CHAPTER
2.100. Vertical Housing Zones and Districts
53398.100.
(a) The Legislature finds and declares that with the dissolution of redevelopment agencies, public benefits will accrue if local agencies, excluding schools, are able to finance multifamily housing projects near high-transit areas through excess property tax increment financing.(b)The financing of multifamily housing projects near high-transit areas serves a public purpose by incentivizing and supporting the development of housing to alleviate the state’s housing crisis, reducing greenhouse gases emissions by locating housing near transit and thereby reducing travel times, and activating underused land near high-transit areas and revitalizing surrounding neighborhoods.
(b) Recognizing that multifamily housing near transit is a critical component to solving the state’s housing crisis, the Legislature has enacted legislation to promote such development through various means, including government-funded grants, required sustainable planning, and project streamlining.
(c) However, in order to successfully drive this type of development, additional legislation is needed to further incentivize higher-density development by developers. This law advances this goal by complementing and working in synergy with other housing and transit laws, including the Density Bonus Law (Section 65915), the streamlined approval process established by Section 65913.4, and exempting transit priority projects from the California Environmental Quality Act that meet
requirements set out in Chapter 4.2 (commencing with Section 21155) of Division 13 of the Public Resources Code.
(d) The development of multifamily housing near high-transit areas will also reduce greenhouse gas emissions by reducing travel times and activate and revitalize underused land in transit-rich urban areas.
53398.101.
Unless the context otherwise requires, the definitions contained in this section shall govern the construction of this chapter.(a)“Affected taxing entity” means any governmental taxing agency that levied or had levied on its behalf a property tax on all or a portion of the property located in the proposed district in the fiscal year prior to the designation of the district, but not including any county office of education, school district, or community college district.
(b)
(a) “County” means a county or a city and county.
(c)(1)“District” means a vertical housing district.
(2)A vertical housing district is a district within the meaning of Section 1 of Article XIII A of the California Constitution
(b) “Excess property tax” means property tax collected in excess as defined in Section 53398.104.
(d)
(c) “High-transit area” means an area located within one-half mile of a major transit stop, as defined by Section 21064.3 of the Public Resources Code, or a high-quality transit corridor, as defined by Section 21155 of the Public Resources Code.
(e)
(d) “Legislative body” means the city council, board of supervisors, or governing body of an affected
a taxing entity.
(f)
(e) “Landowner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of the land by the legislative body. The legislative body has no obligation to obtain other information as to the ownership of land, and its determination of ownership shall be final and conclusive for the purposes of this chapter. A public agency is not a landowner or owner of land for purposes of this chapter, unless the public agency owns all of the land to be included within the proposed district.
zone.
(g)
(f) “Multifamily housing project” means a project in a vertical housing zone where 70 percent of the gross floor area is developed as residential housing.
(h)
(g) “Parcel” means that unit of land identified on a recorded subdivision map or assigned an assessor’s parcel number by the county assessor of the
county in which the unit of land is located.
(i)“Public financing authority” means the governing board of the district established pursuant to this chapter.
(j)“Vertical housing district” means a legally constituted governmental entity separate and distinct from the city or county that established it pursuant to this chapter for the sole purpose of financing multifamily housing projects in a high-transit area as authorized by this chapter. A vertical housing district shall be a local agency for purposes of Chapter 9 (commencing with Section 54950).
(h) “Taxing entity” means any governmental taxing agency that levied or had levied on its behalf a property tax on all or a portion of the property located in the proposed vertical housing zone in the fiscal year before the designation of the vertical housing zone, but not including any county office of education, school district, or community college district.
(i) “Vertical housing project fund” means a fund established for each vertical housing zone project to provide excess property taxes.
(j) “Vertical housing zone” means an area in a high-transit area that a city or county has designated as such to make available excess property tax for vertical housing zone projects. If at least 51 percent of the area of a parcel
is located within the high-transit area designated by the city or county that adopts the resolution described in subdivision (a) of Section 53398.102, that parcel shall be deemed to be included within the vertical housing zone.
(k) “Vertical housing zone project” means a multifamily housing project in a vertical housing zone that has applied for and received excess property tax pursuant to this chapter.
53398.102.(a)A district may be established by a city or county and another affected taxing entity or entities located within that city or county by a resolution adopted by the legislative body of the city or county and the governing body of each of the other entities at a noticed public hearing held pursuant to Chapter 9 (commencing with Section 54950).
