Legal Matters: What You Need To Know About Real Estate Legislation & Regulations In 2016

This year, several issues that could affect the real estate industry will be hot topics in California. As part of an ongoing series, Bisnow caught up with Allen Matkins land-use partner David Blackwell to get the inside scoop on the legal implications of all the political posturing.

Affordable housing has been a big issue in the state, particularly in San Francisco, where voters OK'd issuing bonds to support affordable housing and shot down a measure that would have put a market-rate moratorium in the Mission District (below). Most recently, the Board of Supervisors has called for more than doubling the amount of affordable housing required in new developments (a city charter amendment voters will decide on in June) and has rejected projects that didn't have as much affordable housing as they wanted (as seen with the failed sale of 30 Van Ness).

San Francisco is not alone; other Bay Area cities also are eyeing more affordable housing. So we asked David what we can expect this year.

David tells us there are two macro issues here. The first is the trend to increase affordable housing requirements by local agencies. In San Francisco, Supervisor Jane Kim is introducing an amendment to the San Francisco Charter to more than double the affordable housing requirements for market-rate projects. Other cities that have recently adopted or updated housing impact fees include Redwood City, Sunnyvale and Mountain View, while Oakland is in the process of imposing new affordable housing fees.

Other cities may follow San Jose’s approach, he says, which was affirmed by the California Supreme Court last summer, by characterizing affordable housing requirements (at least for condo units) as permissible land use regulations instead of as exactions, thereby getting more deferential treatment from the courts. (That's downtown San Jose, below.) In response, developers should avail themselves of the tools in the state Density Bonus Law to make their multifamily projects more viable.

The second issue is that even though some Bay Area cities may increase affordability requirements, most cities in the area do not meet their respective RHNA requirements for providing new housing, David tells us. Well-organized neighborhood groups consistently oppose multifamily housing projects, particularly those with affordable units. Although some cities are embracing the idea of higher-density transit-oriented development in the urban cores, others are not. Thus, attempts to increase the stock of affordable units will continue to be impaired by political roadblocks to the development of multifamily housing projects.

In the coming weeks, we'll check back with David on environmental legislation and Prop M limits on office development.