Affordable Housing Archives

Increased State Density Bonus Available Next Year

November 8, 2023November 8, 2023 | Sabrina Eshaghi

As we’ve previously covered, Governor Gavin Newsom signed a substantial amount of housing bills into law this year. Two of the most notable pieces of legislation will significantly increase the state density bonus permitted under state law and will make noteworthy changes to SB 35. Below is a more in-depth look at the amendments to the State Density Bonus Law as well as an overview of the potential impacts of the amendments to SB 35 in San Francisco.

AB 1287 – State Density Bonus Law

Beginning on January 1, 2024, AB 1287 will allow an additional 20% to 50% density bonus on top of the existing maximum bonus for projects that provide additional affordable housing units. Currently, the maximum density bonus allowed under the State Density Bonus Law is 50%, which can be accomplished by providing 15% very low income, 24% low income, or 44% moderate income units. The new amendments will allow projects that qualify for a 50% bonus under the current law to provide additional very low income or moderate income affordable housing units in exchange for an additional density bonus based on the sliding scale shown below. For example, a project that provides an additional 5% very low income units, for a total of 20% very low income units, would be subject to an additional 20% bonus, for a total bonus of 70%.

The only limit placed on projects that utilize this additional density bonus is that no more than 50% of the total units can be restricted as affordable.

The amendments also allow up to four concessions for projects that include a total of at least 16% of the units for very low-income households or at least 45% for moderate income households in for sale developments.

The bill also makes some tweaks to the requirements for 100% affordable housing projects that are proposed under the State Density Bonus law.

SB 35’s Future in San Francisco

SB 35 is a state law that offers streamlined ministerial approval for projects in cities that haven’t met their Regional Housing Need Allocation (RHNA) goals in exchange for providing affordable housing and agreeing to certain labor requirements. SB 423, which will take effect on January 1, 2024, includes a number of amendments to SB 35, as discussed in detail here.

San Francisco is currently falling short of meeting its RHNA goals for low income housing, but not above moderate income housing. So, in order to qualify for SB 35, a project in San Francisco must provide at least 50% of its units (not including units granted via a density bonus) to low-income households.

However, due to the increase in the state’s housing production goals allocated to San Francisco for the current RHNA cycle (2023-2031), it is anticipated that the City will not meet its goals for above-moderate housing in the next reporting period. If the California Department of Housing and Community Development makes that determination next summer, then a rental project will qualify for SB 35 streamlining by providing 10% of its units as affordable to very low income households or 20% of its units to low income households. An ownership project can qualify by providing 10% of its units as affordable to low income households.

SB 35 allows for ministerial approval, meaning it eliminates environmental review under CEQA and discretionary entitlements from the Planning Commission. It also imposes a maximum 6-month time frame for approval of planning entitlements. If San Francisco becomes a “10% jurisdiction,” it could unlock the ability to pursue projects that are otherwise cost-prohibitive due to long processing and approval timelines.

Together, SB 35 and the new additional density bonus could significantly spur housing development in San Francisco next year.

Authored by Reuben, Junius & Rose, LLP Attorney Sabrina Eshaghi.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

2023 Housing Legislation Round-Up

October 18, 2023October 18, 2023 | Justin A. Zucker

Like last year, 2023 was a stellar year for housing legislation in California. Last week, Governor Gavin Newsom signed into law more than forty-five bills related to housing and housing production. Below is a brief overview of thirteen housing bills signed by the Governor becoming effective January 1, 2024, relating to the State Density Bonus Law, housing policies, and parking.

Density Bonus Law Updates

AB 1287 (Alvarez) Additional Density Bonus Layer. This bill adds another density bonus layer option to the State Density Bonus Law. If additional very low income or moderate income units are provided, a project is eligible to receive up to an additional 20% to 50% density bonus on top of the base density bonus, provided no more than 50% of the total units would be restricted as affordable. In addition, this bill alters the definition of “maximum allowable residential density” to mean the greatest number of units allowed under the zoning ordinance, specific plan, or land use element of the general plan, or, if a range of density is permitted, the greatest number of units allowed by the range. This bill clarifies that a local government is not prohibited from requiring reasonable documentation to establish eligibility for a requested density bonus and parking ratios. This bill also authorizes up to four incentives or concessions for projects that include at least 16% of the units for very low income households or at least 45% of the units for moderate income households in for sale projects.
SB 713 (Padilla) Development Standard Definition Adjustment. This bill amends the definition of “development standard” to include regulations adopted by a local government or enacted by the local government’s electorate. SB 713 codifies a recent technical assistance memorandum from the Department of Housing and Community Development (“HCD”) that explicitly re-states existing law, that local governments cannot impose standards that stop state density bonus projects from moving forward.

California Environmental Quality Act (“CEQA”)

SB 423 (Wiener) SB 35 Extension and Expansion. This bill extends SB 35 (2017, Wiener), which is currently set to expire January 1, 2026, and expands its applicably, including into the coastal zone. A more robust overview of SB 423 can be found here.
AB 1449 (Alvarez) 100% Affordable Housing Exemption. This bill, until January 1, 2033, exempts 100% affordable housing projects from CEQA. While there are other tools available to make 100% affordable housing projects ministerial and not subject to CEQA, e.g., SB 35 (2017, Wiener), there are no workforce standards tethered to AB 1449.
AB 1633 (Ting) Housing Accountability Act Protection Extended to CEQA Review. This bill would expand the Housing Accountability Act’s definition of “disapprove the housing development project” to include any instance when a local agency fails to issue an exemption, fails to adopt a negative declaration or addendum for the project, or certify an environmental impact report or another comparable environmental document. This bill also clarifies “that attorney’s fees and costs shall rarely, if ever, be awarded if a local agency, acting in good faith, approved a housing development project.” The bill’s provisions sunset January 1, 2031.

