California’s Continued attempt to Increase Housing Production and Streamlining Approvals

The California legislature’s two-year session has just began. The November 2024 election results provided a few Republican party gains, but the Democrat party still has a 2/3 majority in both houses.

For the at least the past decade, housing legislation will once again be a major focus in Sacramento as there continues to be the effort to not only increase the supply of housing but address its affordability. The California Department of Housing and Community Development (HCD) has stated that California needs to produce 180,000 new homes annually even before the recent destruction from the Los Angeles Fires. The facts are that over the past decade the average number of new homes is not even 80,000 per year. As a result, we have a cumulative deficit along with an annual deficit. In 2022 only 121,614 units were built. While this was the highest since 2005 it still did not meet our housing needs.

I have discussed in previous articles the efforts of the State Legislature and HCD to take control away from local government to ensure more housing, but it does not appear that these measures have solved our housing deficit.

The California Building Association (CBIA) is the leading advocacy group for the housing development community. It has published the following goals for this year in an attempt to meet our housing needs:

“Easy” policy recommendations to speed up housing production

1. Enforce issuance of Certificates of Occupancy as required by the California Building Code: This is a low-cost way to be sure that jurisdictions follow existing law in getting already approved and fully constructed units to market.
2. Enforce partial release of subdivision bonds as required by the Map Act: This is a low-cost way to be sure that jurisdictions follow existing law in getting bonds timely released to reduce the cost of housing.
3. Authorize California Department of Housing and Community Development (HCD) enforcement of existing Housing Law: With the potential for an investigation, and a loss of funding, we believe local jurisdictions will be more apt to follow existing state law.
4. Require the disclosure of the identity of the plaintiff who is bringing a CEQA lawsuit.

“Heavier” policy recommendations to speed up housing production

1. Local Impact fees
   • Cap or limit fees so that they are not disproportionate to the actual impact and cost of serving projects.
   • Eliminate or decrease “discretionary” developer requirements.
2. Regional Housing Needs Assessment (RHNA) reform
   • Incentivize local cities and counties to fulfill their responsibility by tying regional and state funding mechanisms to compliance with RHNA allocations.
   • Tie RHNA housing targets to job growth projections and targets. Build where there’s workforce.
   • Base RHNA compliance on the number of housing units approved and actually built.
3. CEQA lawsuits
   • A project that has gone through the CEQA process and been subject to CEQA litigation must correct the deficiencies the court has determined were required to be corrected. Once that is complete, no more CEQA litigation should be allowed on the project.
4. City and county requirements
   • Simplify and standardize building codes and design criteria for faster approvals and fewer costly, one-off product types and/or features.
   • Require timely and substantive comments and decisions on plans and applications to minimize or eliminate delays.
   • Eliminate downsizing of project approvals.

As the year progresses the CBIA will be providing information on key legislation impacting housing and you can keep informed by going to their website cbia.org. In addition, their local affiliate, the Building Industry Association of Southern California (BIASC) will also be monitoring legislation and their website it biasc.org

There is also a new nontraditional organization which has sprung up to support more housing. I am sure that many of you have heard the term NIMBY (Not in My Back Yard) which has been used to describe those opposing housing development. While this opposition is still a potent force, in recent years a new group supporting housing has arisen and is called YIMBY (Yes in My Back Yard). This group generally supports denser housing, and a statewide group has been formed. Their website is cayimby.org. This year they are actively sponsoring housing legislation which includes:

SB 677 (Wiener) is an attempt to improve existing law to ensure the right to build duplexes and fourplexes in residential areas along with making it easier to streamline the development of multi-family properties in urban areas.

SB 9 (Atkins 2021) and SB 35/423 (Wiener) are previous legislation which have been tools in the fight to build new homes more quickly and affordably, but their initial implementation has exposed loopholes in the existing law that this group believes needs improvement and strengthening. SB 677 integrates what has been learned from the first years of these existing laws to allow more homebuilding in the areas that need it the most.

With the passage of SB 9 in 2021, California became one of the first states to legalize up to four homes per property and streamlined lot splits in residential neighborhoods to increase the supply of smaller, lower-cost homes statewide. But some of the provisions in the law have been abused by cities and anti-housing neighbors, preventing its effective use for building more housing.

Similarly, in 2023, a coalition of housing advocates and labor unions passed SB 423, an extension of SB 35 But provisions in that bill have also proven to be challenging to translate into the policy’s full home building potential.

SB 677 updates both SB 9 and SB 423, improving both bills to make it faster, easier, and more affordable to build homes of all types in the neighborhoods where they are needed the most. SB 677 will allow these laws to deliver more fully on their potential.

AB 1154 (Carrillo) promotes the construction of more Accessory Dwelling units (ADUS) by making it easier to construct Junior ADUS (such as garage conversions).

According to YIMBY, the previous efforts by the California Legislature’s to increase ADU construction has led to the construction of over 85,000 new, affordable ADUs across the state. These rules made it easier and faster to build ADUs and Junior ADUs (JADUs) on a variety of properties, giving homeowners a powerful incentive to build them.

However, YIMBY claims that current laws governing small ADUs have created confusion, with overlapping definitions and standards that lead to slower approvals, or on occasion, denial of legally valid projects. This is especially true for smaller ADUs built within existing space in a single-family home (“JADUs.”).

AB 1154 corrects these redundancies and creates a single set of standards for ADUs under 500 square feet, making it easier for homeowners to access the benefits and flexibility small ADUs can create.

AB 253 (Ward) Third Party Permit Review (Housing “Shot Clock”)

Proposes to speed up the approval process for new homes to allow home builders to hire a licensed third-party review to review housing permit applications if the local government cannot or does not complete the permit review withing 30 days.

Their analysis is that many jurisdictions in California continue to have slow, unpredictable “post-entitlement” permitting and inspection processes. These permitting and inspection delays slow down housing production and can even kill smaller housing projects by driving costs beyond what’s feasible for small, local builders.

SB 79 (Wiener) increases the density and streamlines the permit review process for building multi-family homes near train and rapid bus lines.

YIMBY claims that most cities in California continue to prohibit multi-family homes on many properties near transit stops, which both increases housing costs, and undermines access to, and use of, transit. The broad prohibitions on multi-family housing also increase climate pollution, both through reducing transit ridership and forcing people to drive private vehicles for more of their trips.

SB 79 will make it legal to build multi-family housing near transit, including in areas currently zoned only for single-family homes, by requiring upzoning near rail stations and bus lines. It will help address housing affordability by increasing the supply of homes in these areas, while also bolstering transit use – and the funding stability of public transportation systems.

SB 9 (Arreguin) ADU Owner Occupancy Requirements.

The Legislation in 2020 banned local governments from mandating that ADUs be owner-occupied. However, some local governments have continued to require this for ADUs built prior this law was passed. Senate Bill 9 makes it clear that previous legislation exempting ADUs from owner-occupancy requirements applies to all ADUs, not just new ones.