Increased State Density Bonus Available Next Year

| 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

| Justin A. Zucker
legislation

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.

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 Legislation at a Glance – Part 1

| Justin A. Zucker and Sabrina Eshaghi
CEQA

As we’ve previously reported, 2022 was a blockbuster year for housing legislation and it appears this legislative session is gearing up to be just as consequential. But, with approximately a quarter of the legislative body in their freshman year, it’ll be difficult to determine how the session will play out. In this two-part update, we will be providing a brief overview of some of the most significant bills introduced thus far impacting the California Environmental Quality Act (CEQA), State Density Bonus Law, housing, parking requirements, accessory dwelling units (ADUs), and other land use-related policies.

CEQA Reform

A substantial number of CEQA-related bills have been introduced this legislative session. Most significantly, meaningful CEQA reform appears to be a priority with multiple bills aiming to creatively address CEQA misuse.

AB 978 (Patterson) Bond Requirements for CEQA Challenges to Housing Projects. This bill would require any person bringing a CEQA lawsuit against a housing project to post a bond of $500,000 to cover the costs and damages to the housing project incurred by the project sponsor or lead agency. The court would be permitted to waive or adjust the bond requirement if there is good cause to believe the requirement does not further the interest of justice.

AB 340 (Fong) Written Comments Must be Submitted Ahead of Hearing. This bill would require project opponents to make any written comments challenging the project’s compliance with CEQA at least ten days before the public hearing on the project. Any written comments submitted after that time could not be used in a CEQA lawsuit against the project. Note that this would not restrict opponents’ ability to present oral comments at the hearing.

SB 239 (Dahle) Limits on CEQA Litigation. First, this bill would only allow the Attorney General to bring CEQA lawsuits challenging certified Environmental Impact Reports (EIRs), Negative Declarations, or Mitigated Negative Declarations, meaning members of the public and community organizations would no longer have standing in cases involving these types of CEQA documents. Notably, it excludes other types of CEQA documents like exemptions. Challenges brought for non-environmental purposes would be subject to dismissal and award of attorney’s fees. Second, courts would be prohibited from stopping construction or operation of a project due to CEQA litigation, unless the project (1) presents an imminent threat to public health and safety or (2) contains unforeseen important Native American artifacts or unforeseen important historical, archaeological, or ecological value that would be materially, permanently, and adversely affected. Even in that case, the court can only stop specific activities related to those impacts. Third, for housing projects, the bill would limit subsequent CEQA actions challenging an agency’s remedial revisions to CEQA documents in response to a court’s ruling by prohibiting the court from considering new issues that were not raised in the original proceeding. Lastly, until January 1, 2030, lawsuits challenging certified EIRs for commercial, industrial, housing, or public works projects that meet certain standards and address longstanding critical needs in the project area must be resolved within 365 days, unless the court makes certain findings.

These bills may indicate that the long-awaited first step toward CEQA reform is on the horizon. In addition, a couple of other CEQA-related bills have been introduced that would be helpful in limiting review:

  • Two bills appear to be a response to the First District Court of Appeal ruling last month involving the UC Berkeley project that proposes to turn the People’s Park into student and homeless housing. In that case, the court held that the EIR failed to analyze potential noise impacts from loud student parties, among other inadequacies.
    • AB 1307 (Wicks and Luz Rivas) would amend CEQA to clarify that for residential projects, noise generated by the unamplified voices of residents is not an impact on the environment.
    • AB 1700 (Hoover) would clarify that for housing projects, in addition to noise impacts, population growth is also not an impact on the environment.
  • Currently, aesthetic impacts are not considered significant effects on the environment for housing projects involving the refurbishment, conversion, repurposing, or replacement of an existing building. This existing law is set to expire January 1, 2024. AB 356 (Mathis) would make this provision permanent.

State Density Bonus Updates

Similar to last year, a number of bills proposing updates and tweaks to the current State Density Bonus Law have been introduced.

AB 1287 (Alvarez) Additional Density Bonus. This bill would modify the State Density Bonus Law to supersede the California Coastal Act of 1976. This bill would also allow up to an additional 50% density bonus for projects that (1) maximize the very low income, low income, or moderate-income units permitted under the current State Density Bonus Law and (2) provide up to 15% additional moderate-income units. Projects that utilize this additional moderate-income bonus would also receive up to six incentives or concessions.

AB 1630 (Garcia) Ministerial Student Housing. Dubbed the Student Housing Crisis Act of 2023, AB 1630 would require student and faculty and staff housing (with limitations) on property within 1,000 feet of a university campus to be ministerially approved if a minimum of 20% of the units are affordable to lower income households. In exchange, a local agency could not impose or enforce a minimum parking requirement, floor-to-area ratio requirement, rear or side setback requirements greater than four feet, or height limit below forty feet. This bill would require a range of wage and training standards, including paying prevailing wage, providing workers with health benefits, and giving graduates of state-approved apprenticeship programs first access to these jobs (similar to AB 2011, which is taking effect July 1, 2023).

AB 323 (Holden) Restricting Use of For-Sale Units as Rentals. This bill would prohibit a developer from offering a for-sale unit constructed pursuant to a local inclusionary zoning ordinance to a purchaser that intends to rent the unit to families of extremely low, very low, low-, and moderate-income families, unless the developer can prove that none of the applicants for owner-occupancy can qualify for the unit. Any violation would be subject to a civil penalty of not more than $15,000.

AB 637 (Low) Undermining Local Inclusionary Ordinance Not Allowed. This bill would create an exception from the requirement to grant an incentive, concession, waiver, or reduction if it would alter the requirements of a local inclusionary affordable housing ordinance. The initial draft of this bill would have created an exception from the requirement that a jurisdiction grant an incentive, concession, waiver, or reduction if the project would have an adverse impact on a policy that affirmatively furthers fair housing.

Only in San Francisco

As previously reported last month, AB 1114 (Haney) would bar jurisdictions (San Francisco is the only one affected) from allowing building-permit appeals after a qualifying residential project has received an entitlement.

Stay tuned next week for an overview of proposed legislation related to housing, parking, ADUs, and other land use-related policy bills.

 

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