On June 28, 2024, the California Department of Housing and Community Development released its annual determinations under SB 423 (formerly SB 35). Enacted in 2018 (as SB 35), SB 423 requires streamlined, ministerial approval for qualifying housing projects in jurisdictions that are not meeting their Regional Housing Needs Allocation (RHNA) goals, in exchange for providing a certain level of affordability in the project.
Each June, the Department reviews permitting data from jurisdictions across the state and determines whether a jurisdiction has made sufficient progress toward producing housing for households at various income levels (i.e. lower, moderate, above moderate, etc.). Jurisdictions that have made sufficient progress toward their goals are not subject to SB 423; however, only 47 of California’s nearly 540 local jurisdictions fall into this category.
Jurisdictions that have not approved enough above-moderate income units (i.e. market rate units) are required to ministerially approve code-compliant projects that offer 10% of their units as affordable to 50% AMI for rentals or 80% AMI for ownership units. These are commonly known as “10%-jurisdictions.” Jurisdictions that have not permitted enough very low or lower income housing units are required to approve code-compliant projects that offer 50% of their units as affordable to 80% AMI. These are commonly known as “50%-jurisdictions.” A jurisdiction that fails to produce housing in multiple income categories can be both a 10%-jurisdiction and a 50%-jurisdiction, and a project proponent may choose which affordability scheme to follow in such cases.
Under HCD’s June 28 determinations, a majority of the Bay Area’s cities and counties have been deemed 50%-jurisdictions. Notably, San Francisco has been deemed a 10%-jurisdiction for the first time, and it is now subject to the lower affordability thresholds for projects wanting to utilize SB 423.
If you would like to learn more about qualifying for SB 423’s streamlined review and approval process, please reach out to our office.
Authored by Reuben, Junius & Rose, LLP Attorney, Daniel Turner.
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.