(b)In forming a district, the legislative body shall do all of the following:
53398.102.
(a) The legislative body of a city or county may enact a resolution, by majority vote, to designate a high-transit area located within the jurisdictional boundaries of that city or county as a vertical housing zone.
(b) The legislative body shall include all of the following in the resolution establishing a vertical housing zone adopted pursuant to subdivision (a):
(1) State A statement that a vertical housing district
zone is proposed to be established pursuant to this chapter and describe the boundaries of the proposed district,
zone, which may be accomplished by reference to a map on file in the office of the clerk of the city or in the office of the recorder of the county, as applicable.
(2) State that portions of the vertical housing district are within a high-transit area.
(3) Attach a map identifying high-transit areas in the established district.
(4) State that incremental A provision that provides excess property tax revenue attributable from the city or county and any other participating affected taxing entities within the district may
vertical housing zone can be used, pursuant to Section 53398.107, 53398.104, to finance multifamily housing projects within the district. vertical housing zone.
(5)State the need for the district and the goals the district proposes to achieve.
(5) A statement of the needs and goals of the vertical housing zone.
(6) A statement that the vertical housing zone will incentivize the development of denser and taller housing projects in the high-transit area designated by the city or county.
(c) Upon the creation of a district,
establishment of a vertical housing zone, the legislative body of the establishing city or county shall direct the city clerk or county recorder, as applicable, to mail a copy of the resolution creating the district
zone to each landowner within the district. zone.
53398.103.(a)The public financing authority shall have a membership consisting of either of the following:
(1)If a district has only one participating affected taxing entity, the public financing authority’s membership shall consist of three members of the legislative body of the participating entity, and two members of the public chosen by the legislative body. The appointment of the public members shall be subject to the provisions of Section 54974.
(2)If a district has two or more participating affected taxing entities, the public financing authority’s membership shall consist of three members from the legislative bodies of the participating entities, and a minimum of two
members of the public chosen by the legislative bodies of the participating entities. The appointment of the public members shall be subject to the provisions of Section 54974.
(b)Members of the public financing authority established pursuant to this chapter shall not receive compensation but may receive reimbursement for actual and necessary expenses incurred in the performance of official duties pursuant to Article 2.3 (commencing with Section 53232) of Chapter 2.
(c)Members of the public financing authority are subject to Article 2.4 (commencing with Section 53234) of Chapter 2.
(d)The public financing authority created pursuant to this chapter shall be a local public agency subject to the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950)), the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1), and the Political Reform Act of 1974 (Title 9 (commencing with Section 81000)).
53398.104.(a)The public financing authority may, by a majority vote, designate areas as vertical housing zones within the district.
(b)The resolution to create a vertical housing zone shall include all of the following:
(1)(A)A statement that the entirety of the vertical housing zone or zones is within a high-transit area.
(B)Where at least 51 percent of the area of a parcel is located within a high-transit area, that parcel may also be included in a vertical housing zone.
(2)A statement that the vertical housing zone will
incentivize the development of denser and taller housing projects in that area.
(3)A map and legal description of the vertical housing zone or zones.
(4)(A)A statement that incremental property tax revenue from the city or county and any other participating affected taxing entities may, pursuant to Section 53398.107, be used to finance multifamily housing projects within vertical housing zones.
(B)Specify the maximum portion of the incremental property tax revenue of the city or county and of each affected taxing entity proposed to be committed to a project located in a vertical housing zone for each year during which the district will receive incremental tax revenue for each vertical housing zone project. The portion need not be the same for all affected taxing entities. The portion may
change over time.
(C)A projection of the amount of tax revenues expected to be received by the district in each year during which the district will receive tax revenues, including an estimate of the amount of tax revenues attributable to each affected taxing entity for each year.
(c)The public housing authority shall notify nonparticipating taxing entities that levy property taxes on property within a vertical housing zone of the creation of the vertical housing zone.
(d)Upon the creation of a vertical housing zone, the public financing authority shall direct the city clerk or county recorder, as applicable, to mail a copy of the resolution to create the vertical housing zone to each landowner within the district.
53398.103.
(a) A taxing entity may agree to participate in a vertical housing zone established pursuant to Section 53398.102 by adopting a resolution by majority vote of the taxing entity’s legislative body.(b) A taxing entity that agrees to participate in a vertical housing zone pursuant to subdivision (a) shall, in that resolution, agree to provide excess property tax to a vertical housing zone project pursuant to Section 53398.104.
