2023 Legislative Preview: Will New Faces and Budget Constraints Change Housing Focus in Sacramento?

UPDATE: Since the legislative bill deadline, a number of additional housing ideas have been put forth by legislators by amending spot bills. We have updated our 2023 legislative preview to include new policy proposals.

Despite the passage of significant housing legislation in California in recent years, a continued focus on housing issues is not necessarily a given in 2023. A combination of redistricting and term limits has resulted in the election of nearly three dozen new legislators, the most in recent memory. Several legislators who have championed housing bills over the past few years have reached, or are about to reach, their term limits. In addition, after several years of budget surpluses supporting robust housing expenditures, the state budget outlook for 2023 projects a shortfall of $22 billion.

Yet despite these shifting dynamics, the pace of housing legislation appears to be holding steady in 2023, at least at the beginning of this new legislative cycle. Well over 100 bills pertaining to housing and homelessness were introduced before the February 17th bill introduction deadline. While some of these are minor revisions to existing laws, a handful of bills are more ambitious and build off of important land use reforms of recent years. There have also been dozens of “spot bills”—laws which do not make substantive changes to state law and therefore can be changed after the introduction deadline—that may become vehicles for other housing-related legislation. Finally, even with a budget shortfall, the Newsom administration’s January budget proposal maintains funding for the state’s most integral affordable housing and homelessness programs.

This commentary tracks all of these efforts, and highlights a few themes that have emerged so far.

A continued push on land use reforms

A handful of bills under consideration during this year’s legislative session make changes to local land use laws. Senate Bill (SB) 4, introduced by State Senator Scott Wiener, would allow affordable housing on land controlled by religious institutions and independent institutions of higher education, bypassing local approval processes and zoning restrictions and potentially opening up roughly 38,800 acres of developable land statewide on parcels owned by faith-based organizations alone. New changes to the state density bonus law have also been introduced. Specifically, Assembly Bill (AB) 1287 (Alvarez) would ensure that density bonus incentives are allowed in the California Coastal Zone. The bill would also create a new moderate-income category to combine with existing lower-income options, offering increased density for builders who agree to deed-restrict extra units for moderate-income residents.

Assemblymember Laura Friedman, who authored a bill that passed in 2022 that greatly reduced parking requirements near transit (AB 2097), has introduced two new parking reform bills in 2023. AB 1318 would prohibit cities from imposing new requirements on homes that undergo renovations or additions. AB 894 would require cities to allow property owners to share unused parking spaces, and to allow shared parking spaces to count towards parking minimums in new developments. Similarly, AB 1317 (Carrillo) would require landlords to “unbundle” parking costs from rent, which could improve affordability for tenants who do not own a car.

AB 68 (Ward) would create new streamlining and other incentives for housing projects in infill areas that would promote climate resilience while limiting growth in areas that are environmentally sensitive.

Senator Atkins is proposing to amend the 2021 California HOME Act (also known as SB 9) with SB 450 which would require a 60 day approvals for projects and disallow cities from imposing differing design standards on new units compared to the existing zoning in the area a project is proposed in.

A handful of bills pertain to land use rules for accessory dwelling units (ADUs) and other smaller-scale housing developments. AB 976 (Ting) would make permanent a prohibition on owner occupancy requirements for ADUs. AB 1033 (Ting) would allow accessory dwelling units to be sold or conveyed separately from the primary residence. AB 42 (Ramos) would prohibit sprinkler requirements for ADUs less than 500 square feet in size. SB 294 (Wiener) would prohibit floor area ratio (FAR) standards less than 2.5 on a project with 11 to 20 units, or an FAR less than 1.25 for every ten housing units on a project with 20 or more units. Low FAR standards can limit what size can be built on a lot, making building small-scale infill projects more difficult.

Making it easier to convert existing commercial buildings into residential also continues to be a focus of the legislature. AB 529 (Gabriel) would require the state to revisit and revise existing adaptive reuse codes, which can present significant barriers to the success of such projects.The bill would also create an adaptive reuse scoring category for the state’s Pro Housing Designation program. AB 1532 (Haney) would require that commercial to residential conversions be approved by-right (that is, without a discretionary approval process), and would establish the Office to Housing Conversion Fund to provide financial resources to these types of projects.

Extending tools for affordable housing

Several bills focus on improving existing tools for affordable housing, or creating new ones. Senator Wiener has introduced SB 423 to make a law passed in 2017 to streamline housing construction in cities that have failed to meet their housing goals (SB 35) permanent. The law also would make tweaks to some  standards in order to make the law useful for more types of projects. Preliminary findings from Terner Center show that approximately 18,000 homes have been received or applied for permitting under SB 35 between 2017 and 2021, three quarters of which were deed-restricted affordable units. But the law has yet to apply streamlining to many market-rate projects that only include a share of affordable units, and is set to expire in 2025.

Several other bills have been introduced that would implement creative ways to support the creation of more affordable housing. ACA 1 (Aguiar-Curry) would create a constitutional amendment to lower the threshold for the percentage of voters in favor of affordable housing and infrastructure bonds to 55 percent, rather than the two thirds currently required by the state constitution. The passage of this bill in Sacramento and by voters would have important implications for local governments who often cannot clear the two thirds voter threshold to approve spending for affordable housing. SB 440 (Skinner) would authorize local governments to establish regional housing finance authorities to raise funds and provide technical assistance for affordable housing development. AB 519 (Schiavo) would create a working group tasked with developing a consolidated application for state affordable housing funding sources. Lawmakers continue to be interested in expanding affordable housing supply through publicly built or operated housing. Two bills in this space have been introduced so far—AB 309 (Lee) and SB 555 (Wahab)—which would examine the potential to create a framework for social housing, or housing built by public agencies for low- and moderate-income residents.

