California's 2025 Housing Laws: What You Need to Know

As in previous years, California saw a significant volume of new housing legislation emerge from Sacramento in 2024. (See Holland & Knight's previous annual recaps of California Housing Laws in the final section below.) This Holland & Knight alert takes a closer look at some of the most significant housing laws that the California Legislature passed and Gov. Gavin Newsom has signed into law, grouped into following categories:

• Housing Accountability Act (HAA) and Builder's Remedy
  • AB 1893 – HAA reforms, including new safeguards for Builder's Remedy projects
  • AB 1886 – clarifying that either the California Department of Housing and Community Development (HCD) or a court must confirm that a locality substantially complies with housing element law
  • AB 1413 – reforms to process for challenging "CEQA-laundering" practices
• Enforcement and Planning
  • AB 2023 – establishes rebuttal presumption of invalidity if HCD determines an action does not comply with housing element law
  • SB 1037 – penalties for housing element noncompliance
  • AB 3093 – new income categories, coastal plan requirements and historic preservation reporting in housing elements
  • AB 2667 – reporting requirements for affirmatively furthering fair housing
  • SB 7 – reforms to the Regional Housing Needs Allocation (RHNA) allocation process
• Streamlining
  • AB 2243 – amendments to expand AB 2011 eligibility for housing projects on commercial sites
  • AB 3122 – amendments to SB 35 and subdivision processing for housing on residential sites
  • SB 1123 – amendments to SB 628 for housing projects and subdivisions up to 10 units
  • AB 2694 – extends density bonus law to residential care facilities for the elderly
  • SB 3116 – additional density bonus law benefits for student housing
  • SB 951 – San Francisco exemption from appeals to California Coastal Commission
• California Environmental Quality Act (CEQA)
  • AB 2117 – development permit extension during pending litigation
  • AB 2199 – county infill exemption extension
  • SB 1395 – homeless shelter and navigation center exemption extensions
  • SB 312 – university housing development exemption extension
  • AB 2553 – major transit stop expansion
  • AB 3057 – exemption for adoption of Junior Accessory Dwelling Unit (JADU) ordinances
• Fees
  • AB 2553 – lower traffic impact fees for housing development projects close to transit
  • AB 3177 – limitation on land dedication requirements for road widening
  • SB 937 – impact fee deferral
  • AB 2430 – limitations on long-term affordable housing monitoring fees
  • AB 2663 – inclusionary housing fee reports
  • AB 2012 and AB 1820 – fee estimate tools
• Accessory Dwelling Units (ADUs), SB 9 Lot Splits and Duplexes
  • SB 1211 – increased number of detached ADUs for multifamily projects and relaxed requirements for parking and applicable development standards
  • AB 2533 – extension of building code amnesty for noncompliant ADUs
  • SB 450 – relaxed criteria and legislative declarations supporting SB 9 lot splits and new HCD oversight and enforcement authority over SB 9
  • SB 1077 – guidance for permitting for ADUs and JADUs in the coastal zone
• Addressing Constraints on Housing Production
  • AB 2729 – 18-month entitlement extension for residential developments
  • SB 1210 – transparency in public utility service connection timelines and fees
  • AB 2580 – reporting on historic designations
• Affordable Housing and Financing
  • AB 846 – aligns "affordable" rents with requirements of applicable financing programs, limits rent increases in low-income housing tax credit (LIHTC)-financed housing
  • AB 1868 – reforms to property taxation for lower-income affordable homes
  • ACA 10 and AB 2813 – reforms to Proposition 5 bond process for affordable housing

Except where noted, the new laws take effect on Jan. 1, 2025.

Housing Accountability Act (HAA) and "Builder's Remedy"

AB 1893 (Assembly Member Buffy Wicks) – HAA Reforms, Including New Safeguards for Builder's Remedy Projects. AB 1893 focused primarily on establishing limits and procedural safeguards for what are now called "Builder's Remedy" projects. Those provisions are discussed at length in Holland & Knight's summary of the legislation as it pertains to Builder's Remedy projects. This Holland & Knight alert will address AB 1893's broader changes.

