AgdaPkt 2016-05-23 Closed, Joint SA and PFA

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6.1.B. - Page 1 REPORT To the Honorable Mayor and City Council From the City Manager May 23, 2016 SUBJECT Letter of Support for AB 2502: Local Inclusionary Rental Housing Policies RECOMMENDATION Approve by motion the submittal of a letter from the City Council to State Assemblymember Kevin Mullin in support of AB 2502, which would restore the authority of local governments to enact inclusionary rental housing policies. BACKGROUND Inclusionary housing policies and regulations have been used for decades as a tool to address the shortage of affordable housing within their communities. Inclusionary housing policies and regulations may include requirements for specific percentages of affordable units within new multiple-family residential projects, affordability levels, and alternative methods for developers to satisfy affordable housing requirements. Recently inclusionary housing requirements have been challenged in court. In 2009, a state appellate court ruling in the Palmer v. City of Los Angeles case indicated that the state's Costa-Hawkins Rental Housing Act (Costa-Hawkins) prohibits local governments from creating affordable rental housing through local inclusionary programs. In 2013, legislation was proposed to restore the authority of local governments to enact inclusionary housing policies but the Governor vetoed it indicating that prior to making a legislative change regarding inclusionary housing; he stated he wanted to wait for the California Supreme Court to issue its decision on the California Building Industry Association (CBIA) v. City of San Jose case. In 2010, the CBIA filed a lawsuit against the City of San Jose, seeking to invalidate the city's inclusionary housing ordinance, which applied to ownership or "for sale" units. CBIA alleged the City of San Jose had not demonstrated that development of new residential housing created a need for additional affordable housing units and that requirements for the provision of affordable housing represents a "public taking" of private property without just compensation. In June 2016, the California State Supreme Court upheld San Jose's inclusionary housing ordinance for the provision of below market rate ownership or "for sale" units, finding that the ordinance was constitutional and a lawful exercise of the city's police powers. However, the restriction on affordable rental housing from the Palmer v. City of Los Angeles case remains.