If Signed by the Governor, Senate Bill 35 Will Streamline Approvals for Multi-Family Residential Projects that Include Affordable Housing

On September 15th, the California Legislature passed Senate Bill 35 (SB 35) which, if signed by the Governor, will streamline the approval process for multi-family residential projects that include affordable housing in many urbanized cities and counties.  SB 35 is part of a large package of bills the Legislature passed this term that seeks to incentivize the construction of affordable housing throughout the state, including a controversial new fee on certain real estate transactions that would fund affordable housing projects.  Given that these measures were negotiated with the Governor’s office, many in the Capitol expect the Governor will sign them into law.

The Current State of the Law

For decades, state law has required every city and county to plan for how it will meet its share of regional housing needs, but there were few consequences for a city or county if that planning did not result in actual housing construction.   Beginning in 1969, state law required each city and county to adopt a Housing Element as part of its General Plan which would set forth how that city or county would meet housing needs within its community for people at all income levels.  In the 1980’s, the state Department of Housing and Community Development began assigning housing goals to each region in the state which resulted in a Regional Housing Needs Allocation (RHNA) for each city or county.  Each city and county was then required to include in its Housing Element a plan for how it would accommodate its RHNA, including a designation of specific sites that could accommodate the needed residential development.  However, in many communities, this planning did not result in sufficient projects being built.

SB 35 Would Streamline the Entitlement Process for Certain Multi-Family Residential Projects

SB 35 would provide consequences for cities and counties in urbanized or partially-urbanized areas that fail to meet their RHNA goals.  If a city or county does not issue sufficient building permits to meet its RHNA goals, multi-family residential projects that would contribute to meeting those RHNA goals would receive a streamlined review that would be limited to whether the project meets objective planning criteria and design review (i.e., no conditional use permit may be required).   A city or county would have between 60 and 90 days, depending on the number of units included in the project, to provide the project sponsor with a written explanation as to how the project conflicts with any objective criteria and an explanation of the conflicts.  If the city or county fails to meet this timeline, the project would be deemed to meet the objective criteria.  A city or county would also have between 90 and 180 days, depending on the number of units in the project, to conduct any required design review of the project, which must also be based on objective and generally applicable design criteria and “shall not in any way inhibit, chill, or preclude the ministerial approval” of the project.  SB 35 would also limit a city or county’s ability to impose parking requirements on a qualifying project, and provide that entitlements for certain projects with 50% or more affordable units will not expire.

The streamlined review SB 35 would provide is limited to projects that meet a long list of criteria, including: (1) the project must dedicate between 10-50% of the units to households making below 80% of the area median income, with the percentage of units depending on the type of affordable housing the city or county has failed to permit; (2) the project must be located in a city or county that includes some urbanized area; (3) at least 75% of the perimeter of the project site must adjoin parcels developed with urban uses; (4) the site must be zoned for residential development, or mixed-use development with at least 2/3 of the square footage devoted to residential use; (5) any price- or rent-restricted units must be subject to recorded durational restrictions of 45-years for rental units and 55–years for ownership units; (6) the project would not require demolition of specified types of rental housing or historic structures; and (7) for projects with more than 10 units, the project is subject to prevailing wage requirements and, in certain situations, other labor standards.

In addition, SB 35 would not apply to projects that are: (1) within the Coastal Zone; (2) on prime farmland or farmland of statewide importance; (3) within a wetland; (4) within a very high fire zone; (5) on a hazardous waste site; (6) within a delineated earthquake fault zone; (7) within a floodplain; (8) on lands identified for conservation in an adopted natural resources protection plan; or (9) on land subject to a conservation easement.

Nothing Good Lasts Forever

The streamlined review provided by SB 35 would significantly constrain cities and counties’ ability to deny qualifying housing projects, and may well spur development that will help ease the state’s housing crisis.  Assuming that the Governor signs it, project sponsors will want to act quickly to take advantage of it.  The streamlined review provisions in SB 35 will expire on January 1, 2026.

Authored by Reuben, Junius & Rose, LLP Partner – Matthew Visick

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, the formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.