First, AB 1893 expands the HAA's applicability to certain large-scale mixed-use projects. Currently, the HAA protects only mixed-use projects that are at least two-thirds residential. AB 1893 provides that a mixed-use project can now qualify as long as at least two-thirds of the project's "new or converted" square footage is residential. In addition, a project with at least 50 percent "new or converted" square footage for residential uses also qualifies if the project will produce 500 residential units, although mixed-use projects with hotel and similar uses are excluded. Finally, projects with at least 50 percent "net" new or converted square footage designated for residential use can also qualify in certain circumstances.

Second, AB 1893 expands the scope of actions that local governments are prohibited from taking with respect to an HAA-protected project. Following AB 1893, it is now an HAA violation when a local government subjects an HAA-protected project to more than five hearings (including continuances), misapplies the Permit Streamlining Act when considering project application materials or, subject to certain limitations, undertakes a course of conduct "for an improper purpose, such as to harass or to cause unnecessary delay or needless increases in the cost of the proposed housing development project, that effectively disapproves the proposed housing development without taking final administrative action."

Third, AB 1893 increases the penalties for jurisdictions that persist in HAA violations following a court order to comply. Now, in such instances, courts are required to impose increased fines on repeat HAA violators, with each new violation further increasing the fines.

Finally, in a change applicable to, but not limited to, Builder's Remedy projects, the law expands HAA protections previously only applicable to 20 percent lower-income or 100 percent moderate-income projects. Those protections now apply to projects providing as little as 7 percent extremely-low-income, 10 percent very-low-income or 13 percent low-income units, as well as to any project regardless of affordability that is 10 or fewer units on less than one acre and proposed at a minimum density of 10 dwelling units per acre.

AB 1886 (Assembly Member David Alvarez) – Clarifying that Either HCD or a Court Must Confirm that a City Substantially Complies with Housing Element Law. One of two bills directed to the Builder's Remedy, AB 1886 resolves two issues frequently raised by local governments pushing back against Builder's Remedy projects. First, AB 1886 forecloses the legal effect of local governments' "self-certification" of their housing elements. AB 1886 clarifies that a housing element is "substantially compliant" when HCD (or a court) finds it to be "substantially compliant. Second, AB 1886 clarifies a frequent timing issue. Some local governments have argued that they are not obligated to process Builder's Remedy projects after their housing elements are certified by HCD. Such arguments have been defeated in court. (See Holland & Knight's previous alert, "Holland & Knight Wins First Superior Court Case Affirming California's 'Builder's Remedy'," March 20, 2024.) However, AB 1886 now explicitly states that the submission of an SB 330 application prior to housing element certification "vests" the project's entitlement to use the Builder's Remedy, even after the housing element is certified. AB 1886 states that it is declaratory of existing law and codifies existing HCD guidance, so it should be applicable even to currently pending applications.

AB 1413 (Assembly Member Philip Ting) – Reforms to Process for Challenging "CEQA-Laundering." AB 1413 amends last year's AB 1633, which set some limits on a local government's ability to demand additional CEQA review of qualifying infill housing projects. AB 1633 provided some limited ability for project opponents to contest an agency's ability to demand excessive review. AB 1413 imposes a new notice and public comment period before AB 1633's protections are invoked. Specifically, local governments receiving complaints of improper CEQA review must now post those complaints online, allow 60 days for public comment and consider any responses before ultimately determining whether to alter their decision.

Enforcement and Planning

AB 2023 (Assembly Member Sharon Quirk-Silva) – Establishes Rebuttal Presumption of Invalidity if HCD Determines an Action Not to Comply with Housing Element Law. Current law provides that if HCD certifies a locality's housing element as substantially compliant with housing element law, this creates a rebuttal presumption in court in favor of HCD's determination. However, the law does not expressly provide that the inverse is true: that HCD's determination of housing element non­compliance carries the same legal weight. AB 2023 provides a rebuttable presumption of invalidity of any housing element HCD has found not to substantially comply with housing element law, as well as any local action or failure to act HCD has found inconsistent with housing element. The law also makes modest changes to rezoning deadlines required by housing element law: starting in the seventh RHNA cycle, local governments that are on track for housing element certification by the statutory deadline will receive three years and 90 days to complete rezonings necessary to accommodate its RHNA allocation, while local governments that miss key housing element milestones will have only one year to complete their rezoning.

