The 2021-2022 California Legislative Session closed on August 31 and was dominated by further efforts to address the state’s continued housing crisis. The flurry of major legislation passed by the Legislature and now on the Governor’s desk for signature focuses on expanding the types of development sites eligible for housing production and streamlining approval of that housing (AB 2011, SB 6, AB 2234), expanding the Density Bonus Law and providing enhanced density incentives (AB 682, AB 1551, AB 2334), and restricting minimum parking requirements (AB 2097). Taken together, these are potentially powerful tools to generate new housing opportunities as cities across California face significant housing production goals and work towards meeting state law deadlines for the ongoing Housing Element updates in the coming months.
This post focuses on the key housing-related bills that are, at the time of this publication, awaiting the Governor’s signature. The Governor has until September 30 to either sign or veto the bills. We will follow up with more in-depth coverage on the legislation ultimately signed by the Governor and insights on the resulting potential impacts on the housing landscape.
Repurposing Commercially Zoned Land for New Residential Development
The two blockbuster bills of 2022 – AB 2011 and SB 6 – both have the potential to result in major changes to the housing development pipeline by allowing new qualifying residential development on eligible commercially zoned sites. Both bills are the result of significant and hard-won efforts among legislators, development and pro-housing advocates, and organized labor. Each bill includes very specific eligibility requirements, applicable development standards, and density calculation metrics. The details are beyond the scope of this analysis, but the highlights are described briefly below. If signed by the Governor, both laws would take effect on July 1, 2023 – not in January 2023, as is the case for most new laws – and would remain in effect for 10 years, sunsetting in 2033 unless extended.
AB 2011 (Wicks) [Streamlined Approval Pathway for Qualifying Affordable or Mixed-Income Developments] – AB 2011 provides a streamlined, ministerial review process that is CEQA-exempt, comparable to the existing SB 35 law (see our previous posts on SB 35 here and here), for qualifying multifamily housing development projects on commercially zoned sites (where office, retail, or parking are principally permitted uses) that include requisite affordable housing units and meet certain wage and labor requirements, including paying prevailing wage. The goal of AB 2011 is to unlock significant affordable and mixed-income housing development potential in existing commercial zones.
The bill creates two primary pathways to qualify for its protections: (i) 100% affordable projects located on a commercially zoned site, or (ii) mixed-income projects located along a “commercial corridor,” meaning a street with a right of way width between 70 and 150 feet. The affordability requirements applicable to mixed-income projects are:
- Rental: (i) 8% very low income and 5% extremely low income, or (ii) 15% low income; and
- For-sale: (i) 30% moderate income, or (ii) 15% low income.
AB 2011 also requires development proponents to meet certain wage and labor standards, including that construction workers be paid at least the general prevailing rate of wages (but not requiring a “skilled and trained workforce” as required under SB 6). For developments of 50 or more housing units, construction contractors must also participate in an apprenticeship program or request dispatch of apprentices from a state-approved apprenticeship program, and make specified health care expenditures for construction craft employees.
AB 2011 imposes a detailed list of specific site exclusions, similar to the existing SB 35 ministerial streamlining site requirements, which must be reviewed on a site-specific basis to determine whether a project would potentially qualify for the bill’s protections.
SB 6 (Caballero) [Residential Use of Commercially Zoned Property Without Requiring Rezoning] – Similar to AB 2011, SB 6 allows qualifying housing or mixed-use development projects as a permitted use on commercially zoned (office, retail, or parking) parcels of 20 acres or less without requiring rezoning or other legislative approvals. However, SB 6 differs from AB 2011 in some important ways, including that it:
- Does not provide a new streamlined ministerial or CEQA-exempt approval pathway for these housing or mixed-use projects, which therefore may leave some discretion to local jurisdictions, although existing SB 35 streamlining can be used for SB 6 projects, so streamlining could be available, depending on the jurisdiction;
- Mandates that applicants not only commit to prevailing wages but also to a more robust and cost-intensive “skilled and trained workforce” requirement for construction work (unless fewer than two bids are received, in which case this heightened requirement does not apply during the rebid);
- Does not mandate housing affordability requirements, although local inclusionary requirements may still apply; and
- Contains fewer site-specific exclusions than AB 2011.
In sum and as a comparison, AB 2011 provides a streamlined approval process for affordable and mixed-income projects and does not require the use of a skilled and trained workforce, but the location restrictions, particularly the “commercial corridor” requirement for mixed-income projects, make its use more limited, whereas SB 6 more broadly allows residential or mixed-uses on commercially zoned parcels and does not have an affordability requirement, but it does not provide any streamlining and imposes more rigorous labor standards. Both bills would provide eligible projects with protection under the Housing Accountability Act, which limits a local agency’s ability to disapprove or condition the project to reduce density. Determining which applies to a site and which option is preferable will require a site-specific analysis.
Coblentz attorneys have extensive experience with the state’s latest housing laws, including SB 35, the Housing Accountability Act, and Density Bonus Law, and can help to navigate these newest complexities and opportunities.
Restricting Mandatory Minimum Parking Requirements Near Public Transit
AB 2097 (Friedman) – AB 2097 would generally prohibit a local agency from imposing minimum parking requirements on any residential, commercial, or other development project located within half a mile of a “major transit stop,” meaning existing or planned rail/bus rapid transit stations, a ferry terminal, or two or more bus lines with 15-minute frequencies during commute hours. The bill provides exceptions for local agencies to impose minimum parking standards for developments within half a mile of public transit if the agency makes specific written findings establishing that removing minimum parking standards would have a “substantially negative impact” on the jurisdiction’s ability to meet its state mandated affordable housing obligations; on special housing needs for the elderly or those with disabilities; or on existing residential or commercial parking within half a mile of a housing development project. However, local agencies would not be able to utilize that carve out for residential projects that contain less than 20 housing units or dedicate 20% of units to very low-, low-, or moderate-income households, students, the elderly, or persons with disabilities. AB 2097 would not make any changes to requirements for parking spaces for electric vehicle charging or persons with disabilities.