Accessory Dwelling Units (“ADUs”)

AB 976 (Ting) No Owner-Occupancy Requirement. This bill makes permanent an existing prohibition to imposing an owner-occupancy requirement on an ADU that sunsets January 1, 2025.
AB 1033 (Ting) ADU Condominiumization. This bill allows a local jurisdiction to permit condominiumization and sale of ADUs separate from the primary residence.
AB 1332 (Carillo) Pre-Approved ADU Plan Sets. This bill requires jurisdictions, by January 1, 2025, to develop a program for the preapproval of ADU plans. This bill also requires local governments to approve a detached ADU project utilizing preapproved plans within thirty days.

Housing Policies

SB 439 (Skinner) Priority Housing Development Projects. This bill would allow a party to bring a motion to strike any part of a pleading in a lawsuit challenging approval of a priority housing development project within sixty days of service of the complaint or administrative record. A “priority housing development” is defined as a 100% low income affordable project.
AB 1218 (Lowenthal) SB 330 Amendments. This bill tweaks SB 330 (2019, Skinner) extending the protected unit demolition and replacement controls, which currently only apply to housing development projects, to projects that are not considered housing developments. This bill would also place the restrictions on demolition of protected units and replacement requirements into separate provisions (Government Code Sections 66300.5 and 66300.6) that will apply permanently. Those controls would otherwise become inoperative on January 1, 2030.
AB 1485 (Haney) State Intervention in Actions Involving Violations of Housing Laws. This bill grants the Attorney General and HCD an unconditional right to intervene in any lawsuit filed over a potential violation of an enumerated list of state housing laws, including, among others, the Housing Accountability Act, Housing Crisis Act of 2019, and the Density Bonus Law.
AB 572 (Haney) HOA Assessment Limits for Affordable Units. This bill places a cap on assessment increases a condominium homeowners association (“HOA”) could impose on a deed-restricted affordable unit, subject to certain exceptions. A more robust overview of AB 572 can be found here.

Parking Controls

AB 1308 (Quirk-Silva) Parking Requirements for Single-Family Homes. This bill prohibits a local jurisdiction’s ability to increase the applicable minimum parking requirements that applies to a single-family residence as a condition of approval of a project to remodel, renovate, or add to a single-family residence, provided it does not cause the single-family residence to exceed any maximum size limit imposed by the applicable zoning regulations, including, but not limited to, height, lot coverage, and floor-to-area ratio. This bill complements AB 916 (2022, Salas), which prohibits cities from requiring a public hearing as a condition of reconfiguring space to increase bedroom count within an existing dwelling unit.
AB 1317 (Carrillo) Unbundled Parking for Residential Property. This bill requires landlords to “unbundle” parking costs from rent for leases or rental agreements for residential property in Alameda, Fresno, Los Angeles, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Clara, Shasta, and Ventura counties, commencing or renewed on or after January 1, 2025.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker.

SF’s Proposed BMR and Impact Fee Changes

July 12, 2023July 12, 2023 | Mark Loper

Late last month, Supervisors Peskin and Safai introduced long-awaited legislation lowering San Francisco’s affordable housing requirements for certain approved and proposed projects, as well as reducing impact fees. This week’s alert summarizes the proposal as it currently stands.

Changes for pipeline projects

Sponsors of projects with 25 or more units that were or are approved before November 1, 2023 and have not received a first construction document (usually the architectural addendum)—so-called “pipeline projects”—are allowed to apply for a lower affordable housing obligation, additional time to obtain a site permit, and changes to density bonus law compliance.

The affordable rates are proposed to be reduced across the board as follows:

Affordable housing fee. 16.4%, for both ownership and rental projects. If the project is in an area with a specific affordable housing fee, the applicable percentage is 54.5% of the rate for rental projects in the area or 16.4%, whichever is higher.
On-site. 12% for both ownership and rental projects, with 8% for low-income, 2% moderate-income, and 2% middle-income. For projects in areas with specific on-site BMR requirements, the rate is 54% of the rate for rental housing projects in that area or 12%, whichever is higher.
Off-site. 16.4%, for both ownership and rental projects. If the project is in an area with specific off-site BMR requirements, the applicable percentage is 54.5% of the rate for rental projects in the area or 16.4%, whichever is higher.

Project sponsors can also request an extension of performance periods for their projects up to May 1, 2029. The legislation does not require the City to extend all performance periods to May 2029, though. The current practice is for three-year extensions starting on the date of City approval.

The legislation has two “use it or lose it” provisions. First, the City needs to grant the request for reduced affordable rates by November 1, 2026. Because the deadline is not the date that the request is submitted to the City but the date of City approval, sponsors should make sure to apply comfortably before the end of the deadline. Also, sponsors need to get a first construction document—as noted above, usually the architectural addendum—on or before May 1, 2029.

