Bill Text: CA AB1068 | 2021-2022 | Regular Session | Introduced


Bill Title: Affordable housing: alternative forms of development: model plan.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2021-03-04 - Referred to Com. on H. & C.D. [AB1068 Detail]

Download: California-2021-AB1068-Introduced.html


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1068


Introduced by Assembly Member Santiago

February 18, 2021


An act to add Section 50467 to the Health and Safety Code, relating to housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 1068, as introduced, Santiago. Affordable housing: alternative forms of development: model plan.
Existing law continues into existence the Department of Housing and Community Development (HCD) in the Business, Consumer Services, and Housing Agency. Under existing law, HCD is required to update and revise the California Statewide Housing Plan, which provides, among other things, a housing strategy that coordinates the housing assistance and activities of state and local agencies, including the provision of housing assistance for various populations.
Existing law authorizes the Department of General Services (DGS) to dispose of surplus state real property, as provided. Under existing law, DGS is required to offer surplus state real property, that has been determined by DGS not to be needed by any state agency, to any local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals.
This bill would require HCD to create a model plan for the use of alternative forms, as defined, of developing affordable housing for the purpose of substantially reducing the cost of a unit of affordable housing. The bill would require the model plan to be used in state agency decisions in all state-subsidized housing loan and grant programs. The bill would also require a local agency, nonprofit affordable housing sponsor, private entity, or individual that receives surplus state real property from the state to use the model plan to guide any housing development on that property. The bill would make findings and declarations in this regard.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares the following:
(a) The Department of Housing and Community Development (HCD) projects that the state needs to construct 1,800,000 units of housing between now and 2025.
(b) HCD also projects that 1,500,000 of those units need to be available for persons who are extremely low or very low income, indicating that at least 80 percent of the housing construction need is for California’s most disadvantaged citizens.
(c) According to HCD’s analysis, the state needs to produce an average of 180,000 units per year to meet these goals. Currently, the state has been constructing 80,000 units per year.
(d) In recent years, the cost of constructing a unit of housing has soared, due to a combination of escalating construction and material costs as well as increased land acquisition costs.
(e) In Los Angeles, the average cost per unit is over $500,000 and climbing. San Francisco has eclipsed New York as the most expensive city in which to build a unit of housing, at over $700,000 each. San Diego is approaching Los Angeles’ costs, at more than $475,000 per unit.
(f) Income limits for most affordable housing programs range from 30 percent of the area median income for extremely low income households to 120 percent of the area median income for moderate-income households. In Los Angeles, for example, the area median income was $73,000 in 2019, which translates to $31,300 for an extremely low income family of four and $52,200 for a very low income family of four.
(g) The homelessness crisis in our state has reached levels that are tragic and shameful. One quarter of the homeless population in our nation resides in California, numbering at about 150,000 families and individuals.
(h) With 30 percent of all California renters being rent-burdened, meaning that at least 50 percent of their income is needed to cover rent payments, millions of renters are less than a paycheck away from being forced to live on the streets.
(i) Research from the University of California, Los Angeles, points to a direct correlation between high housing costs and high numbers of homeless people.
(j) Families at very low income levels cannot afford to pay rent on a unit that costs $500,000 or more to build.
(k) The gap between the costs of constructing a unit of housing and the affordability of that unit for low-income Californians continues to widen.
(l) Existing state programs that subsidize the construction of new affordable housing units perpetuate the high cost of construction. The irony of California’s affordable housing laws is that the units constructed are not affordable to the vast majority of Californians for whom they are targeted.
(m) The current tension between construction costs and affordability is unsustainable. California will never build itself out of its current affordable housing construction crisis if it does not change today’s construction cost paradigm.
(n) Even programs like Proposition HHH, a 2016 $1,200,000,000 supportive housing construction program to combat homelessness that was overwhelmingly approved by the voters of Los Angeles and that has a project cost per unit of $350,000, have failed to rein in high construction costs, resulting in new HHH construction costs that range from $500,000 per unit to $700,000 per unit and a reduction of 41 percent in anticipated new housing. Four years later, as of September 2020, HHH had delivered only three projects with 228 units.
(o) This paradigm will never change if the state sustains the current housing construction model that is driving these high costs.
(p) There are alternatives to current construction modalities that can align the cost of producing a unit of housing with the affordability of the unit for persons who are low income.
(1) HCD, in summarizing its commissioned report on alternative housing by the California Polytechnic State University, San Luis Obispo, has stated that there are strategies to cross-subsidize the price of units for low- and moderate-income households by using proceeds from high-income market-rate units within the same development.
(2) Adaptive reuse is the reuse of an existing building for a purpose other than that for which it was originally constructed. Examples of adaptive reuse include the rehabilitation of hotels and motels and converting unused public buildings into individual and family units.
(3) Modular construction is the use of factory-produced, preengineered units that are delivered and assembled onsite and has recently included the frequent rehabilitation of shipping containers into residential units.
(q) California needs to lead the way in reducing the cost of constructing a unit of housing, and the state has the authority through its housing construction subsidy programs to demand those cost reductions.
(r) At the same time, the state needs to take advantage of the most progressive and innovative thinking in the housing development industry.
(s) Therefore, it is the intent of the Legislature that state housing construction subsidy programs prioritize alternative methods to produce housing units that are cost effective.
(t) It is further the intent of the Legislature that the development of housing on surplus state lands shall prioritize alternative methods to produce housing units that are cost effective.