53398.105.53398.104.
(a) (1) The receipt of property tax revenue by district taxing entities from a vertical housing zone project pursuant to this section a city, county, or participating taxing entity pursuant to this chapter shall be divided as follows:(A) That portion of the taxes that would be produced by the rate upon which the tax is levied each
year by or for each of the affected taxing entities city, county, and participating taxing entity upon the total sum of the assessed value of the taxable property in the district vertical housing zone project as shown upon the assessment roll used in connection with the for taxation of the property by the affected taxing entity, last equalized prior to
before the effective date of the resolution adopted pursuant to Section 53398.107 to create the project, approval of the vertical housing zone project pursuant to Section 53398.106, shall be allocated to, and when collected collected, shall be paid to, the respective affected
participating
taxing entities as taxes by or for the affected participating taxing entities on all other property are paid.
(B) That portion of the levied taxes each year specified for the city, county, or other affected and participating taxing entity that has agreed to participate pursuant to Section 53398.102 entities in excess of the amount specified in subparagraph (A)
shall be allocated to, and when collected collected, shall be paid into, a project fund of the district. Unless and until the total assessed valuation of the taxable property in a district exceeds the total assessed value of the taxable property in the district as shown by the last equalized assessment roll referred to in subparagraph (A), all of the taxes levied and collected upon the taxable property in the district shall be paid to the respective affected reserved in the respective vertical housing zone project fund for each city, county, and participating taxing entities.
entity. When the term of the vertical housing zone project is completed, all moneys thereafter received from taxes upon the taxable property in the district on the vertical housing zone project shall be paid to the respective affected city, county, and participating taxing entities as taxes on all other property are paid.
(C) That portion of any ad valorem property tax revenue annually allocated to a city or county pursuant to Section 97.70 of the Revenue and Taxation Code for the city, county, or other affected
participating taxing entity that has agreed to participate pursuant to Section 53398.102, 53398.103, and that corresponds to the increase in the assessed valuation of taxable property the vertical housing project, shall be allocated to, and, when collected, shall be apportioned to, a reserved to the respective vertical housing project fund of the district for all lawful purposes of the district.
city, county, and participating taxing entities.
(2) When the term of the vertical housing zone project is completed, the revenues described in this subdivision paragraph (1) shall be allocated to, and when collected, shall be apportioned to, the respective city, county, or affected taxing entity.
and participating taxing entities.
(b) A multifamily housing project located within a vertical housing zone is eligible to shall, upon submitting an application pursuant to Section 53398.106, receive incremental excess property tax revenue from the district,
city, county, or participating taxing entity, pursuant to subdivision (a), if the following requirements are satisfied:
(1) The land of the proposed multifamily housing project is completely within a vertical housing zone of a district. zone.
(2) The multifamily housing project is entitled by the proper land use authority, legislative body, or otherwise, to develop the fully allowable residential density, including, but not limited to, any height limits, floor
area ratio, and unit limit consistent with any applicable building code.
(3) If a local jurisdiction has an inclusionary housing program in place at the time of the application, the developer shall do one of the following: comply with the local inclusionary housing program.
(A)Participate in the local inclusionary housing program.
(B)Provide 20 percent of the units of the project as workforce housing for 60 years at rental rates calculated as follows:
(i)The workforce set-aside rent shall be not more than 90 percent of the current market rent of the non-set-aside units in the project.
(ii)Multiply the workforce set-aside rent by 12. Divide the result by a 30-percent United States Department of Housing and Urban Development housing cost ratio standard. The resulting amount shall be divided by the area median income. The resulting amount shall be applied to the workforce set-aside rent for a period of 60 years.
(4) The multifamily housing project complies with Section 53398.106. 53398.105.
(c) (1) A vertical housing zone project that satisfies the requirements of this section and is approved pursuant to Section 53398.107 53398.106 shall receive incremental excess property taxes collected on the project for 15
30 years, except as provided in paragraph (3), that a project may receive excess property taxes for 35 years if it complies with the requirements of subdivision (d), beginning with the year the project is deemed completed.
(2) A vertical housing zone project is deemed completed when a certificate of occupancy has been issued by a building official for the city or county in which the project is located.
(3) (A)A vertical housing zone project that provides workforce housing or complies with local inclusionary housing requirements pursuant to paragraph (3) of subdivision (b) shall receive incremental property taxes for 20 years.
