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SB-1369 Adaptive reuse projects: by-right: funding.(2021-2022)

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Date Published: 02/18/2022 09:00 PM
SB1369:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 1369

Introduced by Senator Wieckowski

February 18, 2022

An act to add Article 11.5 (commencing with Section 65658) to Chapter 3 of Division 1 of Title 7 of the Government Code, and to amend Section 53559 of, and to add Section 18941.11 to, the Health and Safety Code, relating to adaptive reuse.


LEGISLATIVE COUNSEL'S DIGEST


SB 1369, as introduced, Wieckowski. Adaptive reuse projects: by-right: funding.
(1) The Planning and Zoning Law requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city that includes, among other mandatory elements, a housing element. Under that law, supportive housing, as defined, is a use by right in zones where multifamily and mixed uses are permitted if the developer provides the planning agency with a plan for providing supportive services and the proposed housing development meets specified criteria.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA does not apply to the approval of ministerial projects.
This bill would make an adaptive reuse project a use by right in all areas regardless of zoning. The bill would define “adaptive reuse project” to mean any commercial, public, industrial, or office building or structure that has 25-percent occupancy or less, which is converted into a housing development project. The bill would define “use by right” to mean that the city or county’s review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a “project” for purposes of CEQA, as specified.
This bill would prohibit a city or county from imposing various requirements on an adaptive reuse project, including a requirement that the adaptive reuse project provide more parking than the amount of on-site parking for the existing building or structure. The bill would provide that an adaptive reuse project is subject to the California Existing Building Code. By imposing new requirements of cities and counties in the review and approval of adaptive reuse projects, the bill would impose a state-mandated local program.
The bill would include findings that changes proposed by these provisions address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
(2) Existing law, the California Building Standards Law, establishes the California Building Standards Commission within the Department of General Services. Existing law requires the commission to approve and adopt building standards and to codify those standards in the California Building Standards Code, which is required to be published once every 3 years.
This bill would require the California Building Standards Commission, in consultation with the Department of Housing and Community Development, to update, adopt, approve, codify, and publish building standards in the California Existing Building Code that revise and clarify fire, safety, health, structural, seismic, and environmental elements that apply to adaptive reuse projects, as specified. The bill would require the building standards to facilitate the development of adaptive reuse projects.
(3) Existing law establishes the Infill Infrastructure Grant Program of 2019, which requires the Department of Housing and Community Development, upon appropriation of funds by the Legislature, to establish and administer a grant program to allocate those funds to capital improvement projects that are an integral part of, or necessary to facilitate the development of, a qualifying infill project or qualifying infill area, as those terms are defined, pursuant to specified requirements. Existing law requires the Department of Housing and Community Development to adopt guidelines for the operation of the grant program, as specified.
This bill would require the department’s guidelines to include provisions that grant an unspecified application bonus to an adaptive reuse project that otherwise meets the requirements of the Infill Infrastructure Grant Program of 2019.
(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares that the state is experiencing a housing shortage crisis and increasing the supply of housing and addressing the impacts of climate change are matters of statewide importance. Promoting the adaptive reuse of building serves all of the following goals:
(a) Increasing the supply of residential, live-work, and mixed-use housing.
(b) Revitalizing unused or underserved existing commercial buildings or sites within the developed urban footprint.
(c) Reducing construction-related greenhouse gas emissions.
(d) Reducing adverse air quality impacts.
(e) Reducing greenhouse gas emissions on an ongoing basis by reducing vehicle travel demand.
(f) Serving long-term community sustainability goals.

SEC. 2.

 Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:
Article  11.5. Adaptive Reuse

65658.
 (a) For purposes of this section:
(1) “Adaptive reuse project” means any commercial, public, industrial, or office building or structure that has 25-percent occupancy or less, which is converted into a housing development project. “Adaptive reuse project” does not include a project to convert an industrial building that is adjacent to active industrial uses on three or more sides of the building.
(2) “Housing development project” means a use consisting of any of the following:
(A) Residential units only, including live-work units.
(B) Mixed-use developments consisting of residential and nonresidential uses with at least two-thirds of the square footage designated for residential use.
(3) “Impact fee” has the same meaning as the term “fee,” as defined in subdivision (b) of Section 66000.
(4) “Use by right” shall mean that the city or county’s review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act. A local ordinance may provide that “use by right” does not exempt the use from design review, provided that the design review shall not constitute a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
(b) An adaptive reuse project shall be a use by right in all areas regardless of the zoning of the site and subject to all of the following:
(1) The city or county shall not require the adaptive reuse project to provide more parking than the amount of on-site parking for the existing building or structure.
(2) The adaptive reuse project shall be permitted to add one story to the roof of the existing building.
(3) If the building does not occupy the entirety of the underlying parcel, the adaptive reuse project shall be permitted to add to the existing building or structure, provided that the addition is consistent with the zoning of the parcel.
(4) The adaptive reuse project shall be subject to the California Existing Building Code (Part 10 of Title 24 of the California Code of Regulations).
(c) (1) Subject to paragraph (2), this section does not prohibit a city or county from imposing fees and other exactions otherwise authorized by law that are essential to provide necessary public services and facilities to housing developments.
(2) Any impact fee imposed on an adaptive reuse project shall be in an amount that does not exceed the difference between the fees that would apply to a new commercial, public, industrial, or office building on the site and the fees that would apply to a new residential development of the site.
(d) A city or county may adopt an ordinance to implement this section and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with this section.
(e) The Legislature finds and declares that this section addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this section applies to all cities, including charter cities.

SEC. 3.

 Section 18941.11 is added to the Health and Safety Code, to read:

18941.11.
 (a) The commission, in consultation with the Department of Housing and Community Development, shall update, adopt, approve, codify, and publish building standards in the California Existing Building Code (Part 10 of Title 24 of the California Code of Regulations) that revise and clarify fire, safety, health, structural, seismic, and environmental elements applicable to adaptive reuse projects. The building standards shall facilitate the development of adaptive reuse projects. This section shall commence with the next triennial edition of the California Building Standards Code (Title 24 of the California Code of Regulations) adopted after January 1, 2023.
(b) For purposes of this section, “adaptive reuse project” means the same as defined in Section 65658 of the Government Code.

SEC. 4.

 Section 53559 of the Health and Safety Code is amended to read:

