California's 2019 Housing Laws: What You Need to Know

HIGHLIGHTS:

• After the California Legislature passed a high-profile package of 15 new housing laws in 2017, it has continued to focus on housing laws in 2018 to address the state's epic housing shortage.
• As Gov. Jerry Brown winds down his time in office, he recently signed into law 16 pieces of housing legislation that will become effective on Jan. 1, 2019.
• Taken as a whole, these laws continue a significant trend towards increasing the expectations on local governments to make progress toward approving sufficient housing to meet the state's housing crisis.

Following 2017, a year in which the California Legislature passed a high-profile package of 15 new housing laws, the Legislature has continued to focus on housing laws in 2018 to address the state's epic housing shortage. (For a summary of the 2018 housing package, see Holland & Knight's article, "A Closer Look at California's New Housing Production Laws," Dec. 6, 2017). As Gov. Jerry Brown winds down his time in office, he recently signed into law 16 pieces of housing legislation, which will become effective on Jan. 1, 2019 and make additional incremental progress in producing housing. Below, they are grouped into the following categories:

• Increasing Density and Housing Opportunities. New laws that facilitate development near Bay Area Rapid Transit (BART) stations, and reform the state's longstanding Density Bonus Law, which entitles developers to a density bonus and to certain concessions and incentives in exchange for including affordable housing in developments. Notably, new law extends the State Density Bonus Law to student housing.
• Streamlining and Removing Barriers to Housing Production. New laws that revise the major streamlining laws from the 2017 housing package (SB 35 and the Housing Accountability Act), reduce parking requirements for historic reuse projects and remove barriers to the development of supportive and affordable housing.
• Planning, Regional Housing Needs and Fair Housing Laws. New laws that reform the process of assigning local jurisdictions their regional housing targets, promote fair housing goals in local planning processes and require charter cities to meet certain planning requirements that were previously only imposed on general law cities.
• Miscellaneous. New laws that expand prohibitions against "price gouging" on rental properties during emergencies and extend the duration of building permits.

Taken as a whole, these laws continue a significant trend towards increasing the expectations on local governments to make progress toward approving sufficient housing to meet the state's housing crisis. As further discussed below, the impacts of these laws are becoming even more meaningful as a result of the California Department of Housing and Community Development (HCD's) commendable implementation of SB 35 and other new laws.

Increasing Density and Housing Opportunities

1.  AB 2923 (Assembly Members David Chiu and Timothy Grayson) – Development on BART-Owned Land is a new law that gives the Bay Area Rapid Transit (BART) board of supervisors the authority to rezone any BART-owned land within a half-mile of a BART station to set the lowest permissible limit for height, density and floor area ratio and the highest permissible parking minimums and maximums. Local jurisdictions must then adopt conforming zoning amendments within two years after BART adopts standards for a district. Qualifying projects may apply for streamlined, ministerial processing as specified in SB 35 – without having to otherwise qualify separately for ministerial processing under SB 35 (discussed further below). Developers may also secure vested rights to develop in accordance with the newly adopted standards after entering into an exclusive negotiating agreement to develop an eligible project. Among the qualifying criteria, developers must make at least 20 percent of housing units affordable to very low-income and low-income households, with additional affordable requirements for projects that would displace housing or take place within the district's boundaries. BART has estimated that up to 20,000 housing units and 4.5 million square feet of commercial space could be built on its parking lots.

2.  AB 2753 (Assembly Member Laura Friedman) – State Density Bonus Process Reforms seeks to expedite the processing of density bonus applications pursuant to the State Density Bonus Law. The State Density Bonus Law, originally enacted in 1979, requires an agency to grant a density bonus and/or a certain number of concessions or incentives to developers who agree to construct developments that provide affordable housing and meet certain criteria. This year's amendments now require local governments to provide determinations to developers regarding the amount of density bonus for which a development is eligible, all reductions in parking requirements for which the applicant is eligible and whether the applicant has provided adequate information for the local government to make a determination regarding any requested incentives, concessions, waivers or reductions in required parking. The law further requires such determinations to be based on the development project at the time the application is deemed complete, and provides that the local government shall adjust the amount of density bonus and required parking based on any changes during the course of the development processing.

