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

Friday, December 21st, 2018

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.

Governor Brown Signs Pro-Density, Pro-Housing Bills to Close Legislative Session

Sunday, September 30th, 2018

In the last evening of the last legislative session of his governorship, California Governor Jerry Brown signed two bills directed at increasing housing availability in the State. He signed each September 30, 2018 with no instructive message.

Senate Bill 828, proposed by San Francisco Democratic Senator Scott Wiener, requires local governments to report more data to the State in order to determine local housing needs pursuant to the Regional Housing Need Allocation (RHNA) law, including percentages of people spending more than 30 percent of their income on housing. The bill sets a minimum target vacancy rate of 5 percent as “healthy.” Areas that fail to meet this goal will need to zone for more housing.

Localities will also be required to zone for housing based on both projected needs and current shortages. Previously, the law only required local governments to zone for projected needs and, therefore, allowed shortages already prevalent in the community to be overlooked. As originally proposed, the bill required localities to zone for 200 percent of projected housing needs in order to boost housing production statewide. However, this figure was reduced to 100 percent in committee review and floor debates.

Developers around the State could see more dense residential zoning in cities that previously had few development opportunities. Opponents of the bill argued that the bill transfers too much planning power away from local governments and into the hands of the State.

Assembly Bill 1771, proposed by Santa Monica Democratic Assemblymember Richard Bloom, amends RHNA requirements by focusing more on job-housing balance metrics. RHNA previously required local governments to plan for an increase of the overall housing supply in a way that includes a mix of housing types and affordability across the region “in an equitable manner.” AB 1771 added that this must be done to “avoid displacement,” increase access of “high opportunity” jobs for low-income residents, and “affirmatively further fair housing.”

Proponents of the bill see it as forcing affluent municipalities to build their fair share of affordable housing. Specifically, the bill represents an effort to force wealthy cities like Beverly Hills and those surrounding San Francisco to plan for additional affordable housing so that existing low-income communities are not solely saddled with the burden of producing more housing.

Both bills support the Legislature’s recent push to use housing supply laws to make it harder for cities to say no to projects that would help alleviate the housing crisis in California.

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Other housing bills that the governor signed include the following

SB 1227 – Provides density bonuses for developments to be occupied by college students

AB 829 — Prohibits any letter of acknowledge requirement for state-assisted projects

AB 2238—Requires LAFCOs to consider regional housing need, fire hazard and other emergencies in project proposals

AB 2372—Allows city or county to award floor area ratio bonus by ordinance, upon developer request

AB 2753 –Requires city or county provide project applicant determination of density and parking bonus

AB 2797— Provides density, parking, and other bonuses be permitted in a manner consistent with the Coastal Act

AB 2923 –BART required to adopt transit oriented development (TOD) standards for each station

City Properly Analyzed Community Park Project Separately from Adjacent Housing Development

Wednesday, January 2nd, 2013

In Banning Ranch Conservancy v. City of Newport Beach (2012) 2012 Cal.App.LEXIS 1259, the Fourth District Court of Appeal issued a decision upholding the trial court’s denial of Banning Ranch Conservancy’s challenge to the City of Newport Beach’s (City) environmental impact report (EIR) for Sunset Ridge Park (Park Project).  Petitioner alleged that the Park EIR failed to comply with the California Environmental Quality Act (CEQA) because, to avoid improper piecemealing, the Park Project should have been evaluated in conjunction with a pending residential and commercial development project proposed on an adjacent property (Housing Project).  Petitioner also alleged the EIR inadequately analyzed five issues relating to the Park Project: (1) the cumulative traffic impact, (2) the growth-inducing impact, (3) the cumulative biological impact, (4) the impact on habitat for the California gnatcatcher, and (5) its consistency with the Coastal Act.  The court rejected each of Petitioner’s arguments.

In reviewing case law concerning piecemealing the court identified three potential categories.  First, there may be improper piecemealing when the purpose of the reviewed project is to be the first step toward future development. Second, there may be improper piecemealing when the reviewed project legally compels or practically presumes completion of another action.  Third, an agency may not be guilty of piecemealing when the projects have different proponents, serve different purposes, or can be implemented independently.

Here, the court concluded the Park Project and the Housing Project most closely fit into the third category.  The court acknowledged that the Housing Project may make reasonably foreseeable changes to the scope and nature of the Park Project due to the fact that the access road to the Park may be designed in a manner that anticipates the potential construction of the Housing Project. However, to constitute piecemealing the court stated that the Housing Project must be a reasonably foreseeable consequence of the Park Project.  While the roadway would ease the way for the Housing Project, the court found that “the park’s access road is only a baby step toward the [Housing] project.”  In light of its relatively small benefit, and the facts that the projects have different proponents, serve different purposes, and may be constructed independently of each other, the court held that the City did not improperly piecemeal the projects by analyzing them separately.

