California Lawmakers Aim To Ease Transitions From Big-Box Retail To Housing

California lawmakers are moving to address two problems — vacant retail centers and a lack of affordable housing — in one fell swoop. 

Last week, a bill advanced that would allow housing projects that would transform empty retail into much-needed residential, the Associated Press reported.

In many cities, these conversions are hamstrung by zoning: Developers would have to get a zoning change to allow for housing to go into a commercially zoned property.

One bill, Senate Bill 6, would permit developers to put housing on commercial sites without a zoning change. The projects would still have to follow other local rules for developments, but local governments’ ability to block such projects based on zoning would be hampered. The state Senate approved SB 6 last week in a 32-2 vote, and it is now headed to the state Assembly.

Retail closures had been on the rise even before the coronavirus pandemic but jumped in 2020. Last year saw 8,950 closures nationwide but fewer than 3,300 openings. Though there have been more store openings nationally than closures this year so far, part of the reason seems to be that there is so much available space.

California’s housing shortage is nothing new. The state needs an estimated 180,000 new homes built every year to keep up with demand, yet over the last decade, it has added fewer than 80,000 per year, according to the California Department of Housing and Community Development. Many cities and counties continue to fall short of state housing goals. Cities have frequently pushed back against other state prompts to increase housing development.

Eric Phillips, the vice president of policy and legislation for the California chapter of the American Planning Association, told the AP that if this legislation passed, he believed it would make California the first state to allow multifamily on commercially zoned sites. 

Another bill under consideration by the state Senate would pay local governments that change zoning to allow for affordable housing. That bill, SB 15, introduced by state Sen. Anthony Portantino, would offer financial incentives to cities that rezone and facilitate projects that convert former retail properties into housing. 

“These fiscal incentives will be used by local governments to replace the sales tax revenues from these big box retail stores,” and, according to a fact sheet for the measure, would come from the California Department of Housing and Community Development.