Finally, density bonus pipeline projects are allowed to request modifications to the number and type of concessions, incentives, and waivers, as well as the number of affordable units. This recognizes that density bonus projects may need to adjust their compliance with the density bonus law if the project’s on-site affordable unit count decreases.

As noted above, sponsors must ask for a reduction; the changes do not apply automatically. Most projects will be approved by City staff administratively, assuming the Planning Commission agrees to delegate its authority. The legislation also would allow staff to extend the time to get a site permit, instead of going to the Planning Commission. Projects proposing “significant modifications” need to go to the Planning Commission, though. This includes projects whose unit count would change by more than 20%, floor area would change by more than 10%, and whose unit typology would change from dwelling units to group housing.

Projects entitled between November 2023 and November 2026

The ordinance would also reduce the affordable housing requirements for non-pipeline projects entitled between November 1, 2023 and November 1, 2026. The rates are proposed as follows:

Affordable housing fee. 20.5%, for both ownership and rental projects. If the project is in an area with a specific affordable housing fee, the applicable percentage is 68% of the rate for rental projects in the area.
On-site. 15% for both ownership and rental projects, with 10% for low-income, 2.5% moderate-income, and 2.5% middle-income. For projects in areas with specific on-site BMR requirements, the rate is 68% of the rate for rental housing projects in that area.
Off-site. 20.5%, for both ownership and rental projects. If the project is in an area with a specific off-site requirement, the applicable percentage is 68% of the rate for rental projects in the area.

These projects also have a “use it or lose it” provision: their first construction document needs to be received within 30 months of entitlement approval or approval on appeal, whichever happens later, and building permit approval for projects that do not require discretionary entitlements.

Permanent affordable housing changes

The ordinance would make a third and permanent change to San Francisco’s affordable requirements:

Affordable housing fee. For projects with 25 or more units, 27% for condos and 24.5% for rental projects.
On-site. 15% for projects with 10-24 units. For projects with 25 or more units, 20% for condos and 18% for rentals. Condos need to be 10% low-income, 5% moderate income, and 5% middle income. Rentals need to be 10% low-income, 4% moderate-income, and 4% middle-income.
Off-site. For projects with 25 or more units, 27% for condos and 24.5% for rentals. Condos need to have 12% low-income, 7.5% moderate-income, and 7.5% middle-income. Rentals need to have 12.5% low-income, 6% moderate-income, and 6% middle-income.
UMU and Divisadero NCT. Different Affordable requirements would apply to UMU and the Divisadero NCT.

Starting in 2028, the on-site percentage would increase by 0.5% annually, up to a maximum of 26% for condo projects and 24% for rentals.

Impact fee reductions until November 2026

The ordinance also proposes to reduce most development impact fees by 33%, so long as the fees are assessed by November 1, 2026, and the project gets a first construction document within 30 months of entitlement approval or approval on appeal, whichever happens first, or building permit approval for projects that do not require discretionary entitlements. Pipeline projects need to receive a first construction document by May 1, 2029.

The schools fee—which is imposed by SFUSD and outside of the jurisdiction of the City itself—would not be reduced. And any Community Facilities Districts (aka Mello-Roos assessments) will continue to apply to qualifying projects in areas such as Central SOMA and the Transit Center District.

We will continue to track this important piece of legislation and its eventual implementation. In the meantime, please reach out to us with any questions about whether your project qualifies for a reduction and how to properly ask for and receive a reduction in a project’s affordable housing requirement.

Authored by Reuben, Junius & Rose, LLP Partner Mark Loper.

Sacramento Doubles Down on SB 9

June 14, 2023June 14, 2023 | Thomas P. Tunny

In 2022, SB 9 took effect, imposing radical new requirements on local jurisdictions to approve new housing in single-family neighborhoods. Although the results of SB 9 have been mixed (more on that later), Sacramento has seized upon the SB 9 playbook and looked to expand it.

SB 684 seeks to “create new pathways to homeownership for middle-income Californians” by making it faster and easier to build smaller, more naturally-affordable “starter” homes near jobs, schools, transit, and other amenities. The bill streamlines approvals for homes in infill developments of 10 homes or less, in multi-family zones, and on vacant lots in single-family zones. (It’s worth noting that in San Francisco inclusionary requirements kick in at 10 units, so projects seeking 8 or 9 units under this bill may get some pressure to do 10 and fulfill the inclusionary requirement.)

The bill supercharges the lot-split provisions of SB 9. The bill amends the Subdivision Map Act, the state law that regulates the creation and improvement of subdivisions and lot splits, to make it faster and easier to build more housing on a single parcel of land.

Specifically, SB 684:

Requires ministerial approval of a subdivision map that creates up to 10 units on qualifying parcels in multi-family neighborhoods and on vacant lots in single-family neighborhoods.
Shortens the timeframe development may begin by requiring local agencies to approve building permits once a tentative map has been approved under the Subdivision Map Act.
Prohibits the removal of housing that is low income, rent-controlled, or occupied by tenants within the last 7 years.
Ensures streamlined projects meet environmental sustainability standards.

SB 684 was introduced by Anna Caballero, whose district is in the Salinas Valley, and recently was passed by the state Senate. It now moves to the Assembly.

Speaking of SB 9, the 2022 law was adopted with great fanfare. A 2021 analysis by the Terner Center estimated that over 700,000 new homes could be newly feasible to build if SB 9 passed, and taking into account on-the-ground market dynamics. But the reality has been different. Many California cities passed urgency ordinances implementing additional regulations prior to implementing the benefits of SB 9. Some jurisdictions still have yet to adopt the objective design standards needed to approve SB 9 projects.