SB 1037 (Sen. Scott Wiener) – Penalties for Housing Element Noncompliance. SB 1037 provides new penalties for local governments that fail to meet the requirements of housing element law. Current law already allows the attorney general's office to sue local governments that adopt legally insufficient housing elements. Under SB 1037, when a local government loses a lawsuit seeking to enforce the timely adoption of housing element revisions or to enforce any law that requires ministerial approval of housing projects (such as SB 35 or AB 2011), the local government may be subject to new monetary penalties. The penalties range $10,000 to $50,000 per month, starting from the date of the violation giving rise to the lawsuit, but may be imposed only if the court first determines that the local government's actions are "arbitrary, capricious, entirely lacking in evidentiary support, contrary to established public policy, unlawful, or procedurally unfair."

AB 3093 (Assembly Member Chris Ward) – New Income Categories, Coastal Plan Requirements and Historic Preservation Reporting in Housing Elements. AB 3093 makes three changes to the housing element process. First, AB 3093 adds two new income categories for which local governments must plan in their housing elements: extremely low-income (15 percent to 30 percent of area median income, or AMI) and acutely low-income (zero percent to 15 percent of AMI). AB 3093 also requires HCD to publish guidance for local governments to follow in planning for these two new income categories and to publish template programs that local governments can adopt to fulfil these new requirements.

Second, AB 3093 amends housing element law to address an issue that concerns the 76 local governments in the coastal zone. Currently, after local governments update their housing elements to accommodate new housing units, they must amend their zoning as needed to allow production of those units and must do so within a set time frame. AB 3093 updates these requirements to provide that, for local governments in the coastal zone, any relevant amendments to their local coastal programs (i.e., those related to land use designations, intensity of land use, etc.) must be completed in parallel with the required zoning amendments.

Third, AB 3093 requires that local governments analyze the impacts of their historic preservation ordinances on housing production as part of the required analysis of how their various ordinances and standards impact housing production (and must alter or remove those restrictions if necessary to meet their housing allocation). AB 3093 also requires local governments to identify any new historic designations in their annual housing report to HCD, along with a status update regarding any housing developments proposed on such sites.

AB 2667 (Assembly Member Miguel Santiago) – Reporting Requirements for Affirmatively Furthering Fair Housing. AB 2667 makes additional changes to the housing element update process that relate to local governments' fair housing obligations. Currently, when updating their housing elements, local governments are required to assess how their existing policies further (or do not further) fair housing and to prioritize fair housing goals when planning. AB 2667 requires that the fair housing analysis be undertaken at the outset of the housing element update process, before the first draft housing element revision is published for public comment. AB 2667 also requires HCD to develop and implement a standardized format for this analysis that must include specific timelines for implementation, responsible agencies, action areas and budgetary commitments related to fair housing programs. Additionally, AB 2667 requires localities to report the number of affordable units approved (and disapproved) within high-resource areas as part of their annual housing progress report to HCD.

SB 7 (Sen. Catherine Blakespear) – Reforms to the RHNA Allocation Process. SB 7 implements several changes to the RHNA allocation process at HCD's recommendation. Each planning cycle, after HCD determines how many housing units each region of the state must plan for, regional entities known as Councils of Governments distribute that allocation to the cities and counties that they oversee. HCD itself directly distributes the RHNA allocation to local governments in 20 predominantly rural counties that are not overseen by a Council of Government. State law currently allows local governments in these 20 counties to contest HCD's determination of their housing needs. SB 7 removes that option going forward.

Current law also allows, but does not require, HCD to review the methodology by which Councils of Governments allocate the RHNA to local governments. At HCD's recommendation, SB 7 shortens the time period to conduct this review from 90 days to 45 days. SB 7 also removes a rarely utilized option for Councils of Governments to propose an alternative RHNA methodology for HCD's consideration. Finally, SB 7 expressly requires Councils of Governments to consult with "households with special housing needs," including households experiencing or at risk of homelessness, during the public comment period that precedes allocation of the RHNA to local governments.

