Two Legislators Take Aim at Statewide Planning Laws

Laws

In an apparent backlash against recent housing bills, two California state legislators have introduced a constitutional amendment that would essentially revoke the state’s ability to regulate land use. If approved, this amendment would allow cities to avoid compliance with state laws aimed at increasing housing production, making it more difficult to meet the housing needs of the growing California population.

The measure was introduced by Assemblymember Muratsuchi (D-Torrance) on March 16, 2021 and co-authored by Senator Glazer (D-Contra Costa). This comes after an attempt to get a similar citizen-initiated measure on the ballot, which has not reported any required signatures to the state as of this writing. In order to qualify for the ballot, two-thirds of each legislative chamber will need to approve the constitutional amendment. That amounts to a minimum of 54 votes in the Assembly and 27 in the Senate, assuming no vacancies. The governor’s approval is not required.

The constitutional amendment itself is fairly simple. It states that city or county regulations regarding “zoning or the use of land” prevail over conflicting state laws. Limited exceptions include conflicts with state statutes involving (1) the California Coastal Act, (2) the siting of certain power generating facilities, and (3) water or transportation infrastructure projects. Transportation infrastructure projects do not include transit-oriented development projects. This amendment would apply to both charter cities and general law cities. However, in charter cities, courts would determine whether a local ordinance that conflicts with one of the subject areas listed above addresses a matter of statewide concern or a municipal affair.

The measure states that the amendment will provide local control over land use decisions in order to balance development with the economic, environmental, and social needs of the community. The measure notes that the impacts of land use decisions vary depending on the municipality and specifically points to impacts on the infrastructure needed to maintain adequate public services.

While these are valid concerns, they need to be evaluated in light of the current housing crisis, which has been decades in the making. The state sets housing production goals, also known as the Regional Housing Needs Assessment (RHNA), that cities and counties are required to plan for in their Housing Elements. However, planning for housing does not always translate into actual housing production. According to the HCD’s latest data, only about 6% of California’s cities and counties are on track to meet the state’s current RHNA goals in all income categories. And, as we noted in a prior e-update, many cities and counties are looking at significant increases in RHNA goals next cycle. In order to incentivize housing production, the legislature has stepped in to streamline approvals, allow density bonuses, and limit municipalities’ ability to deny certain housing projects.

The amendment’s broad applicability to regulations regarding “zoning or the use of land” leaves significant room for interpretation and will result in far-reaching consequences that will ultimately exacerbate the state’s worsening housing crisis. For example, the amendment would allow cities to disregard the following state laws:

  • Density Bonus Law. Under the Density Bonus Law, developers are entitled to up to a 50% density bonus if certain on-site affordability requirements are met. The law also allows waivers and concessions from development standards that would physically preclude the density permitted or result in identifiable and actual cost reductions.
  • SB 35. This legislation requires ministerial approval of housing projects that meet certain affordability requirements in cities and counties that are not meeting their RHNA goals.
  • Permit Streamlining Act. This Act allows certain development projects to be deemed approved if the local agency does not approve the project within specified time limits.
  • SB 330. Among other things, SB 330 (1) provides a mechanism to vest the ordinances, policies, and standards in effect at the date a complete Preliminary Housing Development Application is submitted, (2) limits the ability of municipalities to downzone certain properties, impose moratoria, or apply new subjective design standards to housing developments, (3) further streamlines approvals, and (4) limits the number of hearings that can be conducted prior to approval of a housing project.
  • Housing Accountability Act. This Act limits a local government’s ability to deny, make infeasible, or reduce the density of housing development projects that are consistent with objective local development standards.
  • ADU Law. In recent years, there has been a significant amount of legislation making ADUs easier to build by streamlining the approval process, limiting applicability of impact fees, and relaxing zoning requirements.

The broad language of the amendment may also have the effect of reversing state rent control regulations and General Plan requirements, including the need to update the Housing Element to accommodate RHNA goals. In addition, a number of land-use related bills have been introduced this session that could be impacted by this constitutional amendment.

It remains to be seen whether two-thirds of the legislature, which recently passed landmark housing bills, would vote to put this constitutional amendment on the ballot. We will continue to monitor this measure and keep you updated.

 

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.

Updates to the Proposed Intermediate Length Rental Regulations

units and intermediate length rentals

Medium-term, furnished rentals have been a part of San Francisco’s housing stock for many years. According to the Corporate Housing Providers Association, roughly 3,000 dwelling units in San Francisco – less than one percent of the City’s total housing – are used as intermediate length rentals. These types of rentals serve workers in higher education, healthcare, theater, and other industries, who are in town too long to stay in a traditional hotel but don’t need a full one-year lease. They also provide housing for long-term family visitors – grandparents helping with a newborn or relatives caring for a sick family member.

However, many affordable housing advocates, who view these rentals as competing with long-term housing for San Francisco residents, lined up at the Planning Commission last fall to protest them. Shortly after, Supervisor Aaron Peskin introduced legislation targeted at  rental properties that require tenants to stay for at least 30 days in order to avoid short term rental regulations (See our prior coverage, New Legislation Aims to Limit “Intermediate Length” Rentals).

The legislation would amend the Planning Code to create a new Intermediate Length Occupancy (“ILO”) Residential Use Characteristic for dwelling units offered for occupancy of greater than 30 days but less than one year. It would also add a new Planning Code Section 202.10 to regulate those units. On January 14, 2020, substitute legislation was introduced which makes several changes to the original proposal. The substitute ordinance is available here.

While the original legislation allowed ILO units only in new construction of projects with at least 10 dwelling units, the substitute legislation would allow existing units to be eligible to be classified as ILO units unless the units are below market rate units built under the City’s Inclusionary Housing regulations or are subject to the Rent Control Ordinance. For buildings with nine or fewer units, requests to establish ILO use would be principally permitted so long as no more than 25% of the units in the building are classified as ILO. For buildings with 10 or more dwelling units, ILO units would require conditional use authorization, and no more than 20% of the units could be classified as ILO.

The substitute legislation further clarified that while ILO units could be offered for occupancy of one year or greater without losing the ILO use characteristic, ILO status would be considered abandoned if otherwise defined as abandoned under the Planning Code.

Finally, the revised legislation provides owners and operators of ILO units 24 months from the effective date of the ordinance to submit a complete application to establish the ILO use. The total number of ILO units Citywide would be capped at 1,000 – an increase above the 500-unit cap in the earlier legislation. While not labeled as interim controls, the intent of the legislation is to put in place a policy to regulate corporate housing while the data to be collected under the program is evaluated by the Controller’s Office. The legislation does not address grandfathering of existing ILO units, of which there are approximately 2,000 more than would be permitted by the 1,000 unit cap, but the 24 month compliance period established by the Ordinance indicates that existing units may not be grandfathered or exempt from the new ILO controls.”.

Residential hotels and student housing would still be exempt from Section 202.10 under the substitute legislation. Furthermore, the Rent Ordinance Amendments proposed in the original legislation would remain, except that the prohibition on non-tenant use, including use for a corporate entity’s own employees or licensees, and the requirement that online listings for units disclose that they are subject to the Rent Ordinance, would be effective April 1, 2020 instead of February 1, 2020.

The Planning Commission voted to recommend adoption of the substitute ordinance on January 30, 2020. We will continue to follow the evolution of these regulations as they move towards adoption by the Board of Supervisors and implementation by the Planning Department and Planning Commission.

 

Authored by Reuben, Junius & Rose, LLP Attorney Jody Knight.

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.