Housing Crisis’ Bill Heads Toward Signing

Housing Crisis’ Bill Heads Toward Signing

California’s “housing crisis” legislation aimed at preventing cities from putting caps on apartment development is headed for the desk of Gov. Gavin Newsom, just one of several nationally watched measures aimed at addressing the Golden State’s worsening affordability problems.

Both chambers of the California Legislature passed Senate Bill 330, put forward by state Sen. Nancy Skinner, D- Berkeley, as the Housing Crisis Act of 2019. The measure seeks to speed housing construction in California by cutting the time it takes to obtain building permits, limiting fees on new housing development, and barring local governments from reducing the number of residences that can be built.

Newsom has until Oct. 13 to sign or veto the bill, but its passage follows earlier calls by Newsom and legislative allies to urge production of more than 3.5 million new homes in the nation’s most populous state by 2025. The measures in California, from the San Francisco Bay Area to Los Angeles, are getting close attention by the commercial real estate industry around the country because they could serve as models for other states as cities from Seattle to Denver to New York also struggle with high costs for housing.

“Our failure to build enough housing has led to the highest rents and home ownership costs in the nation,” Skinner said in a statement Sept. 6, after the Senate agreed to amendments included in the Assembly’s recently passed version of the bill.

California has some of the country’s most expensive housing, with affordability problems accelerating amid a dearth of construction, and it leads the nation in homelessness in its major cities, according to state and federal data. Skinner pointed to state data indicating almost one-third of California renters must spend more than half of their incomes on housing, which is above the national rate of 25% of renters facing the same burden.

Skinner said SB 330, which was supported by groups including the California Association of Realtors and California Building Industry Association, “gives a green light to housing that already meets existing zoning and local rules and prevent new rules that might limit housing we so desperately need.”

According to a California Senate floor analysis, the bill was also supported by the California Apartment Association, California Business Properties Association, California Business Roundtable, and building industry and housing advocacy groups in several cities and counties. It was opposed by more than 50 city governments, along with environmental and preservation groups and the League of California Cities.

If signed by the governor, SB 330 would take effect in 2020 and sunset in 2025. It would prohibit cities and counties from hiking fees or changing permit requirements once a project applicant has submitted all preliminary required information. Housing-restricted urban areas would be barred from changing building design standards, cutting the number of housing units allowed, establishing population caps, or enacting moratoriums on new housing construction.

Skinner said the bill also has anti-displacement measures, including banning the demolition of affordable and rent-controlled units unless developers replace all of them. Developers would also have to pay to rehouse tenants and offer them first right of return at the same rent.

SB 330 received relatively little public attention compared with other recent California bills that had mixed success in the California Legislature, targeting issues including rent control, transit-friendly zoning and other changes designed to lessen barriers to the construction of new housing. One of the most high-profile was state Sen. Scott Wiener’s Senate Bill 50, which would have allowed for more high-density apartment development statewide but was shelved until at least next year.

According to a report earlier this year by UCLA Lewis Center for Regional Policy Studies, California cities and counties have approved zoning for 2.8 million new housing units, but that housing is not getting built. Statewide residential building permits issued in the first five months of 2019 were down 12% from the same time in 2018, the California Department of Finance reported.

Newsome recently called on lawmakers to send him bills that would enact changes including rent caps and reductions in red tape now hindering housing construction. Housing-related legislation in California and others states has the potential to significantly alter multifamily investment and development fundamentals nationwide.