The 2023 California Legislative Session, which closed on September 14, was dominated yet again by efforts to address the state’s continued housing crisis. For the last several years, we have written about many bills enacted with the goal of increasing housing production. Although these efforts have helped move the state toward its housing goals, the practical results—new units of housing built—have been slower to materialize than many have hoped.
This lesson has not been lost on pro-housing legislators, who broadly focused their efforts this session on removing barriers to achieving those results: targeting excessive CEQA review (AB 1633 and AB 1307), streamlining housing development and discretionary post-entitlement permitting (SB 423 and AB 1114), and enforcing a state-imposed streamlined process for general plan-compliant projects (AB 821).
This post focuses on the key housing-related bills that have already been signed by Governor Newsom, or are, at the time of this publication, awaiting the Governor’s signature. He has until October 14 to either sign or veto the bills remaining on his desk.
Targeted CEQA Reforms to Increase Housing Production
AB 1633 (Ting) [Holding Jurisdictions Accountable for Abusing the CEQA Review Process] – The premise of AB 1633 is simple: local jurisdictions must not use CEQA to delay zoning-compliant housing projects. The Housing Accountability Act (HAA) prevents local jurisdictions from disapproving or reducing the density of housing projects that comply with zoning and the Permit Streamlining Act provides strict timelines within which local jurisdictions must approve or deny projects. But neither law restricts a local jurisdiction from unreasonably delaying a project’s CEQA review.
AB 1633 intends to close this loophole. To do so, the law bolsters the HAA’s definition of “disapprove the housing development project” to include any instance in which a local government:
- fails to make a determination of whether the project is exempt from CEQA or commits an abuse of discretion; or
- fails to adopt a negative declaration or addendum, certify an environmental impact report, or approve another comparable environmental document for the project, if certain conditions are satisfied.
After an applicant notifies a local jurisdiction of a failure to take CEQA action, the jurisdiction has a 90-day period to make a CEQA determination, which can be extended in limited circumstances, but not indefinitely. And unlike other recent pro-housing bills giving developers the power to streamline CEQA (e.g., AB 2011 and SB 35), AB 1633 is not limited to projects with affordable units or special labor commitments.
Instead, the law would apply to infill projects with at least 15 dwelling units per acre (i.e., townhome or rowhouse projects, or denser). Project sites must meet SB 35’s extensive environmental criteria, which exclude sites on sensitive environmental areas, such as wetlands, flood zones, and hazardous waste sites, among others.
As with other violations of the Housing Accountability Act, a local jurisdiction can be liable for attorney’s fees and potentially penalties if it violates AB 1633. At the other end of the spectrum, the bill also makes it more difficult for project opponents to recover attorney’s fees when challenging housing projects, in most cases prohibiting the award of attorney’s fees if a local jurisdiction acted in good faith when approving a housing project. AB 1633 sunsets on January 1, 2031 unless extended.
AB 1307 (Wicks) [Providing More CEQA Certainty and Clearing Roadblocks to University Housing] – Earlier this year, the First District Court of Appeal in Make U.C. a Good Neighbor v. Regents of University of California held that the University of California must analyze “the potential noise impacts relating to loud student parties” as part of the CEQA analysis for the proposed student housing project at Berkeley’s People’s Park. Although noise is one of the original environmental impacts under CEQA, the requirement to analyze noise generated by residents of a housing development was a novel reading of the law. That decision is now pending before the California Supreme Court.
AB 1307 responds directly to this court ruling and effectively eliminates the “people as pollution” argument under CEQA by stating that noise generated by residential project occupants and their guests, “is not a significant effect on the environment.” In addition, AB 1307 helps clear the way for more than 1,200 units of U.C. housing at People’s Park and will streamline other housing development at California Community Colleges, California State Universities, and other U.C. campuses by eliminating the requirement that these institutions consider alternatives to the location of a residential or mixed-use housing project if: (1) the project is located on a site smaller than 5 acres that is substantially surrounded by qualified urban uses, and (2) the project has already been evaluated in the environmental impact report for the institution’s most recent long-range development plan.
On September 7, the Governor signed AB 1307 into law, which took immediate effect as an urgency statute to address California’s housing crisis.
Streamlining Development and Post-Entitlement Permitting
SB 423 (Wiener) [Updating the SB 35 Ministerial Process for Mixed-Use and Multifamily Projects] – This bill both extends and expands the reach of SB 35, a groundbreaking 2017 law that has primarily been used by affordable housing developers to obtain ministerial approvals on an expedited schedule, without CEQA review, for projects consistent with objective zoning and design standards. Projects can use State Density Bonus Law to obtain relief from objective standards and still take advantage of SB 35, creating a powerful combination.