Streamlining and Density

AB 2243 (Assembly Member Wicks) – Amendments to Expand AB 2011 Eligibility for Housing Projects on Commercial Sites. In one of the more notable efforts of the 2024 legislative session, this law makes several amendments to AB 2011 of 2022 (ministerial processing for housing projects on commercially zoned property) in an attempt to expand the applicability of AB 2011. First, AB 2243 expands the acreage limit from 20 acres to 100 acres for regional mall sites and adds development standards tailored for such sites. AB 2243 also makes amendments to allow a site within 500 feet of a freeway to be eligible if it includes a specified air filtration system. In further broadening applicability, AB 2243 modifies the criteria about surrounding industrial uses to limit the instances in which a site is precluded from eligibility. Conversely, one amendment that may limit eligibility precludes ministerial processing where the development would require demolition of a historic structure that was placed on a national, state or local historic register. On the processing side, AB 2243 adds an obligation for a local government to respond to a resubmittal within 30 days. This supplements the existing obligations for a local government to respond to an initial application submittal. There are many other refinements to AB 2011 adopted by AB 2243 that should be reviewed carefully. Developers with applications pending on or before Dec. 31, 2024, may select whether to be subject to existing AB 2011 provisions or "any of the provisions" adopted pursuant to AB 2243.   

AB 3122 (Assembly Member Ash Kalra) – Amendments to SB 35 and Subdivision Processing for Housing Projects on Residential Sites. This law makes changes to SB 35 (ministerial processing for residential sites). Notably, there are new qualifications required to process a subdivision map ministerially with an SB 35 application; these capture projects where the applicant will seek a LIHTC and projects in incorporated areas or within an urbanized area or urban cluster in a county. For projects that do not meet these criteria and that need a subdivision map, those projects may lose some of their processing efficiency and will need to consider a separate subdivision map strategy. AB 3122 further defines the range within which a project may be modified post-entitlement and retain ministerial processing (generally, up to a 15 percent increase in construction square footage and 15 percent decrease in residential units, but with exceptions). As with AB 2243, there is a new obligation for a local government to respond within 30 days of an application resubmittal.

SB 1123 (Sen. Anna Caballero) – Amendments to SB 628 for Housing Projects and Subdivisions up to 10 Units. SB 628 was intended to increase home ownership by creating a ministerial process for housing development and subdivision approvals on certain sites up to 10 units. Most notably, SB 123 extends eligibility from sites with multifamily zoning to sites with single-family zoning if the site is also vacant. SB 1123 provides more specific guidance on permitted densities under the law and clarifies that any ADU or JADU on a site utilizing this legislation shall not count towards density limits. It also adds lot frontage to the list of development standards with which a project processed under this law need not comply. This law becomes effective on July 1, 2025.

AB 2694 (Assembly Member Ward) – Extends Density Bonus Law to Residential Care Facilities for the Elderly (RCFEs). The state density bonus law currently applies to senior housing and shared housing. This year's amendments make it crystal clear that RCFEs qualify under the state density bonus law; specifically, they qualify under the definition of shared housing. According to the author, the law will help address the need for senior housing, as "[o]ur state is facing a silver tsunami as our population ages creating a demand for senior housing that outpaces supply."

AB 3116 (Assembly Member Eduardo Garcia) – Additional Density Bonus Law Benefits for Student Housing. AB 3116 builds on prior laws that created state density bonus law benefits for student housing. Specifically, it increases the potential density bonus for student housing from 35 percent to 50 percent. It also increases the number of potential concessions to two and can eliminate parking. These amendments are intended to address the acute housing shortage at California campuses.

SB 951 (Sen. Wiener) – San Francisco Exemption from Appeals to California Coastal Commission. For a local government that is both a city and county (namely, San Francisco), an action on a coastal development permit within the coastal zone may no longer be appealed to the California Coastal Commission. This was the only bill that was adopted to address housing in the coastal zone this year. Several other bills that intended to streamline housing approvals within the coastal zone (e.g., to allow density bonus, exempt ADUs and shorten the statute of limitations for challenges to housing in the coastal) all faltered. More focus on coastal zone processing is expected in the next legislative session.

CEQA

AB 2117 (Assembly Member Joe Patterson) – Development Permit Extension During Pending Litigation. This law extends the expiration period for any development permit (e.g., variance, conditional use permit) that is subject to litigation. Though local governments typically extend permits in this circumstance, this law makes the extension automatic. The definition of "development permit" subject to automatic extension under AB 2117 does not include building permits, demolition permits, minor grading permits or any other ministerial permit issued after the entitlement process has concluded but prior to project construction.

