Governor Signs 31 New Housing Laws to Address State’s Housing Crisis

Governor Gavin Newsom signed 27 housing bills into law on September 28, 2021. With the addition of the four housing bills he signed on September 16 (SB 8, 9, and 10 and AB 1174), that makes a total of 31 new housing laws set to take effect January 1, 2022 unless otherwise noted below. Here are the highlights:

Bills Signed on September 29

SB 290 – Senator Nancy Skinner (D-Berkeley) – Expands California’s density bonus law, which allows developers to build projects with a greater number of units, provided the project includes affordable units, to include housing for college students. Specifically, SB 290 requires cities and counties to grant a density bonus to housing projects when at least 20% of the total units are set aside for lower-income students and requires cities and counties to grant at least one concession/incentive for this type of housing project.

AB 1029 – Assemblymember Kevin Mullin (D-South San Francisco) – Seeks to preserve the state’s expiring supply of rental affordability agreements by offering additional points in the scoring of programming applications for housing and infrastructure programs to cities that negotiate extensions with property owners. The types of pro-housing local policies include policies that encourage the planning, approval and construction of housing including financial incentives, reduced parking requirements and the adoption of by-right zoning ordinances. It’s estimated that 30,000 units currently under so-called affordability covenants will expire over the next decade. This bill takes effect immediately.

AB 1584 – Committee on Housing and Community Development (Housing omnibus) – This will make void and unenforceable any covenant, restriction or condition that would prohibit or unreasonably restrict the construction or use of an accessory dwelling unit (ADU) or junior ADU on a parcel zoned for single-family residential use under certain circumstances.

AB 787 – Assemblymember Jesse Gabriel (D-Encino) – Authorizes a planning agency to count in its annual report to the Department of Housing and Community Development (HCD), up to 25% of a jurisdiction’s moderate-income regional housing needs allocation, the number of units in an existing multi-family building that were converted to deed-restricted rental housing for moderate-income households by the imposition of affordability covenants and restrictions for the units. If exercised by the jurisdiction, it would authorize a city or county to reduce its share of regional housing needs for the income category of the converted units on a unit-by-unit basis.  HCD is not required to implement the provisions of the bill until January 1, 2023.

SB 478 – Senator Scott Wiener (D-San Francisco) – Ensures that when cities zone for small apartment/multi-family buildings — between 3 and 10 units — those buildings can be built and are not effectively banned by way of imposition of restrictive square footage caps. Specifically, SB 478 sets minimum standards on floor area ratios (FAR) and minimum lot sizes for these small multi-family buildings.

Current state law already preempts local FAR regulations from hindering the production of ADUs; when building an ADU, local FAR standards are void. SB 478 would simply require a FAR of 1.0 on lots zoned for 3-7 units, and a FAR of 1.25 on 8-10 units, rather than completely nullify them, as is the case with ADUs. This law applies in urbanized areas in multi-family residential or mixed-use zones.

SB 478 also provides that cities cannot deny a project solely on the basis that the lot size does not meet the local agency’s requirements for minimum lot size. Additionally, jurisdictions will not be allowed to impose a lot coverage requirement that would preclude a housing development from achieving the allowed FAR.

AB 602 –  Assemblymember Tim Grayson (D-Concord) –  Sponsored by the pro-housing group California YIMBY (Yes In My Backyard), this law reforms the way cities charge developers fees to build — in an attempt to make it more affordable to create housing. This bill requires:

• A local agency that conducts an impact fee nexus study to follow specific standards and practices, including, but not limited to, (1) that prior to the adoption of an associated development fee, an impact fee nexus study be adopted, (2) that the study identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is necessary, and (3) if the study is adopted after July 1, 2022, either calculate a fee levied or imposed on a housing development project proportionately to the square footage of the proposed units, or make specified findings explaining why square footage is not an appropriate metric to calculate the fees.
• A local agency that calculates fees proportionately to the square footage of the proposed units be deemed to have used a valid method to establish a reasonable relationship between the fee charged and the burden posed by the development
• The posting of written fee schedules or a link directly to the written fee schedule on the local agency’s website
• The collection of fees and exactions upon the issuance of a certificate of occupancy or the final inspection, whichever occurs last

SB 791 – Senator Dave Cortese (D-San Jose) – Establishes the California Surplus Land Unit within HCD with the primary purpose of facilitating the development and construction of residential housing on local surplus land. This bill authorizes the Surplus Land Unit to, among other things, facilitate agreements between housing developers and local agencies that seek to dispose of surplus land; provide advice and assistance to local agencies with surplus land and developers that seek to develop housing on the surplus land; and collaborate with applicable state agencies to assist housing developers and local agencies with obtaining grant financing that facilitate the construction of housing on surplus land.

