California Renters Legal Advocacy and Education Fund

 

Sonja Trauss
Founder
Bay Area Renters Federation

 

Jeff Andrade-Fong
Co-Founder
Tech for Housing

 

Nick Carneiro & Bobak Esfandiari
Community Organizers
Grow the Richmond

 

Victoria Fierce
Organizer
East Bay Forward

[1] http://www.sfhac.org/state-density-bonus-arrived-san-francisco/

[2] https://www.apartmentlist.com/rentonomics/national-rent-data/

[3] https://www.nytimes.com/2017/02/10/upshot/popping-the-housing-bubbles-in-the-american-mind.html?_r=3