AB 2199 (Assembly Member Marc Berman) – County Infill Exemption Extension. This law extends a CEQA exemption that is popular for infill projects in urbanized, unincorporated county areas. The existing statutory exemption – which applies to residential or mixed-use housing projects that are both consistent with General Plan – was set to sunset on Jan. 1, 2025. AB 2199 extends this exemption toto 2032. It also adds a qualifying criteria that a project may not cause a substantial adverse impact to tribal cultural resources.

SB 1395 (Sen. Josh Becker) – Homeless Shelter and Navigation Center Exemption Extension. Under existing law, local agencies are authorized to declare a homeless shelter crisis and allow homeless persons to occupy designated public facilities for the duration of the crisis. There is also a narrow CEQA exemption that applies to actions taken by state or local agencies to lease, convey or encumber state- or local government-owned land for (or to provide financial assistance to) a homeless shelter. SB 1395 extends the sunset date for the CEQA exemption 2026 to 2036 and adds to the list of exempt activities the approval of service contracts for homeless shelters (e.g., case management, security or counseling services contracts). It also deletes the sunset date for the exemption for Low Barrier Navigation Centers (LBNCs) so that such uses may be considered a "by right" use indefinitely.

SB 312 (Sen. Wiener) – University Housing Development Exemption. This law extends the sunset date for the CEQA exemption for a public university housing project from 2030 to 2032. The exemption was originally adopted in 2022 (via SB 886) to address the controversy surrounding the so-called "People's Park" decision. It also relaxes several qualifications for the exemption related to Leadership in Energy and Environmental Design (LEED) certification and consistency with prior long-range development plans and associated environmental review.

AB 2553 (Assembly Member Laura Friedman) – Major Transit Stop Expansion. AB 2533 changes the "major transit stop" definition under CEQA to include an intersection of two or more bus stops with a frequency of service interval of 20 minutes during peak commute periods. This definition previously required bus service to be 15 minutes or less. This modification will increase the number of locations that qualify as a major transit stop and, therefore, will increase the number of projects that will achieve CEQA streamlining from proximity to such major transit stops.

AB 3057 (Assembly Member Lori Wilson) – Exemption for Adoption of JADU Ordinances. Clarifies that local agencies' adoption of JADU ordinances are not "projects" subject to CEQA.

Fees

AB 2553 (Assembly Member Friedman) – Lower Traffic Impact Fees for Housing Development Projects Close to Transit. In addition to the expanded "major transit stop" definition noted above, this law separately modifies the Mitigation Fee Act to require local agencies to set traffic impact fees at a lower rate for housing projects near major transit stops, as compared to housing projects that are not close to major transit stops.   

AB 3177 (Assembly Member Wendy Carrillo) – Limitation on Land Dedication Requirements for Road Widening. In another Mitigation Fee Act amendment, this law is aimed at "spot widening" requirements, which involve widening portions of a roadway adjacent to a new development to accommodate increased vehicle traffic from that development. AB 3177 prevents a local agency from imposing a land dedication requirement to widen a roadway on a housing project for the purpose of mitigating traffic impacts from that project. An agency may, however, impose such an obligation on projects that are not in a transit priority area where the housing development has a street frontage of 500 feet or more. Agencies may also require road widening if an agency makes findings that a land dedication requirement is necessary to preserve the health, safety and welfare of the public. Finally, an agency can still impose a road widening requirement for the purpose of constructing sidewalk and sewer improvements.  

SB 937 (Sen. Wiener) – Impact Fee Deferral for Residential Projects. According to the author, "Senate Bill 937 seeks to minimize the impact of market fluctuations and high interest rates on housing production by delaying development fees and providing additional time post-entitlement." Specifically, it allows fees for "designated residential development projects" to be paid at building occupancy rather than at building permit issuance. A designated residential development project is defined to include 100 percent affordable projects, low-barrier navigation projects (interim housing for people exiting homelessness), AB 2011 projects (residential projects on commercially zoned property), SB 35 projects (residential projects on residentially zoned property), SB 4 (residential projects on land owned by higher education or a religious institution), density bonus projects and projects with fewer than 10 units. As many housing projects already qualify for density bonus benefits naturally through their compliance with local inclusionary housing ordinances, the inclusion of such projects is anticipated to give SB 937 broad applicability. There are, of course, exceptions to the fee deferrals where the fees will be collected for certain public improvements (e.g. water, sewer or wastewater service). The exceptions do not apply equally to a project with at least 49 percent lower-income households. The exceptions require a close reading to confirm applicability.  

