It was a law that flew under the radar for most residents. But the passage of state Assembly Bill 1505, effective Jan. 1, allows cities such as Los Altos and Mountain View to re-establish requirements for developers to provide affordable housing.
Reacting to the new law, Mountain View City Council members Feb. 13 approved amendments to the city’s below-market-rate (BMR) housing program to, among other changes, increase the previous 10 percent minimum requirement on rental projects to 15 percent comprising affordable housing.
AB 1505 was what some insiders described as a “legislative fix” to a 2009 court ruling invalidating inclusionary requirements. The case of Palmer/Sixth Street Properties v. City of Los Angeles held that affordable housing inclusionary requirements violated the Costa-Hawkins Housing Act, which exempts construction after February 1995 from rent control. The state’s Court of Appeal ruled that affordable housing requirements on rental housing conflicted with the act. However, AB 1505 gives cities authority to re-establish inclusionary requirements on residential rental projects through adoption of local ordinances.
The Mountain View council fell short of extending the 15 percent increase to ownership units, pending further study. The council also passed an in-lieu fee for rental units of $34.57 per square foot. An in-lieu fee is money a developer can pay instead of including affordable units in a project.
Councilwoman Pat Showalter said having the BMR requirement restored enables the city to build affordable units more quickly.
“It’s a big change – it will be interesting to see how it adjusts the rate of development,” she said.
“These changes are intended to facilitate the actual production of affordable housing, which aligns with the council’s desire to see units built rather than fees paid,” according to a Mountain View city staff report.
Dennis Martin of BIA Bay Area, a building industry association, said AB 1505 is “one of the worst” of the state’s new housing laws. He implored the city to be flexible with alternatives to BMRs, such as “viable developer in-lieu fees.” He said the law “may have a consequence of slowing housing – take a longer look at this.”
Mountain View is exempting some residential projects already in the pipeline from the new BMR requirements.
Concerns from speakers like Katia Kamangar, executive vice president of SummerHill Homes, gave the council pause about applying the 15 percent BMR figure to ownership units.
“(It) has much more significant impact on for-sale units than rentals,” she told the council at its Feb. 13 meeting.
SummerHill currently has approximately 200 ownership units in the city’s approval pipeline, Kamangar said.
Council members Chris Clark and Lisa Matichak both expressed concerns about applying 15 percent to ownership BMRs.
A second reading of the amended Mountain View ordinance took place at the council’s Feb. 27 meeting. The ordinance would take effect 60 days after that meeting, projected to be April 28.
Los Altos and SB 35
AB 1505 is one of 15 new state laws enacted over the past year aimed at addressing the state’s housing crunch.
Some, such as Senate Bill 35, make it easier for developers to build higher-density housing and harder for cities to deny projects because of perceived impacts on neighbors.
SB 35 streamlines multifamily housing project approvals, at a developer’s request, in cities that fail to issue building permits for its share of the regional housing need by income category.
Affordable housing advocates think Los Altos will be impacted by SB 35 because the city falls far short of its housing targets.
Los Altos City Manager Chris Jordan acknowledged a sense of urgency, brought on by the new state laws, in creating a streamlined housing approval process, as well as amending city codes to create more “objective standards.”
Like Mountain View, Los Altos City Council members also may consider hiking the percentage on residential projects from the current 10-15 percent affordable housing.
“The council would also like to review the city’s inclusionary housing ordinance to determine if we can require more affordable housing units without amending the housing element,” Jordan said.