The 2017 legislative year has come to a close, with the California Legislature passing a total of 977 bills. The Governor signed 859 of them and vetoed 118. Blessed with a Democratic super-majority, Governor Brown had good reason to be pleased with what he was able to accomplish.
San Francisco’s state representatives had a good year, too. Senator Scott Wiener had 12 bills signed into law, with eight still wending their way through a two year process. Assemblyman David Chiu, another prolific lawmaker, co-authored some of the bills and had some of his own signed into law.
Big Battle Over SB 2
At the very end of the session, Governor Brown signed a package of 15 housing-related bills that squeaked through at the last moment. The biggest battle was over SB 2, opposed by all Republicans and needing no defections by Democrats to get the required 54 votes.
Moderate Democrats helped put it over the top in a late-night session on the last day of the legislative year, but not without causing some pain: Marc Levine of Marin wanted corporations to shoulder a tax increase to pay for housing, but he and others relented at the last minute in exchange for some more modifications.
SB 2 imposes a new fee on all real estate transactions, except sales. If you refinance your property or redeem your home from foreclosure, there will now be an extra $75-$225 fee (except in cases of hardship). All the money generated—projections are $250 million per year—will go to provide critical housing, especially for the homeless, and the bulk will go to local governments.
Half the money collected in the first year will be dedicated to assisting homeless Californians and those at risk of becoming homeless. Assemblyman Chiu, chair of the Assembly Housing Committee, said: “SB 2 is at the heart of what we need to do to address the worst housing crisis California has ever faced.”
SB 35 Streamlines the Approval Process
Senator Wiener sponsored a second high-profile housing bill. SB 35 provides for a streamlined approval process for housing when cities are failing to meet their housing creation goals as required by the Regional Housing Needs Assessment. The process applies to any project that is: a) an accessory dwelling unit or multifamily housing development with two-plus residential units, and b) located on an urban infill site zoned for residential or residential mixed-use development. SB 35 won over a number of Republicans but lost seven Democrats due to concerns that it removes local control over development. With so many California cities falling short of their housing goals, SB 35 could find itself applied frequently.
15 New Housing-Related Laws Adopted in 2017
- SB 2: establishes a permanent funding source for affordable housing through a fee on real estate transaction documents.
- SB 3: authorizes $4 billion in general obligation bonds for affordable-housing programs.
- SB 35: streamlines the approval process for infill developments in local communities that have failed to meet their regional housing needs.
- SB 166: ensures that cities maintain an ongoing supply of housing construction sites for residents of various income levels.
- SB 167: increases the standard of proof required for a local government to justify a denial of low and moderate-income housing development projects.
- SB 540: streamlines the environmental review process for certain local affordable-housing projects.
- AB 72: strengthens the state’s ability to enforce laws requiring local governments to achieve housing goals.
- AB 73: gives local governments incentives to create housing on infill sites near public transportation.
- AB 291: the Immigrant Tenant Protection Act makes it illegal to threaten to report a tenant or report a tenant to ICE as leverage for eviction.
- AB 571: makes it easier to develop housing for California’s farm workers.
- AB 879: authorizes a study of local fees charged to new residential developments that will also include a proposal to substantially reduce such fees.
- AB 1397: changes definition of “land suitable for residential development,” thereby increasing the number of sites where new multi-family housing can be built.
- AB 1505: restores local governments’ ability to apply inclusionary policies to rental housing in light of the Palmer vs. Los Angeles decision, which erroneously equated rent control with deed-restricted rental units.
- AB 1515: affords housing projects protections of the Housing Accountability Act, despite local opposition, if they comply with local planning rules.
- AB 1521: gives housing organizations right of first refusal to purchase affordable-housing developments.
SB 3 Heads for November 2018 ballot
Passed and signed by the Governor, this $4 billion affordable-housing bond measure now heads for the November 2018 ballot. Most Republicans voted against SB 3, arguing that eliminating regulatory roadblocks is the way to spur development. For reasons unknown, Governor Brown, who made big pitches for bills related to road repair and cap-and-trade, did little to promote the 15 housing measures he signed into law.
AB 352: affordable housing by reducing size
Wiener also co-authored AB 352, a bill that encourages development of more affordable housing by prohibiting cities from restricting so-called efficiency apartments (“micro-units”) in two ways: a) they cannot require such units to be larger than the International Building Code minimum of 220 square feet; b) they may not place limits on the number of such units built
within a half-mile radius of public transit, where there is access to a ride-share car within a block, or within a mile of a University of California or California State University campus. AB 352 would preempt existing ordinances that impose greater restrictions. A developer seeking approval for efficiency apartments would still have to go through the normal building approval process.
AB 73 and SB 540
AB 73, sponsored by Assemblyman Chiu, together with SB 540, gives cities incentives to plan designated neighborhoods for new development. Under his legislation, a city receives funding when it designates a particular community for more housing, then more funding when it starts issuing permits. At least 20% of the new housing must be reserved for low-or middle-income residents.
If projects meet zoning standards, permits are expedited. SB 540 authorizes state grants or loans for local governments to carry out planning and environmental reviews for designated communities. SB 2 and SB 3 provide the funding.
Good Start, But Not Nearly Enough
While all of these bills should help California with its housing crisis, it’s not nearly enough. Far more needs to be done to encourage the private sector to build more housing at all economic levels. According to a recent McKinsey & Co. report, to replace and build enough new housing to meet the nationwide demand by 2025 could take between $9 and $11 trillion in construction
spending alone; land costs another $5 trillion. Public funding would have to contribute $1 to $3 trillion, with the private sector providing the rest. Seems like we‘ve barely scratched the surface.
Debra Lopez is a SPOSFI business member. Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.