AB 2097 is a two-year bill that faced opposition last year from some affordable housing advocates who argued that eliminating minimum parking requirements could weaken developers’ incentive to utilize the state Density Bonus Law, which requires a minimum percentage of affordable housing units in exchange for providing relief from development standards, including parking requirements. The Governor is anticipated to hear similar arguments again this year as he considers this bill.
Key Changes to Density Bonus Law
AB 682 (Bloom) [New Provisions for Shared Housing Buildings and Revised Base Density Rules] – AB 682 expands the existing state Density Bonus Law program to apply to shared housing projects that provide qualifying percentages of affordable units. Shared housing projects are defined as residential or mixed-use structures with five or more shared units designed for permanent residential use of more than 30 days (i.e., dwellings that include a bathroom and kitchenette features) that share one or more common kitchens and dining areas. These qualifying shared housing projects may also include non-shared residential unit types or commercial uses subject to certain limitations and requirements.
AB 682 also makes several important changes to the definitions of “maximum allowable residential density” and “base density” that would impact how base density and resulting bonus density must be calculated per project. The bill states that density shall be calculated based on dwelling units per acre (DU/A), but if the applicable local land use controls do not provide this type of DU/A standard, then AB 682 would require that base density instead be calculated by estimating the realistic development capacity of the site based on applicable objective standards. Also, in the event that the base density allowed under the applicable zoning is inconsistent with the density allowed under an applicable specific plan or general plan, AB 682 would require that the greater of the density applies – under current law, the general plan density prevails in the event of conflict. Overall, these proposed changes may prove helpful in reducing ambiguity for calculating base and bonus density for these projects and ensuring that Density Bonus Law is interpreted in favor of producing the maximum number of housing units.
AB 1551 (Santiago) [Reinstating Density Bonuses for Commercial Projects] – AB 1551 reinstates the expired density bonus program for commercial/non-residential developments (previously enacted under AB 1934 in 2016). This would allow a commercial developer to obtain one of six commercial density bonuses – for example, 20% increases in floor area ratio, height or development intensity – by partnering with a housing developer to provide qualifying affordable housing (at least 30% total units available to low-income tenants, or 15% affordable to very low-income tenants) through either directly building affordable housing units, donating land for affordable housing units, or providing direct funding to an affordable housing developer for development of an affordable housing project. This commercial density bonus program would be extended through January 1, 2028.
Data provided to HCD indicates that this commercial density bonus program was not widely utilized when previously in effect from 2016 to 2022, and it is unclear whether developers will now take advantage of the same provisions, as extended through 2028.
AB 2334 (Wicks) [Enhanced Density Bonuses for Qualifying Affordable Projects in Low VMT Areas] – AB 2334 expands the Density Bonus Law to allow 100% affordable housing projects to receive unlimited density and a height increase of 33 feet or three stories if located within qualifying “very low vehicle travel areas” in 17 qualifying counties (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, Sacramento, and Santa Barbara). “Very low vehicle travel area” is defined as an “urbanized area . . . where the existing residential development generates vehicle miles traveled [VMT] per capita that is below 85[%] of either regional [VMT] per capita or city [VMT] per capita,” and additional analysis will be required at the local level to determine what specific areas within each county qualify for this enhanced density bonus.
This bill builds on the density bonus framework adopted under AB 1763 in 2019, which allowed for an enhanced density bonus for qualifying housing projects but only within a half mile of a major transit stop. AB 2334 aims to increase the number of eligible project sites to include all qualifying sites within very low vehicle travel areas that otherwise might lack the level of public transportation service required under AB 1763.
Streamlining Post-Entitlement Permitting Issuance
AB 2234 (Rivas) [New Deadlines and Process for Review and Approval of Post-Entitlement Permits] – AB 2234 establishes time limits and other procedural streamlining changes for review and approval of post-entitlement permits related to housing development projects. These time limits are similar to those required for initial entitlements and approvals under the Permit Streamlining Act but do not apply to post-entitlement permits. The categories of post-entitlement permits covered by this new law include permits for demolition, most excavation and grading permits, building permits, and permits for most offsite improvements. In brief, AB 2234 requires that a local agency determine whether an application for a post-entitlement phase permit is complete and provide written notice of its determination within 15 business days after application submission. If the local agency fails to meet initial deadlines, the permit application may be deemed complete. Once the application is complete, the local agency then has a relatively short window to approve or deny the application, 30 business days for projects with 25 units or fewer and 60 business days for projects with 26 units or more. Local agencies may extend these timelines by making written findings that the post-entitlement phase permit might have a specific, adverse impact, as defined, on public health or safety and that additional time is necessary to process the application. Notably, a violation of AB 2234 requirements constitutes a violation of the Housing Accountability Act, which establishes penalties – including potential monetary fines – for violations by cities and counties. Other limitations and carve outs apply, so close review of this bill is required to determine specific applicability.
The Coblentz Real Estate team continues to track changes in state and local legislation impacting housing production. Please contact us for additional information and any questions related to the impact of these new bills on land use and real estate development.