53559.
 (a) The Infill Infrastructure Grant Program of 2019 is hereby established to be administered by the department.
(b) Upon appropriation by the Legislature of funds specified in Section 53559.2, the department shall establish and administer a grant program to allocate those funds to capital improvement projects that are an integral part of, or necessary to facilitate the development of, a qualifying infill project or qualifying infill area, pursuant to the requirements of this section.
(c) (1) The department shall administer a competitive application process for grants funded by the allocation specified in paragraph (1) of subdivision (a) of Section 53559.2 for selected capital improvement projects for large jurisdictions pursuant to this subdivision. The department shall release a notice of funding availability no later than November 30, 2019.
(2) In its review and ranking of applications for the award of capital improvement project grants, the department shall rank the affected qualifying infill projects and qualifying infill areas based on the following priorities:
(A) Project readiness, which shall include all of the following:
(i) A demonstration that the project or area development can complete environmental review and secure necessary entitlements from the local jurisdiction within a reasonable period of time following the submission of a grant application.
(ii) A demonstration that the eligible applicant can secure sufficient funding commitments derived from sources other than this part for the timely development of a qualifying infill project or development of a qualifying infill area.
(iii) A demonstration that the project or area development has sufficient local support to achieve the proposed improvement.
(B) The depth and duration of the affordability of the housing proposed for a qualifying infill project or qualifying infill area.
(C) The extent to which the average residential densities on the parcels to be developed exceed the density standards contained in paragraph (4) of subdivision (e).
(D) The qualifying infill project’s or qualifying infill area’s inclusion of, or proximity or accessibility to, a transit station or major transit stop.
(E) The proximity of housing to parks, employment or retail centers, schools, or social services.
(F) The qualifying infill project or qualifying infill area location’s consistency with an adopted sustainable communities strategy pursuant to Section 65080 of the Government Code, alternative planning strategy pursuant to Section 65450 of the Government Code, or other adopted regional growth plan intended to foster efficient land use.
(3) In allocating funds pursuant to this subdivision, the department, to the maximum extent feasible, shall ensure a reasonable geographic distribution of funds.
(4) For purposes of awarding grants pursuant to the competitive application process required by this subdivision:
(A) “Qualifying infill area” means a contiguous area located within an urbanized area (i) that has been previously developed, or where at least 75 percent of the perimeter of the area adjoins parcels that are developed with urban uses, and (ii) in which at least one development application has been approved or is pending approval for a residential or mixed-use residential project that meets the definition and criteria in this section for a qualifying infill project.
(B) (i) “Qualifying infill project” means a residential or mixed-use residential project located within an urbanized area on a site that has been previously developed, or on a vacant site where at least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses.
(ii) A property is adjoining the side of a project site if the property is separated from the project site only by an improved public right-of-way.
(d) (1) The department shall administer an over-the-counter application process for grants funded by the allocation specified in paragraph (2) of subdivision (a) of Section 53559.2 for capital improvement projects for small jurisdictions, pursuant to this subdivision. A notice of funding availability shall be released no later than November 30, 2019.
(2) Eligible applicants shall submit the following information in the application request for funding:
(A) A complete description of the qualifying infill project or qualifying infill area and documentation of how the infill project or infill area meets the requirements of this section.
(B) A complete description of the capital improvement project and requested grant funding for the project, how the project is necessary to support the development of housing, and how it meets the criteria of this section.
(C) Documentation that specifies how the application meets all of the requirements of subdivision (e).
(D) (i) Except as provided in clause (ii), a financial document that shows the gap financing needed for the project.
(ii) For a qualifying infill project located in the unincorporated area of the county, the department shall allow an applicant to meet the requirement described in clause (i) by submitting copies of an application or applications for other sources of state or federal funding for a qualifying infill project.
(E) (i) Except as provided by clause (ii), documentation of all necessary entitlement and permits, and a certification from the applicant that the project is shovel-ready.
(ii) For a qualifying infill project located in the unincorporated area of the county, the department shall allow the applicant to meet the requirement described in clause (i) by submitting a letter of intent from a willing affordable housing developer that has previously completed at least one comparable housing project, certifying that the developer is willing to submit an application to the county for approval by the county of a qualifying infill project within the area in the event that the funding requested pursuant to this subdivision is awarded.
(3) The department may establish a per-unit formula to determine the amount of funds awarded pursuant to this subdivision.
(4) For purposes of awarding grants pursuant to the over-the-counter application process required by this subdivision:
(A) “Qualifying infill area” means a contiguous area located within an urbanized area that meets either of the following criteria:
(i) The area contains sites included on the inventory of land suitable and available for residential development in the housing element of the applicable city or county general plan pursuant to paragraph (3) of subdivision (a) of Section 65583 of the Government Code, and at least 50 percent of the perimeter of the area shall adjoin parcels that are developed with urban uses.
(ii) The capital improvement project for which funding is requested is necessary, as documented by an environmental review or some other adopted planning document, to make the area suitable and available for residential development, or to allow the area to accommodate housing for additional income levels, and the area otherwise meets the requirements for inclusion on the inventory of land suitable and available for residential development in the housing element of the applicable city or county general plan pursuant to paragraph (3) of subdivision (a) of Section 65583 of the Government Code. At least 50 percent of the perimeter of the area shall adjoin parcels that are developed with urban uses.