Bills Signed on September 16

SB 8 – Senator Nancy Skinner (D-Berkeley) – Extends SB 330 (aka Housing Crisis Act of 2019) by five years to January 2030. SB 330 was enacted to encourage housing production by accelerating the approval process for housing projects, curtailing local governments’ ability to downzone, limiting fee increases on housing applications and implementing accountability provisions.

SB 9 – Senator Toni Atkins (D- San Diego) concerns divisions of single-family zoned property.  The bill was heavily debated, but the key provisions are identified below.

• Declares that access to affordable housing is a matter of statewide concern and not a municipal affair; therefore SB 9 applies to all counties and cities, including charter cities
• Mandates ministerial approval of an application for a housing development, including a parcel map, that splits a parcel into 2 parcels and contains no more than 2 residential units on each lot without a hearing if:
  • The parcel is zoned for single-family residential
  • The housing is proposed within a city, at least some portion of the boundaries of the parcel must be in an urbanized area or urban cluster, or, if the housing is in an unincorporated part of a county, the parcel must be wholly within the boundaries of an urbanized area or urban cluster, as designated by the United States Census Bureau
  • The split results in 2 parcels of approximately equal lot area. A parcel may not be smaller than 40% of the original parcel’s lot area; each new lot must be at least 1,200 square feet in size
  • The project will not demolish more than 25% of the existing exterior structural wall unless permitted by local ordinance
  • The project or property split does not result in the demolition or alteration of:
    • Affordable or rent-controlled housing;
    • Market-rate housing that has been occupied by a tenant in the past 3 years;
    • The property owner exercised the right to withdraw accommodations from rent or lease within the last 15 years; or
    • The property is listed as a historic landmark or is located within a historic district
  • Any unit created as a result will not be used for short-term rentals, and must be rented for a term longer than 30 days
  • In an effort to respond to concerns that SB 9 would benefit developers, the law requires an applicant to sign an affidavit indicating that they intend to occupy one of the housing units as a principal residence for a minimum of three years from the date of the approval of the lot split
  • The project is consistent with objective zoning and design review standards and lot split conforms to all applicable objective requirements of the Subdivision Map Act
  • The parcel being subdivided has not been part of a prior subdivision using the urban lot split process permitted under SB 9
  • Under SB 9, local governments and officials may not:
  • Impose objective zoning, subdivision and design standards that would have the effect of physically precluding the construction of up to 2 units at least 800 square feet in floor area
  • Require a setback for an existing structure or a structure constructed in the same location and to the same dimensions as an existing structure. However, a local government may require a setback of up to 4 feet from the side and rear lot lines.
  • Deny the project unless a finding can be made that it would have a “specific, adverse impact” on “public health and safety or the physical environment” and there are no feasible and satisfactory mitigation options.
  • Impose regulations that require dedications of rights-of-way or the construction of off-site improvements as a condition of issuing a parcel map for an urban lot split
  • Require the correction of nonconforming zoning conditions
• SB 9 also extends the limit on the additional time period that may be provided for utilization of tentative maps from 12 to 24 months

SB 10 – Senator Scott Wiener (D-San Francisco) – Allows a local agency to adopt (without CEQA review) an ordinance to allow 10 residential units per parcel on property near transit or in urban infill areas. This bill only provides a CEQA exemption for the agency’s upzoning, but the actual project will need to comply with CEQA. This law further allows the local agency, by a 2/3 vote, to override voter-approved zoning. AIDS Healthcare Foundation filed a lawsuit in Los Angeles County Superior Court on September 30 challenging this latter provision in the law.

AB 1174 –  Assemblymember Tim Grayson (D-Concord) – Clarifies and expands upon SB 35, which was adopted in 2017 to streamline housing production in jurisdictions not meeting their Regional Housing Needs Assessment numbers. AB 1174 clarifies the length of validity of certain approvals pursuant to SB 35, when newer objective standards can apply to a previously approved project and subsequent permits are sought, and other matters specific to SB 35. It was adopted as an urgency measure and took effect immediately.

Wendel Rosen LLP land use attorneys Amara Morrison, Patricia Curtin and Todd Williams will discuss these new housing rules at their upcoming webinar, Streamlined Housing Approval with SB35 and New Pro-Housing Legislation, on October 20, 2021. To register for the webinar, visit www.wendel.com/webinars.