Senate Bill 35

SB 35 is complex but essentially will encourage the building of high density housing which will have no parking requirements. The bill requires the building to contain two or more housing units. If the building contains ten or more units, then 10% must be affordable housing units which is defined in the bill as housing affordable to families making 80% or less of the area’s median income.  The streamlined permitting process allowed in this bill will bypasses all city guidance by eliminating public hearings and conditional use permits.

The State of California encourages all future housing as multi family housing which includes affordable housing throughout the building and built throughout neighborhoods of all income levels.

Although most cities have announced they’re in compliance with Regional Housing Needs Assessment (RHNA), that doesn’t exempt them from this streamlined process because the “permits issued” criteria is used, which most cities have not met, and not the “goals” criteria.

Funding for construction may come from federal taxpayer credits for affordable housing which the developers sell to the banks for cash. There is also state money to help finance these projects.

I see three things in the bill that are very concerning.

1) From the bill: “(4) The development satisfies both of the following: (A) Is located in a locality that the department has determined is subject to this subparagraph on the basis that the number of units that have been issued building permits is less than the locality’s share of the regional housing needs, by income category, for that reporting period. A locality shall remain eligible under this subparagraph until the department’s determination for the next reporting period. A locality shall be subject to this subparagraph if it has not submitted an annual housing element report to the department pursuant to paragraph (2) of subdivision (a) of Section 65400 for at least two consecutive years before the development submitted an application for approval under this section. (B) …

In the Long Beach “Blue Print for Economic Development” it says: “RHNA is not a production requirement, it is a production goal.” I have heard Christopher Koontz, Advance Planning Officer say that Long Beach is in compliance with RHNA. SB 35 states that a locality will be subject to streamlined processing based on the number of permits issued in each income category and according to the 2016 Annual Housing Element Progress Report, our city is not close to meeting that criteria.

2) Basically, there is no expiration date once the developers get these streamlined permits and there is no way to stop the completion of the project once the permit is issued. And once the permit is issued, as Huntington Beach found out, there is no way to revoke the permit.

3) There are no parking requirements if one of four conditions is met. Two of these conditions are: a) the development is within one half mile of a bus stop or b) there is a car share vehicle within one block. If the first condition is not met, the developer only needs to put in a zip car type vehicle, which pays for itself, in order for there to be no parking requirements. For the developer, construction costs are significantly reduced by not having to excavate to provide parking.

Federal taxpayer credits will be used to pay for the construction of these buildings because some of the units will be affordable housing. The developers can sell these taxpayer credits to the banks for cash and then use that cash to fund the construction. (see below) In the state of California there is also a density bonus which is granted when the building includes affordable housing. This allows additional stories to be added to the zoning standard.

UPDATE:  SB 35 was updated on August 29, 2017 to include: (B) In the event that objective zoning, general plan, or design review standards are mutually inconsistent, a development shall be deemed consistent with the objective zoning standards pursuant to this subdivision if the development is consistent with the standards set forth in the general plan.

In other words, the developers can now take verbiage from The General Plan, which is supposed to look decades into the future, to justify developments even if the appropriate  zoning is not in place.

From the PBS Frontline video: “IRS gives billions in tax credits to the states. Then the states award credits to developers who sell them for cash to investors – mostly banks. The developers use the cash to help build apartment buildings and because tax payer money pays for most of it, they can charge the lower rents which are required. ‘The tax credits give us the equity to build the apartment buildings.’ They could not build these buildings without tax credits.”

From the Denver Post: “The tax credits — the largest funding mechanism for income-restricted rental housing nationwide — are designed to subsidize about 70 percent of the cost of building low-income apartments.

The credits work by incentivizing banks, insurance companies and other private-sector investors to help finance affordable rentals in exchange for a dollar-for-dollar reduction in their federal tax liability over 10 years.

Before the election, those investors were often willing to pay $1.10, maybe $1.15 for $1 in tax credits, White said. Since the election, the going rate has fallen to 85 to 90 cents. [Because the developers tax liabilities may go down under the Trump administration]

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