In dicta the court stated further that some tipping point exists at which the Park Project would do so much of the work needed by the Housing Project that the two projects would become one. Their implementation would be sufficiently interdependent in practice, even if theoretically separable, and a piecemealing challenge would be well founded.  But, the court found that the “baby steps taken here fall short of that point.”

Turning to Petitioner’s additional CEQA arguments, the court dismissed each quickly.  First, Petitioner argued that the EIR failed to properly evaluate the cumulative impacts of the Park and Housing Projects.  The court concluded substantial evidence in the record demonstrated these cumulative impacts were considered in the EIR.   The court acknowledged that the impact analysis “could have been set forth more directly.”  However, an EIR need not achieve “perfection” and the analysis was adequate.

Second, Petitioner argued that the EIR improperly concludes the Park Project will have no growth inducing impacts.  The court concluded that the need for additional park facilities is documented in the City’s General Plan.  Moreover, the Housing Project was proposed by the developer before the Park Project was proposed by the City.  The court found that the Park Project could not induce a project that was already being planned.

Third, Petitioner alleged that the draft EIR was inadequate because the cumulative biological impact analysis did not mention the Housing Project.  However, the final EIR clarified the manner in which the draft EIR accounted for the Housing Project and listed five reasons the projects would not cumulatively result in a significant biological impact.  The court held that, with the clarifications in the final EIR, the EIR sufficiently satisfied its dual role as an informational document and a document of accountability.

Fourth, Petitioner asserted the EIR downplayed the Park Project’s impact on California gnatcatcher habitat.  The court found that no case law supports the conclusion that where critical habitat is impacted by a project, the project’s impact is per se significant.  Instead, the court explained that to determine if the impact is significant the question is whether the project as mitigated will have a “potential substantial impact on endangered, rare or threatened species…”  If a potential impact is not found to be substantial, then it is not a significant impact.  The court explained that the determination of substantiality is a question of fact reviewed under the substantial evidence test.  Applying the substantial evidence test, the court held that the “observations and opinions of the City’s biologist” sufficiently supported the determination that the project’s impact to California gnatcatcher habitat was less than significant.  Although Petitioner contended the two to one ratio proposed to mitigate impacts to California gnatcatcher habitat was insufficient, the court stated that “this is the type of second-guessing that [a court] will not do on appeal.”  The court also noted that in developing mitigation a lead agency is not required to “acquiesce to different mitigation measures proposed by the United States Army Corps of Engineers or anyone else.”

Finally, Petitioner argued that the EIR failed to disclose the Project’s inconsistency with the Coastal Act of 1976 (Pub. Resources Code, § 30000 et seq.).  Petitioner’s argument was premised on two theories.  First, Petitioner alleged the Coastal Commission intended to designate the project area as environmentally sensitive habitat areas (ESHAs).  The court rejected that this potential change in designation was relevant.  The court explained that there are no inconsistencies at the moment.  Second, Petitioner alleged that the project area included wetlands.  The biological technical report prepared for the EIR determined that the site did not include wetlands as defined by the Coastal Act.  To contradict the technical report, Petitioner pointed to a comment by a City Planner acknowledging that coastal staff may determine the site contains wetlands.  But the court stated that the question is whether substantial evidence supports the City’s approval of the EIR, not whether “an opposite conclusion would have been equally or more reasonable.”  Because under the substantial evidence standard of review the court was not permitted to “weigh conflicting evidence and determine who has the better argument” the court held that the biological technical report sufficiently supported the conclusion in the EIR.

Key Point:

Projects with different proponents, different purposes, and which can be implemented independently, typically can be analyzed separately for the purposes of CEQA without violating the rule against piecemealed review.

The CEQA Guidelines provide that CEQA “must not be subverted into an instrument for the oppression and delay of social, economic, or recreational development or advancement.” (CEQA Guidelines, § 15003, subd. (j).)  In Banning Ranch, supra, Petitioner’s attempted to derail the Housing Project before it got off the ground by attacking a Park Project that, once developed, would preserve open space and provide recreational activities for the general public.  CEQA reform is necessary to provide consistency and clarity in interpreting the statute and to discourage litigation where the statute has been carefully complied with.

Written By: Tina Thomas and Christopher Butcher
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For questions relating to this blog post or any other California land use, environmental and/or planning issues contact Thomas Law Group at (916) 287-9292.

The information presented in this article should not be construed to be formal legal advice by Thomas Law Group, nor the formation of a lawyer/client relationship. Readers are encouraged to seek independent counsel for advice regarding their individual legal issues.