SEC. 2.

 Section 50467 is added to the Health and Safety Code, immediately following Section 50466, to read:

50467.
 (a) The department shall create a model plan for the use of alternative forms of developing affordable housing for the purpose of substantially reducing the cost of a unit of affordable housing. “Alternative forms” include, but are not limited to, adaptive reuse of existing buildings, modular housing, and cross-subsidization that results in at least 50 percent of all units being affordable to persons who are extremely low and very low income.
(b) The model plan described in subdivision (a) shall be used in state agency decisions in all state-subsidized housing loan and grant programs, including, but not limited to, all of the following:
(1) The Building Homes and Jobs Act (Chapter 2.5 (commencing with Section 50470)).
(2) The Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)).
(3) The Local Housing Trust Fund Matching Grant Program (Chapter 13 (commencing with Section 50842.1)).
(4) The Housing for a Healthy California Program (Part 14.2 (commencing with Section 53590)).
(5) The Veterans Housing and Homeless Prevention Act of 2014 (Article 3.2 (commencing with Section 987.001) of Chapter 6 of Division 4 of the Military and Veterans Code).
(6) The Affordable Housing and Sustainable Communities Program (Part 1 (commencing with Section 75200) of Division 44 of the Public Resources Code).
(c) A local agency, nonprofit affordable housing sponsor, private entity, or individual that receives surplus state real property pursuant to Section 11011.1 of the Government Code shall use the model plan described in subdivision (a) to guide any housing development on that property.
(d) As used in this section, all of the following definitions apply:
(1) “Local agency” has the same meaning as in subdivision (a) of Section 54221 of the Government Code.
(2) “Nonprofit affordable housing sponsor” has the same meaning as in subparagraph (B) of paragraph (2) of subdivision (b) of Section 11011.1 of the Government Code.
(3) “Surplus state real property” has the same meaning as in subdivision (a) of Section 11011.1 of the Government Code.
(e) Nothing in this section shall be construed to require loans or grants to be given to applicants for an alternative form of development as defined in subdivision (a) if that alternative form would be more expensive than traditional methods of development or if other factors would ensure that a traditional development would achieve actual affordable housing unit outcomes more successfully.

SEC. 3.

 The Legislature finds and declares that facilitating the development of affordable housing to combat the state’s housing crisis is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 2 of this act adding Section 50467 of the Health and Safety Code applies to all cities, including charter cities.
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