California Enacts Bills Aimed to Increase Housing

zoning

Last month, Governor Newsom signed three complimentary bills taking aim at the housing crisis in California: SB-8, SB-9, and SB-10. Together, the bills are intended to promote denser housing, streamline housing permitting, and boost housing production in California. The practical effects of the bills, however, are yet to be seen.

SB-9

SB-9 requires local agencies to ministerially approve the following in single-family zoning districts: (a) subdivision of existing lots into two parcels; and (b) development of up to two units per lot. Ministerial approvals require no environmental review, discretionary review, or public hearing process.

While opponents have painted SB-9 as a death knoll for single-family zoning, in reality the legislation comes with slew of caveats and conditions that limit its practical application.

To qualify for ministerial approval of a lot split under SB-9, all of the following must be met:

  • Site is located in a single-family residential zoning district;
  • Site is located in an urbanized area or urban cluster, or within a city that has an urbanized area or urban cluster, as designated by the US Census Bureau (which covers most urban and suburban cities in the state);
  • Subdivision creates no more than two new parcels of approximately equal lot area, provided that one parcel may not be smaller than 40% of the lot area of the original parcel proposed for subdivision;
  • Both newly created parcels must be no smaller than 1,200 square feet, unless the local jurisdiction adopts an ordinance allowing for smaller lot sizes with ministerial approval;
  • Site is not located on property that is prime farmland or farmland of statewide importance; wetlands; in a very high fire hazard severity zone; a hazardous waste site; in a delineated earthquake fault zone; in a special flood hazard area; in a regulatory floodway; identified for conservation in an adopted natural community conservation plan; a habitat for a protected species; or subject to a conservation easement;
  • Subdivision would not require demolition or alteration of housing subject to rent control; designated affordable housing; housing that has been removed from the rental market through Ellis Act eviction in the last 15 years; or housing that has been occupied by a tenant (market rate or affordable) in the past 3 years;
  • Site is not an historic landmark, and is not located within an historic district;
  • Site was not created through a prior SB-9 subdivision; and
  • Neither the owner of the parcel being subdivided or any person acting in concert with the owner has previously used SB-9 to subdivide an adjacent parcel.

To qualify for ministerial approval to develop up to 2 units per lot under SB-9, the locational and tenant-history criteria are similar.  In addition, applicants will need to show that the project won’t demolish more than 25% of the existing exterior structural walls, unless either a local agency passes legislation allowing otherwise, or the site has not been occupied by a tenant in the last 3 years.

SB-9 also contains an owner-occupancy condition which limits its utility for development entities.  Applicant-owners will be required to sign an affidavit stating their intent to occupy one of the resulting housing units as the owner’s principal residence for at least three years following the lot split.  However, community land trusts and qualified nonprofit corporations are exempt, and local agencies cannot impose any other owner-occupancy requirements.

And while SB-9 will allow for ministerial approval of qualifying projects, local agencies can still require all of the following:

  • Lots resulting from ministerial subdivision be limited to residential use;
  • No short term rental of units resulting from ministerial approval;
  • Project compliance with all objective zoning, subdivision, and design review standards applicable to the parcel that do not have the effect of physically precluding construction of two units on either resulting parcel or result in a unit size of less than 800 sf;
  • That new structures provide setbacks of up to 4 feet form side and rear lot lines;
  • For residential units connected to an onsite wastewater treatment system, a percolation test completed within the last 5 years, or, if the percolation test has been recertified, within the last 10 years.
  • Projects provide easements for provision of public services and utilities;
  • All resulting parcels maintain access to or adjoin the public right of way;
  • Projects to provide parking of up to 1 space per resulting unit, unless the site is located within ½ mile of a high-quality transit corridor or major transit stop, or there is a car share vehicle located within 1 block of the site.

Finally, on lots that are both created by an SB-9 lot split and developed with two units under SB-9, a local agency is not required to permit ADUs or JADUs.

SB-8

SB-8 primarily extends the Housing Crisis Act of 2019 (SB-330) another five years until 2030 and clarifies some of the text of the previous measure.  Among other things, SB-330 expedites the permitting process for housing developments; protects existing housing inventory; allows housing developments to file preliminary applications that provide grandfathering protection against zoning changes enacted during the discretionary review process; and limits the ability of local agencies to downzone areas unless they upzone an equivalent amount elsewhere within their boundaries.

SB-10

SB-10 authorizes local governments, at their election, to adopt an ordinance to zone any parcel for up to 10 residential units in transit-rich areas or urban infill sites.  That would apply to most properties located along established bus lines, within half a mile of a major transit stop, or in residential/mixed use areas of most California cities.  Ordinances or resolutions adopted by local agencies under SB-10 are exempt from environmental review, would require a 2/3 vote in favor from the local legislative body to adopt, and could not be used to reduce density otherwise permitted on any parcel subject to the ordinance.  SB-10 would further prohibit a residential or mixed-use project with 10 or more units that is located on a parcel zoned pursuant to an SB-10 ordinance from being approved ministerially or by right, or from being exempt from environmental review.

 

Authored by Reuben, Junius & Rose, LLP Attorney Melinda Sarjapur.

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.

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.

New Interim Density Controls for Residential-Commercial Districts

interim zoning controls

In January the Board of Supervisors passed interim zoning controls for parcels in RC, RM, and RTO (excluding RTO-M) zoning districts. The controls require Conditional Use Authorization (“CU”) for most new construction or alterations that do not maximize residential density. Sponsored by Supervisor Peskin, the interim zoning controls became effective on January 21st and are in place for 18 months, until July 2022. They apply to all projects—even ones currently under review by the Planning Commission—where a final site or building permit has not been issued (i.e., any project currently on file with the City).

The controls aim to disincentivize low-density projects, restrict the construction of large residences, and prevent the loss or conversion of rent-stabilized housing units.  The zoning districts cited allow for a higher density (i.e., more units at a smaller size), but often are developed with larger units that are more suitable to higher-income families (i.e., less units at larger sizes).

The controls apply to any (i) new construction of a residential building or (ii) a proposed alteration that would result in the expansion of the building. A CU from the Planning Commission will be required if the residential building does not maximize the principally permitted residential density while meeting minimum unit size requirements. The following minimum unit sizes must be used in density studies under the interim controls: 450 sf for 1-bedrooms, 700 sf for 2-bedrooms, 900 sf for 3-bedrooms, and 1,100 sf for 4-bedroom units.

There are exceptions to the Conditional Use requirement where site constraints prevent a project from maximizing density or for certain minor expansions. To fall under the site constraints exception, a project must meet the following criteria:

  1. Existing lot conditions or form-based restrictions on development (e.g., height, bulk, rear yard requirements) prevent a project from maximizing density without seeking a variance or subdividing units (while adhering to the minimum unit sizes in the Planning Code);
  2. The proposed project increases density on a subject lot; and
  3. No unit is greater than 2,000 square feet in size.

Expansions of existing residential buildings are permitted without a CU if the proposed expansion is 25% or less of the existing residential building and:

  1. Does not increase the size of any units that is already larger than 2,000 square feet in size;
  2. Does not create a new unit larger than 2,000 square feet, or
  3. Cause an existing unit less than 2,000 square feet in size to exceed 2,000 square feet.

It is unclear how many projects the interim zoning controls will impact, or whether it will result in changes to proposed development. Until the Planning Department or Planning Commission adopt clear guidelines for implementing the controls, including standards for density studies, the impact of the interim zoning controls remains uncertain. Reuben, Junius & Rose LLP will continue to monitor the implementation of the interim controls.

 

Authored by Reuben, Junius & Rose, LLP Attorney Tara Sullivan.

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.