California Legislature Passes Housing Crisis Act of 2019 and Rent Control Bill, Among Others

A handful of important state laws related to housing have been passed by the California legislature, including the Housing Crisis Act of 2019 (SB 330), which provides a set of limited reforms to the Housing Accountability Act (HAA), Planning and Zoning Law, and Permit Streamlining Act. These new laws, most of which would take effect in January 2020 if signed into law by Gov. Gavin Newsom, are of interest to project proponents and local agencies:

• SB 330 limits jurisdictions' abilities to move the goalposts for housing development projects during their application process and strengthens the protections of the HAA and the Permit Streamlining Act. It also bans jurisdictions from downzoning or otherwise adopting standards that would lessen housing intensity on sites zoned or planned for residential use – but it does not otherwise limit cities' ability to impose the California Environmental Quality Act (CEQA) or other discretionary review procedures on housing development applications. SB 330 sunsets on Jan. 1, 2025.
• AB 1482, the statewide rent control bill described in an earlier Holland & Knight alert, passed the legislature on Sept. 11, 2019.
• A series of other bills passed by the legislature (AB 101, AB 430, AB 1763, SB 18 and AB 1110) provide limited streamlining opportunities, density bonus reforms and new tenant protections.

As usual, most of the major housing bills ether will (or will not) be passed at or near the deadline for the legislature to act on by Sept. 13, 2019. Gov. Newsom must sign or veto the approved bills by Oct. 13, 2019, with some exceptions. Holland & Knight is monitoring this activity and will report on additional laws passed by the legislature once the legislative session concludes.

SB 330 – Housing Crisis Act of 2019

SB 330, passed by the legislature and awaiting the governor's signature, tightens the protections for development projects under the HAA by limiting a jurisdiction's ability to change development standards and zoning applicable to the project once a preliminary application is submitted. Prior law held that standards in place at the time an application was complete were applicable and thus jurisdictions could change applicable standards during the application process in order to preclude it from qualifying for HAA protection. The bill also prevents jurisdictions from increasing exactions or fees during a project's application period, but allows such increases if the resolution or ordinance establishing the fee calls for automatic increases in the fee over time. If the development project does not start construction within 2 ½ years of final approval or the project is modified to include 20 percent or more residential units or square footage, then a jurisdiction can subject a project to new standards.

The bill also modifies the Planning and Zoning Law to prohibit cities or counties from conducting more than five hearings if a proposed housing development complies with the applicable, objective general plan and zoning standards in effect at the time an application is deemed complete. This prevents jurisdictions from undertaking a protracted approval process in which projects can stall because of financing or other issues. The bill also requires jurisdictions to make a determination on the historic nature of a planned housing development site at the time the application is deemed complete. This determination remains valid for the pendency of the development process.

The bill also amends the Permit Streamlining Act to specify what constitutes a "preliminary application" and states that a jurisdiction has one chance to identify incomplete items in an initial application and after that may not request the submission of any new information that was not in the initial list of missing items. The bill also reduces the time in which a lead agency is required to approve or disapprove certain housing projects.

Finally, the bill prohibits a jurisdiction (with some exceptions) from enacting development policies, standards or conditions that would change current zoning and general plan designations of land where housing is an allowable use to "lessen the intensity of housing," such as reducing height, density or floor area ratio, requiring new or increased open space, lot size, setbacks or frontage, or limiting maximum lot coverage. It also bans jurisdictions from placing a moratorium or similar restrictions on housing development, from imposing subjective design standards established after Jan. 1, 2020, and limiting or capping the number of land use approvals or permits that will be issued in the jurisdiction, unless the jurisdiction is predominately agricultural.

Other Acts Provide Limited Streamlining Opportunities, Density Bonus Reforms and New Tenant Protections

Enacted: The following bills have been signed into law.

• The Housing Development and Housing 2019-20 Budget Act – AB 101 requires local governments to provide "by right," CEQA-exempt approvals to certain qualifying navigation centers that move homeless Californians into permanent housing. Signed into law by Gov. Newsom on July 31, 2019 (and already in effect), the act also creates additional incentives for cities to comply with their mandates to plan for sufficient housing in their Housing Elements, and provides some modest additional remedies that the state can use in court when cities fail to comply with housing element law. These reforms fall well short of Gov. Newsom's proposal at the beginning of 2019 to withhold state money from cities that fail to plan for and approve sufficient housing.
• The Keep Californians Housed Act ­– SB 18 (Sen. Nancy Skinner), removes the Dec. 31, 2019, sunset date on a state law which gives tenants at least 90 days' notice before their tenancy can be terminated if a landlord loses ownership of their rental property as a result of a foreclosure sale. Gov. Newsom signed SB 18 into law on July 30, 2019.

Adopted But Require Governor Approval: The following bills have been approved by the Senate and Assembly but require Gov. Newsom's signature.

• The Tenant Protection Act of 2019 – AB 1482 (Assembly Member David Chiu), the statewide rent control bill that Gov. Newsom has announced his intention to sign, was passed by the legislature on Sept. 11, 2019. (For a summary of AB 1482, see Holland & Knight alert, "Rent Control Bill Gets Gov. Newsom's Support as Clock Ticks on Deadline for New Laws," Sept. 9, 2019.)
• The Camp Fire Housing Assistance Act of 2019 – AB 430 (Assembly Member James Gallagher), is intended to create housing relief in areas of Butte County where the housing stock was devastated by the 2018 Camp Fire. The bill, passed by the legislature on Sept. 6, 2019, and awaiting Gov. Newsom's signature, creates a streamlined ministerial, CEQA-exempt approval process in and adjacent to the cities of Biggs, Corning, Gridley, Live Oak, Orland, Oroville, Willows and Yuba City for qualifying housing developments that comply with those localities' objective zoning, subdivision and design review standards.
• Planning and zoning: density bonuses: affordable housing – AB 1763 (Chiu), passed by the legislature on Sept. 3, 2019, and awaiting Gov. Newsom's signature, would create enhanced density bonus options, including a potential 80 percent increase in base density, under the State Density Bonus Law. However, this would only apply to projects that consist of 100 percent affordable housing (no more than 20 percent moderate-income, and the remainder for lower-income).
• Rent increases: noticing – AB-1110 (Assembly Member Laura Friedman), passed by the legislature on Sept. 10, 2019, and awaiting Gov. Newsom's signature, would require 90-day notice, rather than 60-day notice, before a landlord may increase the rent of a month-to-month tenant by more than 10 percent.

Conclusion

In this year's package of housing laws, the legislature has continued emphasizing (as seen in AB 101 and AB 430) that it believes that the best way to ensure housing is built is to reform and streamline the local review process and move toward a "by right" model for housing that complies with local zoning and planning rules. However, the legislature continues to apply this principle on a very limited scale rather than to advance the construction of the 3.5 million homes that Gov. Newsom has said must be built by 2025 to stem the statewide housing crisis.

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.