Local regulations—such as low maximum unit size, height limitations, and other design rules—can render the construction of SB 9 homes infeasible. Not to mention high construction costs and/or lack of expertise with homebuilding. As a result, few jurisdictions in California are seeing much SB 9 activity, and many are seeing none. In San Francisco, only 34 applications have been submitted, and 16 approved (21 total units). Los Angeles had the most overall activity in 2022, with 211 applications for new units under SB 9. We will continue to monitor the progress of both SB 9 and SB 684.

Authored by Reuben, Junius & Rose, LLP Attorney Thomas P. Tunny.

SF Contemplates Major Reductions in Inclusionary Housing and Impact Fees

March 16, 2023March 16, 2023 | Kaitlin Sheber

In the recently released Preliminary Controller Recommendations, the Inclusionary Housing Technical Advisory Committee (“TAC”) recommended reductions in San Francisco’s inclusionary housing requirements to make low- and mid-rise condo development feasible. Through its studies, TAC found no housing project prototype studied would be financially feasible under San Francisco’s 2022 inclusionary on-site requirements or at the current fee percentage requirements.

In 2022, the inclusionary requirements for projects with 25 or more units were as follows:

5% for apartment units provided on-site.
5% for condominium units provided on-site.
30% in-lieu fee for apartment units.
33% in-lieu fee for condominium units.

TAC recommended lowering the on-site requirement within the range of 12-16% and lowering the in-lieu fee within the range of 22-29% to make some housing project prototypes possible. The study suggested the reduction would make some low- and mid-rise condominium project prototypes under 8 stories feasible. However, the analysis acknowledged that under the recommended reduced inclusionary housing requirements, condominium project prototypes over 8 stories and all apartment project prototypes would remain infeasible. Overall, a greater proportion of low-rise condominium projects would likely be feasible than mid-rise condominium projects under TAC’s recommended reductions. If requirements were set in the lower portion of recommended ranges, additional mid-rise condominium projects may be feasible.

TAC also outlined additional policy levers available to the Mayor and Board which could affect financial feasibility of housing development, including:

Impact and other permanent regulatory fees.
Timing of payment.
Other city-imposed exactions.

TAC recommended the reduced requirements remain in place through April 2026 and that current TAC membership not expire to ensure a fully-seated TAC during the next Triennial Review.

Further, as of February 16, 2023, San Francisco’s Planning Department (the “Department”) updated its Bulletin on implementing the State Density Bonus Program (“SDBP”). The update clarifies and revises certain Department policies regarding the interaction of the SDBP and local inclusionary requirements. Two of the biggest takeaways include:

SDBP projects (rental or ownership) can now use an incentive to substitute low-income units for required moderate or middle income units in the base project, lowering the base project overall affordability requirements. However, ownership projects must still include the required percentage of low-income (80% AMI) ownership units in both small and large projects and may not reduce the affordability level of those units below 80% AMI in order to qualify for greater bonus under state law.
For SDBP projects with a base project under 25 units, the addition of density bonus units to the project will not trigger the City’s higher inclusionary requirements for projects with 25 or more units.

We will continue to track San Francisco’s efforts to reduce constraints on housing development as the City implements its recently adopted updated housing element.

Authored by Reuben, Junius & Rose, LLP Attorney Kaitlin Sheber.

PDR Protections & Higher Fees for Large Institutions in Housing Element Package

November 23, 2022November 23, 2022 | Melinda Sarjapur and Daniel Frattin

San Francisco’s Housing Element Update (“Update”) has been in the works since mid-2020, and the City is sprinting to adopt it before a January 2023 deadline that could open the door to Builder’s Remedy Projects and eventually a loss of state funding for affordable housing and transportation. (See Exhibit D to the Planning Department’s Update Initiation Memo).

The Update’s primary focus is to spur residential construction to meet the state-mandated RHNA target of 82,000 new homes over eight years and to shift more housing development – especially affordable housing – to transit corridors on the westside.

However, through “conforming amendments” to other elements of the City’s General Plan, the City sets the stage for new restrictions on the conversion or displacement of existing Production, Distribution, and Repair (“PDR”) or Industrial uses. It also targets large institutions – one of the sectors where in-person activity tends to be higher in the era of hybrid work – for new development impact fees.

Two of these amendments are shown below. For each item, text from the existing General Plan is shown in plain text; proposed additions to the General Plan are underlined.

Air Quality Element:

Policy 3.3: Continue existing city policies that require housing development in conjunction with office development and expand this requirement to other types of commercial and large institutional developments.

The intent is to require large institutional employers that aren’t currently subject to the City’s Jobs-Housing Linkage Fee to conduct an analysis of the housing demand of their employees and then show how they will meet that demand in their Institutional Master Plans (“IMP”). It could also pave the path for extending the JHLF to large non-institutional uses that are not currently subject to it (hospitals/schools/etc.).

In a bit of revisionist history, the Planning Department notes that the “IMP” caused colleges to realize the housing needs of their students and credit that as causing many private non-profit colleges to build student housing. In fact, IMPs had nothing to do with colleges building housing. The need was obvious; in reality inclusionary housing requirements were too expensive for them to shoulder. It was only when the City exempted student housing from inclusionary requirements that several private schools embarked on ambitious housing construction programs. Non-profit colleges and healthcare providers will find it difficult to grow in San Francisco if the Jobs-Housing Linkage Fee – currently ranging from $26 – $76 per square foot for other uses – is extended to them.