(B)A vertical housing zone project that is not subject to local inclusionary housing requirements may elect to provide workforce housing pursuant to subparagraph (B) of paragraph (3) of subdivision (b). A vertical housing zone project that elects to provide workforce housing pursuant to this subparagraph shall receive incremental property taxes for 20 years.
(d) A vertical housing zone project shall receive excess property taxes for 35 years provided the developer of the project agrees to comply with one of the following:
(1) Offer affordable units pursuant to a local inclusionary housing program, the Density Bonus Law (Section 65915), or other state laws or local ordinances.
(2) If no inclusionary housing units are required by a local inclusionary housing program and inclusionary housing units are not being provided pursuant to the Density Bonus Law (Section 65915) or other state laws or local ordinances, the developer provides either:
(A) Eleven percent of the total units of a vertical housing zone
project for very low income households, as defined in Section 50105 of the Health and Safety Code.
(B) Twenty percent of the total units of a vertical housing zone project for low-income households, as defined in Section 50079.5 of the Health and Safety Code.
(d)
(e) A developer seeking a vertical housing zone project designation for a multifamily housing project may request a waiver from project permitting fees and impact fees from the permitting agency of the city or county belonging to the district.
county.
53398.106.If the vertical housing zone project requires the demolition of housing that meets any of the following, a developer shall provide on-site housing as a replacement for units demolished at levels of affordability at the time of last occupancy prior to demolition:
53398.105.
A vertical housing zone project shall comply with the following requirements:(a) A vertical housing zone project may not be located on a site that would require demolition of one of the following types of housing:
(a)The housing
(1) Housing that is subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of moderate, low, or very low income.
(b)The housing
(2) Housing that is subject to any form of rent or price control through a public entity’s
valid exercise of its police power.
(c)The housing
(3) Housing that has been occupied by tenants within the past 10 years.
(b) A vertical housing zone project may not be located on the following sites:
(1) A site previously used for housing that was occupied by tenants that was demolished within 10 years before the developer submits a vertical housing zone project application.
(2) A site that would require demolition of a historic structure that was placed on a national, state, or local historic register.
(3) A site with property containing housing units that are occupied by tenants, and units at the property are, or were, subsequently offered for sale to the general public by the subdivider or subsequent owner of the property.
53398.107.53398.106.
(a) A developer of a multifamily housing project within a vertical housing zone of a district may apply for a vertical housing zone project designation by filing an application with the public financing authority. city or county that established the vertical housing zone. The application shall include all of the following:(1) A project description packet, including proposed construction, current state of the site, the number of units at both affordable and market rates, and nonresidential uses proposed for the site.
(2) All applicable and necessary entitlements demonstrating that the project is entitled to build the full height and density as described in paragraph (2) of subdivision (b) of Section 53398.105. 53398.104.
(3) A statement that any affordable units on site will remain affordable for 60
55 years by recordation of a covenant.
(b) (1)The public financing authority The city or county shall approve applications for designation of a multifamily housing project as a vertical housing zone project designations by majority vote.
upon a completed application submitted pursuant to subdivision (a).
(2)Prior to voting on whether to approve an application pursuant to paragraph (1), the public financing authority shall direct the city clerk or county assessor to notify landowners within a 150-foot radius of the multifamily housing project 20 days prior, by mail, of the initial public meeting to consider the designation of a vertical housing zone project.
(c) Upon approval, the developer and the public financing authority
city or county shall execute a binding agreement that includes both of the following:
(1) A commitment by the public financing authority city or county to provide a excess property tax increment to the vertical housing zone project, upon completion, for a period of 15 or 20
30 or 35 years, as provided in Sections 53398.105 and 53398.108. 53398.104 and 53398.107.
(2) A commitment by the developer that it will do all of the following:
(A) Develop the project fully as entitled.
(B) Comply with Section 53398.106. 53398.105.
(C) Comply with subparagraph (3) of subdivision (b) of Section 53398.105,
53398.104, as applicable.
(D)Not seek additional public funding in the form of grants, loans, or other aid.
53398.108.53398.107.
Following the receipt of excess property tax increment proceeds pursuant to Section 53398.105, 53398.104, the district
city, county, and participating taxing entities shall annually disburse the funds to completed vertical housing zone projects pursuant to any agreements entered into pursuant to subdivision (c) of Section 53398.107. agreements entered into under subdivision (c) of Section 53398.106.
