New Policies for Real Estate Development in California 2024

In recent years, California has faced significant challenges in housing development. The state's housing production has averaged only 80,000 new homes per year, far short of the annual demand of 180,000 homes. This housing shortage has driven up home prices, making homeownership less attainable and resulting in over three million households choosing to rent rather than buy.

Despite these obstacles, the demand for housing in California continues to grow, with 47.9% of homes selling above the listing price as of June 2024.

While the state's housing issues may seem daunting, policymakers are increasingly focusing on solutions to address the crisis. These efforts are underway to enhance the housing supply, create opportunities, and streamline the permitting and approval processes.

New Housing Approval and Permitting Streamline Policies in California 2024

SB 684

SB 684 simplifies the approval process for housing developments consisting of up to 10 units on parcels smaller than 5 acres. It mandates that local governments approve eligible projects without discretionary reviews. The bill also requires issuing building permits for qualifying projects and specifying the conditions for approval. Importantly, the bill does not mandate the approval of ADUs on parcels created under its provisions.

• Approval Timeline: Local governments must decide within 60 days.
• Density and Zoning: Projects must be on lots zoned for multi-family development, and at least 75% of the perimeter must adjoin urban uses.
• Prohibits local rules that block development; e.g. minimum FAR
• Goals: Increase home ownership and address California's housing crisis with faster approvals.

AB 2011

AB 2011 facilitates the construction of affordable and mixed-income housing in commercial zones, such as areas designated for offices, retail, or parking. The primary objective is to tackle California's housing crisis by encouraging urban infill development, ensuring workers' fair compensation, and minimizing disruptions to existing neighborhoods. AB 2011 aims to:

• Streamline the approval process for multifamily housing developments, requiring ministerial approval within 90 or 180 days, depending on the project's size.
• Mandate fair wages for construction workers and specific rules for affordable housing, setting targets for Below Market Rate (BMR) units
• Provide exemptions from the California Environmental Quality Act (CEQA) and outlines site-specific criteria,
• Site Requirement: at least 75% of the project's perimeter is surrounded by urban uses.
• 2 eligibility paths: 100% BMR projects on commercial-zoned land or mixed-income projects (typically with 15% BMR) on commercial corridors.

AB 821

AB 821 modifies the consistency requirements between a jurisdiction's general plan and its zoning ordinance. Specifically, if a proposed development project aligns with the general plan but not with the current zoning ordinance, the local agency has two options:

1. Amend the zoning ordinance to be consistent with the general plan within 180 days of receiving the application. If this amendment is not completed within 180 days, the application can proceed according to the previous guidelines.
2. Process the application using the objective standards outlined in the general plan, even if the zoning ordinance is not consistent with those standards. In this case, the inconsistent zoning standards would not apply.

New Land Use Policies in California 2024

SB 478

SB 478 prevents the misuse of floor area ratio (FAR) and minimum lot size requirements, which currently obstruct the construction of multifamily buildings in designated zones. Some cities use FAR restrictions to limit building sizes, thereby hindering multifamily housing development.

This bill stipulates that jurisdictions cannot impose an FAR standard of less than 1.0 for housing projects with 3 to 7 units, or less than 1.25 for projects with 8 to 10 units. Additionally, local agencies are prohibited from enforcing lot coverage requirements that would prevent these housing developments from meeting the specified FARs.

The eligible parcels for these regulations must be located in either multifamily residential or mixed-use zones.

AB 1287

AB 1287 broadens and enhances SB 35 by amending the State Density Bonus Law. It redefines "maximum allowable residential density" and introduces an "additional density bonus" for eligible housing projects.

Projects that comply with the Density Bonus Law (DBL) can receive an extra density bonus of 20% to 50% by incorporating a specified percentage of units designated for very low or moderate-income households.

AB 976

AB 976 removes the sunset provision in AB 881. Instead of requiring owner occupancy, it authorizes local agencies to require that an ADU be used for rentals of terms 30 days or longer.

AB 1033

Previously, California law prohibited the sale of an Accessory Dwelling Unit (ADU) separately from the primary residence. AB 1033 changes this by giving local governments the option to permit the separate sale of ADUs as condominiums. AB 1033 is among one of the new ADU laws in California.

Other Laws Streamlining the Housing Process in California

SB 330

SB 330 aims to speed up permitting and loosen local regulations to?quickly rebuild housing, as well as limit public hearings to five on all housing projects. SB 330 would limit cities and counties' ability to assess and approve development projects. This transition is reinforced in six ways:

• Prevent local governments from downzoning unless they upzone by an equal amount elsewhere within their jurisdiction.
• Suspend the implementation of local downzoning and housing building moratoriums.
• Require quick processing of housing permits that adhere to zoning rules.
• Ensure that house demolition does not lead to a net loss of units.
• Postpone requirements for voter approval of zoning and general plan modifications.
• Require resettlement benefits and first right of refusal in new units or compensation for rehousing for renters who may be displaced.

SB 35

SB 35 is designed to simplify the approval process for housing projects, particularly in cities struggling to meet its Regional Housing Need Allocation affordable housing goals. It addresses the shortage of affordable housing by streamlining ministerial approval for qualifying projects.

• Ministerial Approval: Projects subject to SB 35 bypass discretionary review, expediting the process.
• Affordability Requirement: Projects must offer at least 109% affordability to households below 80% of the area median income
• Limited Public Review: Provides minimal opportunities for public input.
• Exemption from CEQA: Projects are exempt from California
• Environmental Quality Act (CEQA) requirements due to their streamlined nature.

While many policies remain to be implemented to fully resolve California's housing crisis, the current laws are driving meaningful progress toward this goal.

To keep informed about the latest developments in California’s housing policies, we invite you to subscribe to our newsletter: https://www.dhirubhai.net/build-relation/newsletter-follow?entityUrn=7218745744000704512

References:

• https://www.hcd.ca.gov/policy-and-research/addressing-variety-housing-challenges
• https://www.redfin.com/state/California/housing-market#overview
• https://bbklaw.com/guidance-for-2024-housing-new-laws-in-california
• https://planning.lacity.gov/project-review/assembly-bill-2011#

Disclaimer: The information provided here is for informational purposes only and is not intended as legal advice. For specific legal inquiries or guidance on housing policies, please consult with a qualified legal professional.

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