Commerce & Industry Element:

Policy 4.5: Control encroachment of incompatible land uses on viable industrial activity. Production, Distribution, and Repair (PDR) areas offer economic opportunity for adjacent neighborhoods, especially for low-income communities and communities of color. PDR businesses can provide stable job opportunities, good wages, and diversity in types of activities and jobs Restrict incompatible land uses, such as housing and office, and the conversion of industrial buildings to other building types in PDR districts and in areas of concentrated PDR, construction, or utility activities.

In mixed-use districts or areas adjacent to PDR districts, avoid the displacement of existing businesses, protect the affordability of PDR space, and, if displacement is unavoidable, replace some or all the PDR use with viable, affordable industrial space on-site or off-site in a PDR district.

This revised language paves the way for the City to adopt additional restrictions on the types of uses permitted in PDR districts – specifically the conversion or new construction of laboratory uses that frequently complement PDR. Engineering labs, for example, often need PDR to supply parts for prototyping, testing, and may well grow into small-scale manufacturing (PDR) uses themselves. This flexibility has served both PDR and lab uses well. How is a policy that replaces synergy with inflexibility good for the City? Why is industrial protection in districts where housing is not even permitted a “conforming” amendment to the General Plan?

Even more ironically, this policy amendment sets the stage to say “no” to housing in the very areas that have been most successful at producing it: rezoned PDR areas accounted for roughly ¾ of housing production by striking a balance between preserving space for industry and allowing much higher residential density. Proposition X made it harder to build housing in certain districts by requiring replacement space. However, this policy could reach much further and set up yet another restriction on housing in favor of preserving industrial space. The Update is supposed to remove barriers to housing. This one fails that test.

A full list of the General Plan updates proposed in connection with the Housing Element Update is available on the Planning Department’s website.

The full Housing Element Update is anticipated for adoption by the Planning Commission on December 15, 2022, and Board of Supervisors in January 2023.

Authored by Reuben, Junius & Rose, LLP Attorney Melinda Sarjapur and Daniel Frattin.

2022 Housing Legislation Round-Up

October 6, 2022October 6, 2022 | Justin A. Zucker and Daniel J. Turner

This year was a blockbuster year for housing legislation coming from Sacramento. Last week, Governor Gavin Newsom signed into law more than three dozen bills related to housing and housing production. Below please find a brief overview of twelve housing bills signed by the Governor that become effective next year.

AB 682. Density Bonus for “Shared Housing” Buildings

AB 682 amends the State Density Bonus Law to create a density bonus for “Shared Housing” developments. Shared housing, or group housing as it is commonly known, is characterized by single-room units with shared access to common kitchen and dining facilities. Each unit is typically intended for one or two occupants and features a small kitchenette. This new density bonus will allow shared housing developments to build at greater densities in exchange for dedicating a percentage of units to affordable housing, with the same affordability requirements and bonus amounts as is currently available to standard-unit developments. Notably, shared housing developments can provide up to 25% of their floor area as standard-unit housing and still qualify for a density bonus.

AB 916. No Public Hearing to Increase Bedroom Count

AB 916 prohibits cities from requiring a public hearing for a permit to add up to two bedrooms by reconfiguring existing space within an existing dwelling unit.

AB 1551. Commercial Development Bonuses for Providing Affordable Housing

AB 1551 creates a density bonus for commercial developers who partner with housing developers and support the provision of affordable housing through land donation, cash payment, or by directly building units. A commercial developer is eligible for up to a 20% density bonus. To qualify, the housing development supported by the commercial developer must provide either 30% of units as affordable for low income (<80% AMI) or 15% of units as affordable for very-low income (<50% AMI).

AB 2011. Affordable Housing and High Road Jobs Act

AB 2011 provides streamlined, ministerial approval of multifamily housing developments that contain affordable housing units located in commercial zones. Two tiers of development are available, depending on the amount of affordable housing provided. A project dedicating 100% of units as affordable for lower income households can be developed by right on most parcels zoned for retail, office, or parking uses. A project with market-rate units that provides a specific percentage of rental or ownership units as affordable for either lower income or very-low income households can be developed by right on parcels zoned for retail, office, or parking if the site has at least 50 feet of frontage on a commercial corridor (a street between 70 and 150 feet wide). AB 2011 projects are also subject to certain prevailing wage and skilled workforce requirements. We have discussed AB 2011 in greater detail in previous updates on August 24, 2022, and September 1, 2022.

SB 6. Middle Class Housing Act

SB 6 is intended to increase the development potential for middle-income housing by principally permitting housing developments that meet specific criteria in areas zoned for office, retail, or parking uses. Eligible developments are required to meet or exceed certain density thresholds established in the state’s Housing Element law, such as 30 units per acre in metropolitan settings or 20 units per acre in suburban settings. SB 6 projects must also meet certain prevailing wage and skilled and trained workforce requirements, although a development can be exempted from these in certain circumstances.

