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California’s New Laws to Speed up Affordable Housing Production

SB-6 and AB-2011 allow affordable housing in current commercial and industrial zoning

Lack of housing security is a major issue in the state of California for decades. As the state has weathered the effects of a global pandemic and its homeless population hit an all-time high, lawmakers continue to look at ways to combat the unmet demand for new, residential development. To ease the housing crisis and to incentivize homeless, affordable housing, and multifamily residential development throughout the state, two bills, SB-6 and AB-2011, were signed into law this September. With the relaxed zoning requirements, the bills will give developers more options to preserve and repurpose vacant, abandon, and existing structures and hopefully establish a sustainable path for affordable housing growth in the state.

SB-6, the Middle-Class Housing Act of 2022, first introduced in 2020 and enacted into law on September 28, 2022, is set to take effect on July 1, 2023. The bill allows for multifamily residential and mixed-use development projects to move forward in existing structures within office, retail, or commercial zones, as long as the projects were able to meet certain specified conditions and requirements. Projects that include in their square footage any hotel, short-term leased units (30 days or less), or other transient living uses are excluded from consideration under this bill.

AB-2011, the Affordable Housing and High Road Jobs Act of 2022, authorizes local municipalities to offer two options for development projects that qualify under a specific set of requirements. The bill provides for conditions under which the need for a Conditional Use Permit may be eliminated.

The bills streamline the redevelopment process and allow affordable housing in current commercial and industrial zoning designated properties.

SB-6 gives local municipalities the option to offer an expedited development process to avoid the property remaining vacant. This could mean that areas previously occupied by big box stores and office buildings could be revived with multifamily and affordable housing projects.

AB-2011 could also aid in limiting the amount of time these structures remain unoccupied in areas where prior to its adoption, the local municipality would have required a Conditional Use Permit to be issued or for the project to be rezoned into a district where the proposed use is permitted by right.

Under the new laws, there are different zoning requirements for new affordable housing projects.

Under SB-6:

  • The density for a new housing development located within an existing office, retail, or parking property shall meet or exceed the applicable density that is appropriate to accommodate housing for lower-income households.
  • The new housing development will need to comply with its respective zoning, parking, design, density requirement, other ordinances, local code requirements, and processing and permitting procedures.
  • It allows for affordable housing within any commercial, industrial, or parking subject property, the parcel must be considered a legal parcel and the project site must be 20 acres or less.  
  • The subject property must not be adjoined to any site where more than one-third of the square footage on the site is dedicated to industrial use.

Under AB-2011:

  • It allows developers to apply for a multifamily or mixed-use residential use without the issuance of a Conditional Use Permit.
  • Local municipalities can offer two potential development paths for interested developers:
    • Projects with 100% of units intended for lower-income households, or
    • Projects with mixed-income units along a commercial corridor.

While neither bill guarantees that development can move forward, they both contribute to more favorable conditions for affordable housing development and eliminate some of the obstacles that have hindered the past progress.

While SB-6 and AB-2011 are specific to California, many similar laws are being discussed across the country. Local municipalities are examining their existing laws to determine if more can be done to encourage growth in their areas. Understanding the specific zoning regulations within each municipality that the subject property is governed by is crucial for ensuring the viability of any development project and any real estate transactions associated with them. It also helps to identify and mitigate any potential risk that could result in a future loss on investment or construction delay.