3.  AB 2372 (Assembly Member Todd Gloria) – State Density Bonus Law Floor Area Ratio Bonus authorizes cities or counties to grant a developer of an eligible housing development under the State Density Bonus Law a floor area ratio bonus in lieu of a bonus on the basis of dwelling units per acre. The floor area bonus is calculated based on a formula prescribed in the new statute (i.e., allowable residential base density x (site area in square feet / 43,500) x 2,250). An eligible housing development under the law is a multifamily housing development that provides at least 20 percent affordable units, is located within a transit priority area or a half-mile from a major transit stop, meets requirements for the replacement of existing units and complies with height requirements applicable to the underlying zone. The law also prohibits cities and counties from imposing parking requirements in excess of specified ratios and allows an applicant for an eligible development to calculate impact fees based on square feet and not per unit.

4. SB 1227 (Sen. Nancy Skinner) – Density Bonus for Student Housing extends the State Density Bonus Law to apply to student housing. It allows student housing projects where at least 20 percent of the units are affordable for lower income students to receive a 35 percent density bonus. The law also provides that the development must provide priority to students experiencing homelessness. The density bonus under the law will be calculated based on the number of beds instead of units.

5. AB 2797 (Assembly Member Richard Bloom) – Reconciling the State Density Bonus Law and the Coastal Act requires the State Density Bonus Law to be harmonized with the California Coastal Act so that both statutes can be given effect within the coastal zone to increase affordable housing in the coastal zone while protecting coastal resources and access. This law supersedes the Second District Court of Appeal's opinion in Kalnel Gardens, LLC v. City of Los Angeles (2016) 3 Cal.App.5th 927, 944 holding that the State Density Bonus Law is subordinate to the Coastal Act.

Streamlining and Removing Barriers to Housing Production

6.  AB 3194 (Assembly Member Tom Daly) – Housing Accountability Act Amendments makes three important revisions to strengthen the Housing Accountability Act (HAA). The HAA strictly limits local governments' authority to reject or restrict housing development projects that comply with applicable objective general plan, zoning and subdivision standards. The Legislature's reforms to the HAA in 2017 were one of the most significant elements of the 2017 housing package. (For a full description of the reformed HAA, see Holland & Knight's alert, "California Governor Signs into Law Major Reforms to Housing Accountability Act," Sept. 29, 2017.) This year, as revised by AB 3194, if the zoning for a project site is inconsistent with the general plan, a proposed housing development project cannot be considered "inconsistent" with a jurisdiction's zoning standards and cannot be required to seek a rezoning, as long as the project complies with the jurisdiction's objective general plan standards. Second, local agencies must now apply zoning standards and criteria to facilitate and accommodate development at the density allowed on the site by the general plan. Third, the Legislature declared its intent that a "specific, adverse impact on the public health and safety" – the only permissible basis on which a local government can reject or reduce the size of a project that complies with objective standards—will "arise infrequently."

7.  SB 765 (Sen. Scott Wiener) – SB 35 Amendments makes a series of "cleanup" revisions to SB 35, the major streamlining law enacted in 2017, which requires localities to grant a streamlined ministerial approval to housing projects that meet the locality's objective standards, commit to provide prevailing wage labor and provide a specified amount of affordable housing, among other criteria. Among the most helpful of this year's amendments is the Legislature's explicit statement that the California Environmental Quality Act (CEQA) does not apply to the agency's determination of whether an application for a development is subject to the streamlined ministerial approval process – eliminating one argument housing opponents have used to try to avoid the effect of SB 35. In addition, the Legislature stated that "it is the policy of the state that this section be interpreted and implemented in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, increased housing supply."

8.  AB 2263 (Friedman) – Parking Reductions for Historic Reuse Projects authorizes parking reductions for a development project in which a designated historical resource is being converted or adapted. For projects converting or adapting a designated historical resource to a residential use that is located within a half-mile of a major transit stop, an agency shall not require the project to provide parking spaces greater than the number of parking spaces that existed on the project site at the time the project application was submitted. For a project converting or adapting a designated historical resource to a nonresidential use, a local agency shall provide a 25 percent reduction in the amount of parking spaces that would otherwise be required.

9.  AB 2162 (Chiu and Daly) – Supportive Housing Use "By Right" requires supportive housing to be considered a use "by right" in zones where multifamily and mixed uses are permitted, including nonresidential zones permitting multifamily uses, if the proposed housing development meets specified criteria. Supportive housing is housing linked to an onsite or offsite service that assists the resident in retaining the housing, improving his or her health status and ability to live and work in the community. Qualifying criteria relates to affordability, long-term deed restrictions, nonresidential floor use providing supportive services and other design requirements. The law requires a local government to approve, within specified periods, supportive housing developments that comply with these requirements. The law prohibits the local government from imposing any minimum parking requirement for units occupied by supportive housing residents if the development is located within a half-mile of a public transit stop.