AB 2334. Density Bonus in Very Low Vehicle Travel Area

AB 2334 expands the available density bonus for 100% affordable housing developments in very low vehicle travel areas. A “very low vehicle travel area” is a transit analysis zone where existing residential development generates 85% or fewer vehicle miles traveled per capita than the regional area in which it is located. Qualifying density bonus projects are not subject to maximum density controls, are entitled to up to 4 development incentives, and may receive an additional three-stories of height. This additional density bonus is only available in the counties of the Bay Area, Sacramento, the Southern Coast, and Inland Empire. AB 2334 also clears up the grey area for application of the state density bonus in a form-based zoning district, requiring calculation of an “average unit size” multiplied by the density bonus amount to determine increase in floor area allowed.

AB 2653. Housing Element Reporting

AB 2653 alters some of the requirements for annual housing element reports cities must submit to the state. Cities must include greater detail, including the numbers of all new and demolished housing units in the jurisdiction, as well as data on all approved density bonus projects. AB 2653 also provides a mechanism for the state to request corrections and make referrals for enforcement.

AB 2668. SB 35 Streamlining Updates

AB 2668 amends SB 35 clarifying streamlined SB 35 projects are not subject to any non-legislative discretionary approval and that density bonus units are not considered when calculating whether a project satisfies SB 35’s affordability requirements. Further, the bill prohibits cities from denying an application for missing materials if there is enough information to allow a reasonable person to conclude the development is consistent with the applicable objective standards. AB 2668 also brings important change to how the Cortese List affects SB 35 eligibility. Placement on the Cortese List, which is the aggregate of the state’s decentralized hazardous waste sites databases, disqualifies a site from SB 35, until it is cleared for residential use by the authority having jurisdiction. However, longstanding confusion over the mechanism of clearing a site meant that once a site was listed, it was effectively barred from SB 35 permanently, even if it had undergone extensive remediation. AB 2668 establishes specific criteria, documentation, and agency determinations that allow a “listed” site to qualify for SB 35.

AB 2221 & SB 897. ADU Law Updates

AB 2221 and SB 897 make a number of changes to existing ADU law to provide for greater development flexibility and ensure consistent and efficient project review. Under these bills, a city that denies an ADU application will be required to provide a full set of written comments that includes a list of all deficient items and details how the application can be remedied. These comments must be provided within the existing 60-day review period. Additionally, a city will be prohibited from denying an ADU application based on nonconforming zoning conditions, building code violations, or unpermitted structures that are not affected by the ADU construction and do not pose a threat to safety.

The bills also increase ADU development potential by restricting setbacks that prevent ADUs below a minimum floor area, increasing the minimum height limit for ADUs located near transit stops or attached to primary dwellings, and prohibiting owner-occupancy requirements until January 1, 2025. Importantly, the addition of an ADU will no longer constitute a change of R occupancy under the building code such as from an R3 (single-family or duplex) to an R2 (multi-family), and will not trigger a requirement for fire sprinklers if not previously required.

AB 2234. Post-Entitlement Permit Processing

AB 2234 focuses on post-entitlement non-discretionary building permit processes after the planning process has concluded and environmental review is complete. AB 2234 requires local agencies to compile a list of information need to approve or deny a post-entitlement permit, a checklist and post an example of a completed, approved application. AB 2234 also sets timelines for review of post-entitlement applications for housing projects: (a) for projects with 25 units or fewer, a local agency shall complete first review and comment within 30 days of an application completion; and (b) for projects with 26 or more units, a local agency shall complete first review and comment within 60 days of an application completion. These time limits are tolled if a local agency requires review of an application by an outside third-party reviewer. Failure to meet these timelines is a violation of the Housing Accountability Act.

Authored by Reuben, Junius & Rose, LLP Attorneys Justin A. Zucker and Daniel J. Turner.

HCD Cracks Down on S.F. Housing Practices; S.F. Real Estate Tax Appeal Deadline

September 6, 2022September 7, 2022 | Thomas P. Tunny

Last month, the State Department of Housing and Community Development (“HCD”) announced that its Housing Accountability Unit (“HAU”) will conduct a first-ever Housing Policy and Practice Review of San Francisco, aimed at identifying and removing barriers to approval and construction of new housing in the City. According to the City’s self-reported data, it has the longest timelines in the state for advancing housing projects to construction, among the highest housing and construction costs, and the HAU has received more complaints about San Francisco than any other local jurisdiction in the state. U.S. Census data shows that Seattle – a city of comparable size – approves housing construction at more than three times the rate of San Francisco.

Over the next nine months and beyond, the HAU, in partnership with the U.C. Berkeley Institute of Urban and Regional Development and others, will conduct a comprehensive analysis of San Francisco’s housing approval policies and practices. The review will examine discretionary decision-making patterns that lead to abnormally long housing delays. The review also intends to identify barriers to the approval and development of housing at all income levels, including housing that is affordable to lower- and moderate-income households.

Separately, in an August 8 letter to Planning Director Rich Hillis, HCD was both critical and encouraging of the City’s Draft Housing Element. California cities are required to update their General Plan Housing Elements by January 2023. HCD praised the City’s “bold and meaningful actions to both reduce barriers to higher-opportunity neighborhoods while simultaneously reinvesting in historically underserved neighborhoods.” Yet HCD also identified a number of revisions that would be necessary for the Housing Element to comply with state law.

In yet another letter on August 11, HCD asked the City to explain itself concerning a specific project approval, expressing concern that the City violated housing law. HCD was concerned with the City’s decision, in granting conditional approval, to downsize a 19-unit group housing project at 3832 18th Street in the Mission District. HCD expressed concern that the downsizing violated the State Density Bonus Law.