AB 2430 (Assembly Member Alvarez) – Limitations on Affordable Housing Monitoring Fees. This law prohibits a local agency from imposing a monitoring fee on the continued affordability of a housing development project in attempt to avoid duplication where the California Tax Allocation Committee (CTCAC), California Housing Finance Agency (CalHFA) or HCD will otherwise monitor long-term affordability of regulated unites. It applies to projects with affordable units regulated by the state density bonus law or the applicable local inclusionary housing ordinance. The law also provides that an eligible housing development that is currently subject to the fee shall no longer be subject to that fee beginning on Jan. 1, 2025. Agencies may, however, impose a monitoring fee where the applicant utilizes a local incentive program that results in units with deeper or different affordability than what is monitored by the referenced state agencies or receives funding from an agency that would not provide monitoring by the state agencies. Additionally, an agency can impose a monitoring fee where an applicant uses a local program that results in moderate income units.

AB 2663 (Assembly Member Timothy Grayson) – Inclusionary Housing Fees Reports. AB 2663 intends to add transparency to the collection and use of inclusionary housing in lieu fees. The law responds on instance where it was discovered that a local government used money from its affordable housing fund to pay legal fees to defend itself in a housing lawsuit. The new law requires a local agency that collects inclusionary housing in lieu of fees to post on its website the amount of fees collected and whether the fees are intended to be use for a project, if any. Beginning on Jan. 1, 2026, and every five years thereafter, a local agency must also post the amount of fees collected in the past five years and the projects for which that the fees were spent. Notably, a separate provision of the Mitigation Fee Act requires agencies to refund unspent fees if they do not make required findings within five years of a fee deposit. Accordingly, AB 2663's increased reporting on inclusionary fees could result in additional monitoring of the use of the fees and, in some cases, return of unused fees where agencies don't make the requisite findings.

AB 3012 (Assembly Member Grayson) and AB 1820 (Assembly Member Pilar Schiavo) – Fee Estimate Tools. AB 3012 requires cities and counties to make fee estimate tools available online for housing development projects. A city or county with a population of greater than 500,000 must meet the requirements by July 1, 2031, while smaller cities or counties must meet the requirements by July 1, 2032. The fee estimate tool must address fees including, but not limited to, fees imposed pursuant to the Mitigation Fee Act, affordable housing fees, art fees, parkland fees, construction excise taxes and community facilities district (CFD) taxes. The agencies are not, however, responsible for the accuracy of the estimate provided by the fee estimate tool. Additionally, by July 1, 2028, HCD must prepare a fee schedule template that may be used by cities and counties, as well as a list of best practices. Similarly, AB 1820 allows housing applicants to submit, concurrent with their SB 330 application, a request for an estimate of any fees and exactions that the local government will impose on the project. The local government must provide an estimate within 30 days.

ADUs, SB 9 Lot Splits and Duplexes

SB 1211 (Sen. Nancy Skinner) – Land Use: Accessory Dwelling Units - Ministerial Approval. SB 1211 increases the number of detached ADUs that can be approved ministerially in multifamily residential projects. Prior to the enactment of SB 1211, local agencies were required to approve building permits for up to two detached ADUs at existing or proposed multifamily projects. Now, local agencies are required to approve building permits for proposals that consist of 1) not more than eight detached ADUs on a lot with an existing multifamily dwelling and 2) not more than two detached ADUs on a lot with a proposed multifamily dwelling. These limits now apply on a "per lot" basis, as opposed to a "per project" basis. SB 1211 also prohibits a local agency from requiring the replacement of an off-street parking space if one is demolished in conjunction with construction of or conversion to an ADU and clarifies that local agencies are not permitted to apply objective development standards on "state-exempt" classes of ADUs, aside from those expressly stated in the ADU law.