10.  AB 829 (Chiu) – Prohibitions on Local Government Requirements for State Funding Assistance prohibits local governments from requiring a developer of obtain a letter of acknowledgment or similar document prior to applying for state assistance for a housing development. The law defines state assistance as any state funds, a state tax credit or a federal tax credit administered by the state. The legislative analysis for the bill explained that in at least one case in the state, city council members have delayed projects for supportive housing requiring financial assistance by conditioning a project to receive official sign-off from the local elected official in order to receive funding. This law ends that practice for all jurisdictions.

Planning, RHNA and Fair Housing Goals

11/12.  SB 828 (Wiener) and AB 1771 (Bloom) - RHNA Process Amendments make a number of changes to the Regional Housing Needs Assessment (RHNA) process to use more data to more accurately and fairly reflect job growth and housing needs, with an emphasis on fair housing goals. RHNA is the process to identify the total number of housing units and income levels that each jurisdiction must accommodate in its housing element. The RHNA process has been in the spotlight recently due to claims that some cities have artificially low RHNA targets due to a politically driven process. New amendments revise the data that the council of governments (the entities that determine RHNA targets) must provide to HCD as part of the RHNA process. That data must now include new information regarding overcrowding rates, vacancy rates and cost-burdened housing (among other new data points). This law adds more opportunities for public comment and HCD adjustments to the council of governments' methodology for selecting RHNA targets, as well an ability for local governments to appeal RHNA targets. Additionally, the law prohibits a council of governments from using prior underproduction of housing, or stable population numbers, as justification for a determination or reduction in a local government's share of the RHNA.

13.  AB 686 (Assembly Member Miguel Santiago) – Affirmatively Further Fair Housing requires a public agency to administer its programs and activities relating to housing and community development in a manner to affirmatively further fair housing and not take any action that is inconsistent with this obligation. "Affirmatively furthering fair housing" means, among other things, "taking meaningful actions ... that overcome patterns of segregation and foster inclusive communities" and "address significant disparities in housing needs and in access to opportunity." Additionally, an assessment of fair housing practices must now be included in upcoming housing elements.

14.  SB 1333 (Sen. Bob Wieckowski) – Planning Requirements for Charter Cities makes charter cities (those governed by a city charter document rather than by general law) subject to a number of planning laws that previously only applied to general law cities. These include laws related to general plan amendment processing, accessory dwelling unit permitting and the preparation of housing elements. Notably, the new law now requires a charter city's zoning ordinances to be consistent with its adopted general plan. Currently, only about 25 percent of the state's 121 charter cities have adopted consistency rules that zoning and subdivision approvals must be aligned with the cities' general plans.

Miscellaneous

15.  AB 1919 (Assembly Member Jim Wood) – Anti-"Price Gouging" During Emergencies recognizes that under current prohibitions against "price gouging," landlords cannot raise rents by more than 10 percent within 30 days of a declared disaster, but the prohibition does not apply to rental properties that were not on the market at the time of the emergency. In response to concerns about increased rents in the North Bay region immediately following the October 2017 wildfires, this new law expands the existing crime of price gouging to include new rentals that were not on the market at the time of the emergency within the types of goods and services that are price-controlled in the immediate aftermath of an emergency. The law also makes other related reforms to limit rent increases and evictions following an emergency.

16.  AB 2913 (Wood) – Extending the Duration of Building Permits extends the duration of a building permit from six months (180 days) to 12 months, as long as construction has started and has not been abandoned. The law also provides that a permit is subject to the building standards in effect on the date of original issuance, and if the permit does expire, the developer may obtain approval from the local building official for one or more six-month extensions.

Conclusion

After another prolific year of new housing laws, tracking and understanding new California housing law is becoming more important than ever. HCD has been extremely active in monitoring the implementation of these laws by regularly releasing new materials on the interpretation, implementation and enforcement of these laws on its dedicated webpage. Most recently, HCD promulgated draft official guidelines for SB 35, which will have significant weight interpreting this important law. HCD is seeking public comment on the guidelines for a 30-day comment period ending Oct. 30, 2018.

Further, implementation of the HAA continues to pick up steam throughout the state in both administrative and judicial settings. This year's package has the potential to increase the effectiveness of these laws even further. Additionally, the facilitation of development on BART-owned land, amendments to the State Density Bonus Law, RHNA and Fair Housing laws demonstrate that we have entered an era where the typical processing of housing developments has been fundamentally shifted. 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.