This project-specific letter follows HCD’s letter to the City last November expressing concern that the City’s denial of two large housing projects, at 450 O’Farrell Street and 469 Stevenson Street, may have violated state law. In those cases, the Planning Commission had approved the projects, but the Board of Supervisors denied them.

The aforementioned Housing Accountability Unit at HCD is part of an unprecedented new initiative to support the production of housing statewide. According to its website, “California’s housing crisis has reached historic proportions despite the passage of numerous laws intended to increase the supply of housing affordable to Californians at all income levels.” As part of the 2021-2022 state budget, HCD received additional staff to grow its accountability efforts and formed the HAU. The HAU holds jurisdictions accountable for meeting their housing element commitments and complying with state housing laws. One of its primary tools is technical assistance to the public and enforcement letters. More information on these powers is available at the HCD website.

San Francisco Real Estate Tax Appeal Deadline

The deadline for San Francisco property owners to appeal their property’s value for the 2022/2023 tax year is September 15, 2022. Deadlines for other California counties vary. Please contact Kevin Rose (krose@reubenlaw.com) if you have questions about the tax appeal process.

Authored by Reuben, Junius & Rose, LLP Attorney Thomas P. Tunny.

November Ballot Measure Seeks to Increase Affordable Housing Production

June 27, 2022June 27, 2022 | Melinda Sarjapur and Daniel Frattin

The “Affordable Homes Now” measure submitted in March by a coalition of labor and housing advocates, has successfully collected the 52,000 signatures required to qualify for San Francisco’s November 2022 ballot. Citing a study by the Terner Center for Housing Innovation at UC Berkeley, the measure describes San Francisco’s four-year average to permit multifamily residential buildings as “one major obstacle to the goal of increasing affordable housing.” The measure attributes soaring housing costs to the difficulty many small businesses and essential service providers have with hiring and retaining workers, resulting in high turnover among public school and community college teachers. Finally, it notes that the lack of a “large, stable, and productive construction workforce” is a further constraint on housing production, driving delays, cost overruns, and safety incidents.

Affordable Homes Now takes aim at these issues with a program to bolster and expedite the production of local affordable housing by providing streamlined, ministerial approval for the following types of development:

“100% Affordable Housing Projects,” in which (a) all residential uses are restricted as affordable housing with a maximum overall average income of 120%, and (b) maximum sales or rental prices do not exceed 80% of median market rents or sales for the neighborhood, as determined by the Mayor’s Office of Housing and Community Development (“MOHCD”). To provide for the “missing middle” that is not served by existing affordable housing programs, households earning up to 140% of AMI would be eligible for residency, so long as they comply with the overall average affordability requirements above. Qualifying projects may include non-residential use at the ground floor, and those accessory to and supportive of on-site housing;
“Increased Affordable Housing Projects,” which contain 10 or more units, and agree to provide on-site affordable units in an amount that is 15% greater than otherwise required under the City’s Inclusionary Housing Program or local HOME-SF density program. For example, a project subject to a 21.5% on-site requirement under the Inclusionary Program would be required to make 24.7% of its units affordable under the Affordable Homes Now measure. In a 100-unit project, the total number of affordable units would increase from 22 to 25; and
“Educator Housing Projects,” as currently defined in Planning Code Section 206.9. Among other criteria, this includes providing all residential units as deed-restricted for the life of the project for occupancy by at least one employee of the San Francisco Unified School District (“SFUSD”) or San Francisco Community College District (“SFCCD”); providing at least 4/5^ths of all units as affordable to households with income ranging from 30%-140% of AMI, with the overall average of 100% AMI across all units, and the remaining 1/5^th of all units affordable up to a maximum 160% AMI.

To protect historic buildings, recreational resources, prevent tenant displacement or development that would conflict with certain zoning standards or preexisting uses, the measure would not apply to Projects that:

Remove or demolish historic landmarks, contributory buildings to a designated historic district, or Category I or II “significant” buildings under Article 11 of the Planning Code;
Are located on Recreation and Parks Department property;
Are located on sites not zoned for residential use;
Demolish, remove, or convert any residential units, movie theaters, or nighttime entertainment use; or
Include non-residential uses that require Conditional Use Authorization under the Planning Code.

Similar to the statewide SB-35 legislation which took effect in 2018, qualifying Affordable Homes Now projects that meet objective zoning standards would receive streamlined processing and be exempt from the California Environmental Quality Act (“CEQA”). Such projects would require no discretionary approvals by City Boards, commissions, or officials, and would not be subject to Discretionary Review. Associated building permits and other city permits necessary for construction would also receive streamlined, ministerial processing.

Projects qualifying under this measure could also utilize State Density Bonus Law to increase residential density, in which case any waivers, concessions or incentives would be considered consistent with objective zoning standards. However, for projects that do not utilize State Density Bonus Law, the measure would allow for administrative waivers or reductions from certain development standards including residential density; ground floor ceiling height; rear yard setback; dwelling unit exposure; loading; parking and open space.

Affordable Homes Now projects would not be required to submit for a Preliminary Project Assessment before filing a formal development application. Following submission of a complete development application, the City would have approximately six to nine months to approve qualifying projects, depending upon the number of residential units they contain.