(B) “Qualifying infill project” means a residential or mixed-use residential project located within an urbanized area on a site that has been previously developed, or on a vacant site where at least 50 percent of the perimeter of the site adjoins parcels that are developed with urban uses.
(e) A qualifying infill project or qualifying infill area for which a capital improvement project grant may be awarded pursuant to either subdivision (c) or (d) shall meet all of the following conditions:
(1) Be located in a city, county, or city and county in which the general plan of the city, county, or city and county has an adopted housing element that has been found by the department, pursuant to Section 65585 of the Government Code, to be in compliance with the requirements of Article 10.6 (commencing with Section 65580) of Chapter 3 of Division 1 of Title 7 of the Government Code.
(2) Be located in a city, county, or city and county that, at the time of application, has submitted its annual progress reports for 2017 through the most recently required annual progress reports.
(3) Include not less than 15 percent of affordable units, as follows:
(A) For projects that contain both rental and ownership units, units of either or both product types may be included in the calculation of the affordability criteria.
(B) (i) To the extent included in a project grant application, for the purpose of calculating the percentage of affordable units, the department may consider the entire master development in which the development seeking grant funding is included.
(ii) Where applicable, an applicant may include a replacement housing plan to ensure that dwelling units housing persons and families of low or moderate income are not removed from the low- and moderate-income housing market. Residential units to be replaced shall not be counted toward meeting the affordability threshold required for eligibility for funding under this section.
(C) For the purposes of this subdivision, “affordable unit” means a unit that is made available at an affordable rent, as defined in Section 50053, to a household earning no more than 60 percent of the area median income or at an affordable housing cost, as defined in Section 50052.5, to a household earning no more than 120 percent of the area median income. Rental units shall be subject to a recorded covenant that ensures affordability for at least 55 years. Ownership units shall initially be sold to and occupied by a qualified household, and shall be subject to a recorded covenant that includes either a resale restriction for at least 30 years or equity sharing upon resale.
(D) A qualifying infill project or qualifying infill area for which a disposition and development agreement or other project- or area-specific agreement between the developer and the local agency having jurisdiction over the project has been executed on or before the effective date of the act adding this section, shall be deemed to meet the affordability requirements of this paragraph if the agreement includes affordability covenants that subject the project or area to the production of affordable units for very low, low-, or moderate-income households.
(4) Include average residential densities on the parcels to be developed that are equal to or greater than the densities described in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2 of the Government Code, except that a project located in a rural area as defined in Section 50199.21 shall include average residential densities on the parcels to be developed of at least 10 units per acre.
(5) Be located in an area designated for mixed-use or residential development pursuant to one of the following:
(A) A general plan adopted pursuant to Section 65300 of the Government Code.
(B) A sustainable communities strategy adopted pursuant to Section 65080 of the Government Code.
(C) A specific plan adopted pursuant to Section 65450 of the Government Code.
(D) A Workforce Housing Opportunity Zone established pursuant to Section 65620 of the Government Code.
(E) A Housing Sustainability District established pursuant to Section 66201 of the Government Code.
(f) Funds awarded pursuant to this section shall supplement, not supplant, other available funding.
(g) (1) The department shall adopt guidelines for the operation of the grant program. The guidelines shall include provisions for the reversion of grant awards that are not encumbered within two years of the date an award was made, and for the recapture of grants awarded, but for which development of the related housing units has not progressed in a reasonable period of time from the date of the grant award, as determined by the department. The guidelines shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(2) The department guidelines shall include provisions that grant an application bonus of ___ percent to an adaptive reuse project that meets the requirements of this section. For purposes of this paragraph, “adaptive reuse project” means the same as defined in Section 65658 of the Government Code.
(h) For each fiscal year within the duration of the grant program, the department shall include within the report to the Governor and the Legislature, required by Section 50408, information on its activities relating to the grant program. The report shall include, but is not limited to, the following information:
(1) A summary of the projects that received grants under the program for each fiscal year that grants were awarded.
(2) The description, location, and estimated date of completion for each project that received a grant award under the program.
(3) An update on the status of each project that received a grant award under the program, and the number of housing units created or facilitated by the program.
(i) Notwithstanding paragraph (4) of subdivision (e), a city with a population greater than 100,000 in a standard metropolitan statistical area or a population of less than 2,000,000 may petition the department for, and the department may grant, an exception to the jurisdiction’s classification pursuant to subdivisions (d) to (f), inclusive, of Section 65583.2 of the Government Code, if the city believes it is unable to meet the density requirements specified in paragraph (4) of subdivision (e). The city shall submit the petition with its application and shall include the reasons why the city believes the exception is warranted. The city shall provide information supporting the need for the exception, including, but not limited to, any limitations that the city may encounter in meeting the density requirements specified in paragraph (4) of subdivision (e). Any exception shall be for the purposes of this section only. This subdivision shall become inoperative on January 1, 2026.

SEC. 5.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.