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3 New Policies That Could Change The Way You Do Business In California

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Several housing bills currently in California's state legislature could have significant effects on the commercial real estate industry's approach to the housing crisis.

As California's legislative calendar winds down, state lawmakers are putting the finishing touches on a range of bills aimed at making it easier to build housing in regions like the Bay Area.

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The bills come in a variety of forms. One, SB 330, is an emergency measure meant to stem NIMBYism by limiting how strict cities can make their zoning. Another, AB 1485, tweaks existing legislation to streamline zoning-compliant, mixed-income housing developments in the nine-county Bay Area. And a third, SB 13, could lead to tens of thousands of additional affordable housing units across the state even without a dollar of public subsidies. 

All are aimed at tackling the state's persistent housing crisis. McKinsey estimates California loses $140B per year in economic output because of its dwelling shortage, while a Harvard study has found that almost half of national renters are rent-burdened, or spending at least 30% of their income on rent.

Here's a quick primer on each proposed policy:

SB 330 (Sen. Nancy Skinner)

State Sen. Nancy Skinner's SB 330 approaches the housing crisis the same way the state handles natural disasters.

Meant for cities with extremely low residential vacancies and high housing prices — which includes practically all of the Bay Area, Skinner points out — SB 330 prevents governments from downzoning until 2025; setting parking minimums or imposing housing moratoriums; or enacting other local measures that have made housing development nearly impossible in space-strapped areas.

"This is definitely targeting the bad actor cities as basically a 'do-no-more-harm' bill," Bay Area Council Senior Vice President of Public Policy Matt Regan said. "It's limiting to a small degree local control over zoning."

Dubbed the Housing Crisis Act of 2019, the bill also limits the number of public hearings on a zoning-compliant housing development proposal to five, and the length of time its permits can be considered. Skinner says SB 330 is a way to allow developers to more easily obtain financing, and helps cities reach housing goals.

"It adds certainty, a specified timeline, so that if what's proposed meets zoning rules, you know it's only going to take this long and they're not going to change rules or increase fees," Skinner told Bisnow

"Our local governments have already in concept, through their zoning documents and housing plans, approved close to the number of housing units that we need."

To Regan and others, the city of San Bruno's changing demands for, and ultimately rejection of, last month's Signature Development's 425-unit housing development is only the latest example of logjams SB 330 is hoping to break.

Credit: © Steven Pavlov / lovingwa.blogspot.com, via Wikimedia Commons

AB 1485 (Assembly member Buffy Wicks)

Assembly member Buffy Wicks' AB 1485 is a follow-up to SB 35, which removed discretionary review and other processes for mixed-income, completely zoning-compliant housing development proposals in cities not meeting their state-determined housing needs.

Only three projects since SB 35 took effect in 2018 have actually benefited from such streamlining, including Sand Hill Property Co.'s redevelopment of Cupertino's Vallco Shopping Mall, which is facing rekindled opposition from the town's new city council.

"You have to catch lightning in a bottle to meet the standards set out in SB 35," Regan said.

For its part, AB 1485 aims to broaden the types of projects qualifying for the shortened process by giving developers more flexibility in the income mix of their proposal.

Under the proposed bill, a project can have 10% of its units reserved for residents with incomes 80% or less of area median income, or 20% of units for incomes less than 120% of AMI. With SB 35, the proportions were 10% or 50%, respectively.

3 New Policies That Could Change The Way You Do Business In California
Sen. Bob Wieckowski

SB 13 (Sen. Bob Wieckowski)

State Sen. Bob Wieckowski, business advocacy group Bay Area Council and other proponents of SB 13 think relaxing impact fees on accessory dwelling units could have a significant impact on the cost of living in California. They have some evidence to prove it. 

SB 1069 (Wieckowski), AB 2299 (Richard Bloom) and AB 2406 (Tony Thurmond) all eased restrictions on ADUs (also known as "mother-in-law" units) when they took effect in 2017, resulting in a surge in ADU applications, according to a report from UC Berkeley's Terner Center for Housing.

SB 13 is designed to do something similar. The bill waives impact fees on units under 750 SF and decreases existing fees for spaces over that size.

Regan points to Vancouver's utilization of ADUs, which are small living spaces added to existing single-family homes, as a model the Bay Area and the rest of the state can follow. About a third of single-family homes in the Canadian city have such a unit.

"There are 1.5 million single-family homes in the Bay Area and 9 million statewide," Regan said. "If we got to 10% saturation with ADUs, we'd be a quarter of the way to Gov. [Gavin] Newsom's target of 3.5 million homes and with no public subsidy required."

SB 13 goes further than cutting impact fees. It allows for automatic approval of an ADU permit application if a local agency has not acted upon the application in 60 days. It also removes the requirement that the owner of an ADU live in the main home while renting out the ADU, meaning both the main dwelling and accessory unit can be rented. 

"I think people are going to be pleasantly surprised at how much housing gets built in the Bay Area because of [SB 13]," Wieckowski told Bisnow

The bill's potentially low-cost, high-reward equation is exciting for Regan, who says the Bay Area Council is promoting the implementation of ADUs across the Bay Area. 

"I'm a firm believer that [SB 13] is going to be, if not the biggest solution to the housing crisis, one of the biggest pieces," he says.

SB 13 and the other bills still have a ways to go, having to survive various committees and myriad potential amendments before potentially getting passed by mid-September. Each is slated to be voted on in the first half of the month.

"As we go along, the herd gets thinner and thinner," Regan said. "We'll see what makes it to the finish line."