Finally, the measure aims to attract a larger, more stable, and skilled construction workforce by setting minimum labor standards for Affordable Homes Now projects. These standard scale up based on the size of a project:

10+ units – All workers must be paid at least the applicable prevailing wage.
40+ units – In addition to the prevailing wage requirements, contractors that will employ construction craft employees for 1,000 or more hours are (a) required to provide medical insurance or make an $11.90/hour contribution to Healthy San Francisco per hour worked up to a weekly maximum of $476 and participate in state-approved apprenticeship programs; or (b) use contractors that are a signatory to a collective bargaining agreement that requires participation in a state-approved apprenticeship program. If no apprentices are available, projects may move forward without delay. The labor requirements are to be monitored through San Francisco’s Office of Labor Standards Enforcement, with contractors and subcontractors required to submit monthly reports confirming compliance with the above standards. Failure to submit a monthly report is subject to a $10,000 fine per month for each month the report is not provided, as well as fines of $200 per worker per day employed in contravention of Affordable Homes Now requirements.

The Affordable Homes Now Initiative is proposed by a coalition of labor and housing advocates, including the Nor Cal Carpenters Union; Housing Action Coalition; Habitat for Humanity; Greenbelt Alliance; YIMBY Action; SPUR; and Grow SF. It is backed by Mayor London Breed; Senator Scott Weiner; and Supervisor Matt Dorsey. The 52,000 signatures gathered to place the measure on the ballot represent more than 10 percent of registered San Francisco voters.

Authored by Reuben, Junius & Rose, LLP Attorneys Melinda Sarjapur and Daniel Frattin.

State Takes Aim at Housing Fees and Permit Delays

April 27, 2022April 27, 2022 | Sabrina Eshaghi

After a productive legislative year in 2021, the state legislature is continuing to tackle California’s ongoing challenges related to the housing crisis and lengthy processing times. Two bills would aim to minimize some of the roadblocks facing housing projects by bringing down both direct costs and holding costs. First, AB 2063 proposes to codify the state’s often disregarded stance that affordable housing fees do not apply to density bonus units. This would eliminate a significant cost for density bonus projects, which play a vital role in increasing housing production across the state. Second, AB 2234 proposes to enact time limits on processing and approving post-entitlement permits to create a more efficient and consistent process. Both of these bills would help address some of the root causes of the high cost of building housing, including increasing impact fees and long-term holding costs associated with permitting.

AB 2063

This bill would update the State Density Bonus Law to clarify that affordable housing fees cannot be applied to density bonus units, except in limited circumstances. Although this is a relatively simple bill, its impact would be huge for housing projects in jurisdictions that have been requiring hundreds of thousands, and sometimes millions, in affordable housing fees on top of the on-site affordable housing units needed to qualify for the density bonus. The Attorney General issued an opinion in 2019 that this practice of applying impact fees on density bonus units was not permitted under the State Density Bonus Law. The Attorney General’s reasoning was that the imposition of these fees on density bonus units disincentivizes what the legislature clearly wished to incentivize—the construction of affordable housing. Despite the Attorney General’s opinion, some cities continue to apply affordable housing fees on density bonus units. This bill would codify the Attorney General’s opinion, putting this practice to rest.

The bill was introduced on February 14, 2022 by Assembly Member Berman and is sponsored by the Housing Action Coalition, a nonprofit that advocates for building more housing for California residents of all income levels. It was unanimously passed by the Assembly Housing and Community Development Committee on April 5th and the Assembly Local Government Committee on April 20th. It is now under review by the Appropriations Committee.

AB 2234

The Permit Streamlining Act sets time limits for the review and approval of entitlements. Its impact has been limited since its time limits run from completion of CEQA review, which is typically the main driver of entitlement schedules. This bill aims to put a similar, but more effective, framework in place for post-entitlement approvals. Due to challenges associated with staffing, permitting backlogs have long been a problem, especially in large cities with high volumes of construction. These delays increase holding costs and slow overall housing production. Given today’s inflationary environment, delays are even more problematic.

The bill would apply limits on the review process for all nondiscretionary permits for projects that are at least two-thirds residential. This would apply to building permits and permits for off-site improvements, demolition, excavation, and grading. Failure to meet any of the time limits would be treated as a violation of the Housing Accountability Act.

Specifically, the bill would require local jurisdictions to:

Publish an online checklist of requirements for applications to be deemed complete along with an example of an ideal application that developers can use as a reference. Cities with a population of at least 250,000 will also be required to accept and update the status of applications online, including noting whether anything is required from the applicant.
Provide written notice regarding whether the application is complete within 15 days. If a local agency does not make a timely determination, the application will be deemed complete.
Approve or deny a post-entitlement permit within 30 days of deeming the application complete for projects with up to 25 units, or within 60 days for projects with 26 or more units. This would not apply if the city makes a written finding that the permit may have a specific adverse impact on public health or safety and additional time is necessary to process the application.
Provide a process for applicants to appeal an incomplete determination and denial of a complete application within 60 days for projects with up to 25 units, or 90 days for projects with at least 26 units.

The bill was introduced by Assembly Members Rivas and Grayson on February 15, 2022 and is cosponsored by the Housing Action Coalition and Silicon Valley Leadership Group. It is scheduled to be heard by the Assembly Local Government Committee today.

We will continue to monitor these bills and keep you updated as they move through the legislative process.