Sacramento Addresses Housing (or not)

This week’s update discusses recent legislative activity at the state level affecting housing.

Rent Control

Sacramento has been abuzz recently with machinations among California legislative leaders and housing interest groups seeking to expand rent control.  Currently, the 1995 Costa-Hawkins Rental Housing Act exempts newly constructed housing (after 1979 in San Francisco) from rent control laws and prevents cities from limiting a landlord’s ability to raise rents on a unit after a tenant moves out.

AB 1506, introduced in early 2017 and co-authored by San Francisco Assemblymember David Chiu, proposed to repeal Costa-Hawkins.  Late last week, the bill was killed in Committee.  This means that any repeal of Costa-Hawkins likely will not happen in the Legislature, and instead appears headed to the voters as a statewide ballot measure in November 2018.

Besides concerns that the expansion of rent control will suppress the construction of new housing, other unintended consequences could result.  For example, in San Francisco, the expansion of rent control could make the already-arduous process of dwelling unit merger or demolition (even if the units will be replaced) even more difficult.  When the City has approved mergers and demolitions, an important criterion is that the unit is not rent-controlled.  If rent control is expanded, the pool of units allowed to be merged or demolished could be reduced significantly.

High Density Near Transit

Policy-makers in recent years have become increasingly enamored of higher densities near public transit.  The City’s pending Central SoMa Plan is a prime example of this.  The City is seeking to increase densities along the new 4th Street Muni extension South of Market.

Under SB 827, parcels within a half-mile of a high-connectivity transit hub — like Muni, BART, or Caltrain — will be required to have no density maximums, no parking minimums, and a minimum height limit of between 45 and 85 feet, depending on various factors, such as whether the parcel is on a larger corridor and whether it is immediately adjacent to the station. (Developers can, of course, decide to build below that height.) A local ordinance can increase that height but not go below it. SB 827 allows for many more, smaller apartment buildings, described as the “missing middle” between high-rise steel construction and single-family homes.

Projecting Housing Needs

The Regional Housing Needs Assessment (RHNA) is how California determines how much housing each local community should build.  Although it is rarely enforced, California cities and counties that do not meet their RHNA housing production requirements are in violation of state law.  Some jurisdictions have manipulated the RHNA process to lower their required housing production.

Policy-makers have become critical of the RHNA methodology, arguing that it underestimates population growth and how much housing will be needed.  Another criticism is that the RHNA allocation process needs to be standardized, is insufficiently connected to reliable data, and is highly politicized, thus giving some communities advantages when determining their required housing allocation.

SB 828 attempts to address these issues.  Its intent is to require a more data-focused, objective process and to reduce the ability of local jurisdictions to affect their RHNA allocations.  SB 828 also requires communities to begin making up for past RHNA deficits.  The hope is that these measures will help address California’s considerable housing deficit.


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

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.