AB 2533 (Assembly Member Juan Carrillo) – Extension of Building Code Amnesty for Noncompliant ADUs. Under existing state law, local agencies are prohibited from denying a permit for an unpermitted ADU that was constructed before Jan. 1, 2018, on the basis that the ADU violates building standards, unless doing so is necessary to protect the health and safety of the public or the occupants of the structure. AB 2533 expands the state amnesty law to also include ADUs that were constructed before Jan. 1, 2020, that violate such standards. For unpermitted ADUs that are denied on health and safety grounds, AB 2533 now requires local agencies to provide applicants with a checklist of substandard building conditions and inform homeowners that, before submitting a permit application, the homeowner may obtain a confidential third-party code inspection from a licensed contractor.

SB 450 (Sen. Toni Atkins) – Relaxed Criteria and Legislative Declarations Supporting SB 9 Lot Splits. SB 450 offers further refinements to SB 9, which mandates streamlined, by-right approval processes for two-unit (duplex) projects and urban-lot splits on single-family zoned parcels. Such refinements include, but are not limited to, 1) removing the criteria that two-unit projects cannot involve the demolition of more than 25 percent of the existing exterior structural walls, 2) prohibiting local agencies from applying objective development, design or subdivision standards that are not uniformly applied to development in the underlying zone (i.e., no "SB 9-unique" standards"), 3) requiring local agencies to approve or deny SB 9 applications within 60 days from the date the agency receives a complete application and 4) if no approval or denial occurs within that 60-day period, clarifying that the SB 9 project is deemed approved as a matter of law. SB 450 places HCD in charge of oversight and enforcement of SB 9. Lastly, SB 450 includes several new important Legislative declarations of state policy in response to a recent trial court decision in Los Angeles Superior Court declaring SB 9 unconstitutional as applied to charter cities.

SB 1077 (Sen. Blakespear) – Guidance for Permitting ADUs and JADUs in the Coastal Zone. This requires the California Coastal Commission to coordinate with HCD to develop and provide guidance by July 1, 2026, for local governments to facilitate the preparation of amendments to a local coastal program to clarify and simplify the permitting process for ADUs and JADUs in the coastal zone.

Addressing Constraints on Housing Production

AB 2729 (Assembly Member Patterson) – 18-Month Entitlement Extension for Residential Developments. In response to economic conditions that have resulted in entitled housing projects homes "dying on the vine," this law extends by 18 months the expiration of housing entitlements that were issued before Jan. 1, 2024, and will expire before Dec. 31, 2025. Most entitlements issued for a project that is at least two-thirds residential qualify for the exemption, but the law does not extend the expiration of any development agreement, SB 330 preliminary application or approved subdivision map that has already been extended pursuant to SB 9 of 2021's amendments to the Subdivision Map Act, Gov. Code § 66452.6. The law also tolls the 18-month extension during any time that the housing entitlement is the subject of a legal challenge. The law does not limit any locality's ability to issue its own extension of any approved entitlement (to the extent consistent with local law), but it gives permit holders increased ability to extend issued entitlements that a locality is not willing or able to extend on its own.

SB 1210 (Sen. Skinner) – Transparency in Public Utility Service Connection Timelines and Fees. It is increasingly common for homebuilders to express frustration at being unable to get timely utility service, even for fully approved and entitled projects. In a first step in the direction of addressing this problem, SB 1210 will require specified larger public utilities providing electrical, gas, water or sewer service to publicly post on their internet websites the schedule of estimated fees for typical service connections for various housing development types and the estimated timeframes for completing typical service connections needed for each housing development type.

AB 2580 (Assembly Member Wicks) – Reporting on Historic Designations. Some individuals and groups have tried to weaponize historic designations as means to forestall housing growth and evade the effect of state streamlining laws. To monitor these occurrences, AB 2580 will require localities to include in their annual progress report on housing element compliance a list of all historic designations listed in the national, state or local historic registers, along with the status of any housing development projects proposed within the new historic designations.

