As the new year unfolds, local governments are expected to begin unraveling the practical implications of new statewide laws designed to promote affordable housing.
Steep housing costs, a drought in subsidies for affordable units and cumbersome planning processes were cited by California lawmakers who pushed through a package of bills aimed at increasing development.
The laws touch on a range of issues including streamlining the planning process for certain housing developments, which some worry will strip local control; creating a new permanent affordable housing funding source, the first since the dissolution of redevelopment agencies; and encouraging governments to plan for transit-oriented developments.
The League of California Cities is working to help educate local governments on the new rules and how they might be affected. It will also be keeping an eye out for guidelines from the state’s Housing and Community Development Department, which is expected to shed some light in the coming months as to how the rules will roll out.
“I think everybody is still trying to digest,” said the league’s Legislative Representative Jason Rhine. “The guidelines are going to be really important.”
In the meantime, the league has prepared a 2018 guide and local jurisdictions are discussing the possible effects of the statewide changes.
Ken Cole, director of San Mateo County’s Department of Housing, agreed many are in the analysis stage trying to envision how these new laws might trickle down. Some reactions might be jurisdictions updating their general plans, cities enacting inclusionary policies that push developers to build below-market rate apartments, and strong advocacy in support of a statewide housing bond.
We’re “trying to wrap our brains around all these measures. It was quite a package, an extensive package. So it’s going to be a very exciting year for local governments, counties and cities in regards to affordable housing development,” Cole said, noting there are tradeoffs. “Streamlining of the zoning or permitting process is definitely one that’s going to catch cities’ attention. … When the state acts, there’s a tendency for local communities to feel there’s an overreach.”
Land use and local control
One of the most talked changes is Senate Bill 35, which streamlines the approval process for certain developments that include below-market rate units. The law affects cities or counties that haven’t met their Regional Housing Needs Allocation, or the number of units by affordability level each jurisdiction must accommodate in its state-mandated Housing Element. SB 35 is expected to apply to almost all jurisdictions in some form, as few have met every one of their RHNA targets, Rhine said.
Cities are given “RHNA numbers, and you plan for them because that’s really the only thing you can control at the local level. And now, you have to find someone to build them or you’re held accountable for streamlining,” Rhine said, noting he hopes the state takes market conditions into consideration. “We don’t control housing forces, we can only plan for them.”
Now under certain conditions, developers can seek a ministerial approval and sidestep the often lengthy public planning process. To qualify, the project must be consistent with local zoning and design codes, and include at least 10 percent below-market rate units. Sites that are in a coastal zone, considered historic or that would require demolition of existing housing would not qualify.
There are some perks and tradeoffs for developers. Projects would be exempt from further environmental review so long as they comply with existing codes, but builders must pay prevailing wages and provide affordable units. Local governments can only require up to one parking space per unit; but, if it’s located within a half-mile of transit or a block away from a car share then no parking requirements can be imposed.
The league opposed SB 35 during the legislative process, but Gov. Jerry Brown had made clear his signature on new funding opportunities would require regulatory reform.
“There’s probably always been a tension between what the state wants to see as far as land use, and local governments’ constitutional power,” Rhine said. “Land use is one of the fundamental reasons why cities incorporate, to be in control of your own destiny.”
Cole agreed, noting it could be hard for local policy makers faced with community dissent about the impacts of growth, but are also beholden to state laws.
“I understand people are worried about traffic and quality of life issues as they relate to density, but we’re so far behind on housing units, to not do something, to stay with the status quo, in my estimation would be terrible,” Cole said.
The need
A deep deficit of affordable housing is spurring ongoing legislative efforts. Construction of about 180,000 homes a year is needed to meet statewide demands. But development has fallen far short in recent years with the number of units coming online ranging from just 80,000 to about 120,000 new homes a year, according to the league.
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Most cities are required to draft housing elements indicating where they’ve zoned for housing to meet RHNA targets. In San Mateo County, like many other areas, few cities have met all of their goals for various income levels.
The lack of supply has contributed to 3 million California households paying more than 30 percent of their income on rent, and about 1.5 million people giving more than 50 percent of their paychecks to landlords, according to the league.
In San Mateo County, average single-family home prices near $1.2 million and asking rents for a one-bedroom apartment teeter around $2,500. Incomes have not kept pace with housing costs, and home ownership is at its lowest level since the 1940s, according to the league.
Planning ahead
Moving away from the car-dependent lifestyle of decades past, some of the new housing laws seek to promote transit-oriented developments and workforce housing.
Aside from SB 35, Rhine said he anticipates two other bills might encourage local governments to update their general plans or implement zones where housing can be streamlined. Senate Bill 540 allows jurisdictions to create Workforce Housing Opportunity Zones, which focus on promoting new units near jobs and aims to reduce greenhouse gas emissions. Assembly Bill 73 outlines housing sustainability districts, which cities can adopt by completing upfront zoning and environmental reviews. Under both rules, mitigation measures and parking requirements are outlined as part of the zoning process. Ministerial, or streamlined approvals, are then available to developers that comply with the requirements, include a certain number of affordable units, and pay prevailing wages, according to the league.
Funding and building
One opportunity already sparking discussion amongst local governments is to require for-profit developers to include affordable units in new apartments, Cole said. San Mateo County’s 21 Elements Group previously issued studies enabling cities to require developers pay impact fees and members of the same group are now starting discussions about how Assembly Bill 1505 could be leveraged.
The new law sought to clarify a 2009 California Supreme Court case known as the Palmer decision, which indicated governments could not require apartment developers to build below-market-rate units. AB 1505 would reinstate jurisdictions’ ability to implement inclusionary zoning policies, but they must provide developers alternate options such as paying in-lieu fees or to build the units off site, according to the league.
“It’s elegant in many ways, it puts the burden onto the project to create the affordability and it gets people dispersed, so lower-income families can live in good neighborhoods and go to good schools,” Cole said.
While excited by the prospect, he noted it’s not yet clear whether legal challenges to the law might arise.
Local governments’ affordable housing toolbox had been whittled away in recent years following the Palmer decision and Brown’s dissolution of redevelopment agencies. Critical components of the legislative package were aimed at the biggest hurdle to affordable housing developments — funding.
Senate Bill 2 is expected to generate around $250 million a year toward affordable housing by requiring a $75 to $225 recording fee on certain real estate documents. The new revenue, while still a far cry from demand, has been hailed as the first permanent funding source since local governments lost RDAs.
Another possible opportunity is in the hands of voters as Senate Bill 3 has suggested a $4 billion housing bond that could support a range of programs related to veterans, transit-oriented development, farm workers, rehabilitation of low-income multi-family buildings, first-time home buyer assistance and more.
Cole and Rhine noted many questions from local governments, aside from the effects of streamlining, have revolved around when and how cities might receive support for much-needed affordable housing construction.
“We think about overreach with the state,” Cole said, “but we also tend to say to the state ‘show me the money.’”
(650) 344-5200 ext. 106
Twitter: @samantha_weigel
(1) comment
Finally, the legislators are working with stakeholders to find community solutions to the community concern of housing. Noticeably absent, once again, are kudos from those who push draconian property control measures in the name of "helping the vulnerable". They only seek to destroy existing housing. Cheers to those who are working so hard to make progress on the difficult issue of providing more housing and additional affordable housing.
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