SB 50 “Equitable Communities Incentive” Would Exempt Affordable Housing Developments in “Job-Rich” and “Transit-Rich” Areas from Certain Zoning Standards

December 21st, 2018

By: Thomas Law Group



California
State Senator Scott Wiener (D–San Francisco) has introduced Senate Bill 50, the
More Housing Opportunity, Mobility, Equity, and Stability (“HOMES”) Act, which establishes
the “equitable communities incentive.” This incentive would allow developers to
bypass certain local zoning restrictions when building multi-family units that
are near transit or employment opportunities in exchange for allocating a
portion of the units as affordable.

The Bill exempts
multi-family developments from specified zoning restrictions if the project is
located either (a) within a half mile of a rail transit station; (b) within a
quarter-mile of a high-frequency bus stop; or (c) within a “job-rich”
neighborhood. In these special zones, parking minimums would be sharply reduced
and zoning codes could not impose height limits lower than 45 or 55 feet,
depending on local factors. In exchange, developers who use this incentive will
be required to designate an as-yet-undefined portion of new units as affordable
housing.

While recent
housing policy employs the term “transit-rich” neighborhood, SB 50 adds the
concept of a “job-rich” neighborhood. This is defined as a “residential
development within an area identified by the Department of Housing and
Community Development and the Office of Planning and Research, based on
indicators such as proximity to jobs, high area median income relative to the
relevant region, and high-quality public schools.” In short, a “job-rich”
neighborhood is a residential area with a short commute to jobs, high median
incomes, and superior schools. This marks an effort to push development into
areas that may have previously resisted it by not being “transit-rich”
neighborhoods.

Wiener
proposed a similar bill last session, SB 827, which perished in committee
review amid opposition from cities and vocal labor, building, and environmental
groups largely for failing to provide adequate protections to existing renters.
The renewed and revised bill, SB 50, provides a specific protection against the
risk of displacement by prohibiting projects on a site that had a housing
tenant within the last seven years. Key components of SB 50 include the
following proposals:

  • Establishes the “equitable communities incentive” for developers that meet the following criteria:
    • Project must be in a job-rich or transit-rich area (Gov. Code, § 65918.52(a).)
    • Project must be on a site already zoned to allow for housing (Gov. Code, § 65918.52(b).)
    • Project meets SB 50’s affordable housing requirements and, if applicable, the heightened local inclusionary housing ordinance (Gov. Code, § 65918.52(c).)
    • Project site was not occupied by tenants within seven years preceding the date of application, including housing that was vacated or demolished, nor was the site withdrawn from lists as a home for rent within fifteen years (Gov. Code, § 65918.52(d).)
  • Exempts eligible projects from maximum density controls, maximum parking requirements greater than 0.5 spaces per unit, and includes the following:
    • Waiver from maximum height requirements less than 45 feet and FAR less than 2.5, for projects 0.25-0.5 miles from a major transit stop
    • Waiver from maximum height requirements less than 55 feet and FAR requirements less than  3.25, for projects within 0.25 miles from a major transit stop
    • Provides each eligible project up to three incentives and concessions pursuant to the Density Bonus Law (Gov. Code, § 65915.)
  • Permits local governments to modify or expand the terms of the incentive “provided that the equitable communities incentive is consistent with, and meets the minimum standards specific in, this chapter”
  • Delays implementation of SB 50 until July 2020 for “sensitive communities,” areas vulnerable to displacement pressures

Wiener reasons
that existing voluntary programs are not strong enough; they allow cities to
evade state housing production goals, which causes rent prices to rise beyond
affordable levels. Supporters of SB 50 expect that it will increase the pace of
construction and add millions of units to help relieve the State’s housing
crisis, a key goal for Governor-elect Gavin Newsom. Mayors from many of
California’s largest cities have already indicated their support, including San
Francisco Mayor London Breed, Oakland Mayor Libby Schaff, and Sacramento Mayor
Darrell Steinberg.

Senate
Bills 5 and 6, proposed by State Senators James Beall (D –San Jose) and Michael
McGuire (D –Healdsburg), appear to be aimed at getting ahead of SB 50’s spur
for high-density housing by reviving tax increment financing for housing development
near jobs and transit. That approach, using a portion of property tax growth
for housing, was employed by more than 400 redevelopment agencies before Governor
Jerry Brown and then-State Senator Darrell Steinberg eliminated it in 2011. According
to the Senators, SB 50 is too rigid, communities need flexibility to relieve the
housing crisis. In response to such concerns, SB 50 allows economically
vulnerable communities to obtain a delay in implementing the zoning changes.

The
biggest short-term impact of SB 50 will likely be felt in neighborhoods that
are already gentrifying and have a significant amount of housing turnover. Lots
with owner-occupied, single-family homes that may have been “flipped” will now
be bought by developers who will use the lot to build apartments.