Affordable Housing and Financing

AB 846 (Assembly Member Mia Bonta) – Aligns "Affordable" Rents with Requirements of Applicable Financing Programs, Limits Rent Increases in LIHTC-Financed Housing. Many housing laws – including the density bonus law, surplus lands act, HAA and streamlined ministerial approval laws – define "affordable" rent with reference to provisions of the California Health and Safety Code that establish the maximum rent that may be collected for a housing unit in terms of a percentage of the applicable AMI. However, these rent limits can often conflict with the rent limits established under certain federal and state financing programs, notably the LIHTC program, causing significant difficulties for affordable housing developers with financing under these programs who seek to make use of housing law protections. To address this, AB 846 provides that projects that reserve at least 80 percent of their units, exclusive of a manager's unit or units, for lower-income households, can qualify as charging an "affordable rent" if they comply with the rent limits established by the applicable tax credit, tax-exempt bond or grant financing applicable to the project. The law also authorizes the California Tax Credit Allocation Committee (TCAC), by June 30, 2025, to adopt regulations establishing a limit on annual rent increases for tenants in existing properties that enjoy a LIHTC and requires TCAC to annually assess this rent increase limit.

AB 1868 (Assembly Member Friedman) – Reforms to Property Taxation for Lower-Income Affordable Homes. In 1999, the Legislature expanded California's property tax welfare exemption, which had long applied only to rental properties, to include eligible nonprofit corporations that build and rehabilitate affordable housing units for sale to low-income families. In application, however, providers of affordable for-sale housing identified a disparity between rental and ownership housing, related to how county tax assessors valued affordable housing developments in which housing ownership opportunities were provided to qualifying purchasers under a "community land trust model." Many county assessors had interpreted assessment valuation requirements to mandate including the value of subsidized financing encumbrances in property valuations when assessing properties subject to such programs. The result potentially increased the property taxes low-income households would pay in land trust ownership developments and treated those residents differently from low-income tenants in rental properties that qualified for the welfare exemption. In response, AB 1868 establishes a rebuttable presumption that an assessor shall exclude the value of the deed of trust on certain affordability-restricted properties utilizing the community land trust model. This revision is of great importance to organizations devoted to affordable homeownership, such as Holland & Knight client Habitat for Humanity.

Assembly Constitutional Amendment (ACA) 10 (Assembly Member Cecilia M. Aguiar-Curry) and AB 2813 (Assembly Member Aguiar-Curry) – Reforms to Proposition 5 Bond Process for Affordable Housing. Last year, the Legislature voted to place a constitutional amendment titled Proposition 5 before the voters in the November 2024 election that would authorize special taxes and bond issues upon only 55 percent voter approval (rather than the otherwise applicable two-thirds vote) to finance improvements to and acquisition or construction of affordable housing, permanent supportive housing and public infrastructure projects. (See Holland & Knight's previous alert, "California's 2024 Housing Laws: What You Need to Know," Oct. 31, 2023.) In this year's session, the Legislature curtailed the originally proposed scope of Proposition 5 by enacting ACA 10. Most notably, ACA 10 removes special taxes from the scope of Proposition 5 so that General Obligation (GO) bonds will be the only method by which local agencies may generate revenue specifically for affordable housing and public infrastructure projects other than with a two-thirds vote. AB 2813 enacts further statutory provisions for the implementation of Proposition 5, including by defining housing, housing assistance programs and rehabilitation programs that are affordable to households earning up to 150 percent of countywide median income within the definition of "affordable housing" that can be funded with Proposition 5 bonds. Although ACA 10 and AB 2813 both took effect immediately, their provisions are each contingent upon voter approval of Proposition 5.

For more information about how to maximize these and other state housing laws to advance the approval of your project, contact the authors or your Holland & Knight West Coast Land Use & Environmental Practice Group attorney.

Previous California Housing Law Alerts

• A Closer Look at California's New Housing Production Laws, Dec. 6, 2017
• California's 2019 Housing Laws: What You Need to Know, Oct. 8, 2018
• California's 2020 Housing Laws: What You Need to Know, Oct. 18, 2019
• California's 2021 Housing Laws: What You Need to Know, Nov. 4, 2020
• California's 2022 Housing Laws: What You Need to Know, Oct. 13, 2021
• California's 2023 Housing Laws: What You Need to Know, Oct. 10, 2022
• California's 2024 Housing Laws: What You Need to Know, Oct. 31, 2023

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, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.