SB 423 effectively reduces the amount of onsite affordable units needed to qualify for SB 35 in certain jurisdictions from 50% of project units to just 10%, opening the door for more mixed-income projects. To qualify, projects must pay prevailing wages, and must use skilled and trained workforces for projects exceeding 85’ in height.
The reduction to 10% affordable will happen at different times in different jurisdictions, but generally will occur in four phases: (1) January 1, 2024, for jurisdictions without a compliant Housing Element, until compliance is achieved; (2) mid-2024, for San Francisco specifically; (3) 2025 for Southern California jurisdictions with a compliant Housing Element that are not making adequate progress toward their market rate Regional Housing Needs Allocation (“RHNA”) goals; and (4) 2027 for other Bay Area jurisdictions not making adequate progress toward their market rate RHNA goals. Because the 6th Cycle RHNA numbers are so high, many, if not most, jurisdictions likely will not be making adequate progress during these timeframes. A brief table introducing these timelines is below:
|Council of Governments||6th Cycle Housing Element Planning Period||
Earliest SB 35 Recategorization
|ABAG (Bay Area)||1/31/23–1/31/31||2027 (excluding San Francisco, which is mid-2024)|
|SCAG (Los Angeles)||10/15/21–10/15/29||2025|
|SANDAG (San Diego)||4/30/21–4/30/29||2025|
HCD tracks Housing Element progress for all jurisdictions, which can be found here. As more jurisdictions change to 10% affordable for SB 35 eligibility, the permitting process for many housing projects could change radically. This is particularly true in jurisdictions such as San Francisco where the use of union labor on large projects is common.
AB 1114 (Haney) [Streamlining San Francisco’s Discretionary Post-Entitlement Permitting] – We previously wrote about AB 1114, which targets appeals of San Francisco post-entitlement building permits for housing projects. The bill builds on AB 2234, a bill that applied strict review timelines statewide for local jurisdiction response to and issuance of non-discretionary post-entitlement building permits. AB 1114 targets San Francisco’s unique discretionary post-entitlement building permit process, applying AB 2234’s review and issuance timelines and blocking appeals of building permits for projects that are, “at least two-thirds residential.”
Currently in San Francisco, only projects that have received a Conditional Use Authorization from the Planning Commission are protected from post-entitlement building permit appeals to the Board of Appeals. Expanding this protection to all San Francisco housing projects is particularly important in the context of expanded use of non-discretionary entitlement processes under SB 35/423. One inspiration for the bill was 2550 Irving Street, a 90-unit affordable housing project in the Sunset District, which was approved under SB 35 quickly, but was then subjected to multiple building permit appeals. Without a Conditional Use Authorization, the project had no protection from such appeals, but would be protected under AB 1114. San Francisco has historically had the longest processing times for post-entitlement permits. However, because such permits would now be non-discretionary, they will be subject to the strict review timelines in AB 2234.
State Mandates on Local Planning and Zoning
AB 821 (Grayson) [Enforcing a Streamlined Process for General Plan-Compliant Projects] –State law requires that the zoning ordinances of a city or county be consistent with its general plan. If a zoning ordinance is amended in a manner that makes it inconsistent with a local jurisdiction’s general plan, state law allows residents and property owners to take the jurisdiction to court to enforce compliance with the law. However, if the local jurisdiction amends its general plan in a manner that makes it inconsistent with the zoning ordinance, there is currently no built-in enforcement mechanism.
To address this issue, AB 821 requires that if a development application is submitted for certain projects consistent with the general plan, the local jurisdiction must either make the zoning ordinance consistent with the general plan within 180 days from the receipt of the development application, or if it does not do so, the local jurisdiction must process the development application based on the general plan and any zoning provisions that are not inconsistent. AB 821 also provides a legal remedy for residents and property owners to ensure compliance with these requirements. The key for this bill is that it allows general plan-compliant projects to move forward in a timely manner and removes the possibility of a protracted local rezoning process that can stymie housing production. It is noteworthy that AB 821 is not limited to housing projects.
The Coblentz Real Estate Team has extensive experience with the state’s latest housing laws, including SB 35, AB 2011, SB 6, the Housing Accountability Act, the Permit Streamlining Act, and Density Bonus Law, and can help to navigate the laws’ complexities and opportunities. Please contact us for additional information and any questions related to the impact of these new bills on land use and real estate development.