Finally, AB 84 (Ward) would expand the eligibility of affordable housing developments that can utilize the state’s welfare property tax exemption, which exempts housing affordable to low-income residents from local property taxes. The law would create more certainty on the exemption and provide a hold-harmless clause for tenants whose incomes grow above the current threshold of 80 percent of area median income after move-in.

Strengthening Accountability and Protections

A handful of laws look to expand accountability provisions or strengthen protections. For example, AB 821 authored by Assemblymember Tim Grayson would require cities to address inconsistencies between zoning regulations and general plans. Failure to do so would require those cities to deem applications consistent with zoning. AB 1633 authored by Assemblymember Phil Ting would allow the Housing Accountability Act to apply in instances where a locality has denied a California Environmental Quality Act (CEQA) exemption or has held up the approval of other environmental clearances. AB 1485 (Haney) would empower California’s Department of Housing and Community Development and the Attorney General’s office to intervene in any legal action addressing a violation of specified housing laws, including the Housing Accountability Act, the Density Bonus Law, the Housing Crisis Act of 2019, and more. SB 83 (Wiener) would expedite electrical connections for development projects with an eight-week timeline and a $0.25 per square foot compensation per day for delays.

A handful of other changes have been proposed to the CEQA process as well. A recent tentative ruling found that population increases and noise from future residents could be considered environmental impacts under CEQA, a ruling which opens the door for future legal action against all housing proposals and which has prompted proposals from the legislature. AB 1700 (Hoover) would state clearly that these factors could not be considered under CEQA. SB 393 (Glazer) would require a person or organization who brings a CEQA lawsuit to disclose information about any financial support they receive. AB 978 (Patterson) would require a person seeking judicial review of the CEQA decision of a lead agency to post a bond of $500,000 to cover the costs and damages to the housing project incurred.

Some legislation would create new protections for tenants. For example, SB 567 (Durazo) would modify the state’s Tenant Protection Act of 2019 by lowering allowable rent increases to a 5 percent maximum annually and by expanding applicability of the law to certain homes currently not covered by the act. For example, AB 1035 (Muratsuchi) would extend statewide rent cap provisions under AB 1482 to mobile home park residents, who are not currently protected. SB 460 (Wahab) would prohibit landlords from inquiring about an applicant’s criminal history. AB 12 (Haney) would cap rental security deposits at one month’s rent.

As always, the Terner Center will continue to monitor legislative activity and provide data and analysis to inform the conversation. Below are links to the legislative text of the bills we are watching. With feedback or comments on this summary, please contact Policy Associate Muhammad Alameldin at muhammadalameldin@berkeley.edu.

 

ACA 1 (Aguiar-Curry) – Would place a constitutional amendment on the statewide ballot that would lower the voter threshold for approving affordable housing bonds to 55 percent. The threshold is currently two thirds.

ACA 10 (Haney) – Would make an amendment to the constitution declaring that the state recognizes the fundamental human right to adequate housing for everyone in California. The measure would make it the shared obligation of state and local jurisdictions to respect, protect, and fulfill this right, by all appropriate means.

AB 11 (Jackson) – Would create a new commission tasked with studying the causes and effects of the rising cost of living in California and developing solutions toward making California a more affordable place to live.

AB 12 (Haney) – Would prohibit a landlord from demanding or receiving security for a rental agreement for residential property in an amount or value more than one month’s rent, regardless of whether the residential property is unfurnished or furnished.

AB 42 (Ramos) – Would prohibit sprinkler requirements for ADUs less than 500 square feet in size.

AB 68 (Ward) — Would halt development in high fire and flood risk areas while streamlining construction of infill housing development.

AB 84 (Ward) – Would remove the requirement that an owner eligible for the welfare property tax exemption receive a low-income housing tax credit and would instead require that a unit continue to be treated as occupied by a lower-income household if the property is subject to a legal restriction that provides that units designated for use by lower-income households are continuously available to or occupied by lower-income households.

AB 271 (Quirk-Silva) – Would authorize counties to establish a homeless death review committee for the purposes of gathering information to identify the root causes of death of homeless individuals and to determine strategies to improve coordination of services for the homeless population. Would establish procedures for the sharing or disclosure of information by a homeless death review committee.

AB 281 (Grayson & Rivas) – Would extend post-entitlement phase permit timeline requirements to include special districts.

AB 312 (Reyes & Ward) – Would establish a new grant Program to provide technical assistance to eligible entities for the purpose of creating a state-managed online platform of affordable housing listings, information, and applications.

AB 356 (Mathis) – Would make permanent the current CEQA exception regarding the evaluation of aesthetic effects in the case of refurbishment, conversion, repurposing, or replacement of an existing building.

AB 426 (Jackson) – Would require HCD to develop a plan for the state to keep pace with building infrastructure and housing units during an economic downturn. The bill would require the Department to submit the plan to the Senate and Assembly Housing Committees.

AB 434 (Grayson) — Would empower HCD to notify cities, counties, or the Attorney General of non-compliance regarding various housing provisions and approvals.

AB 440 (Wicks) — Would redefine “maximum allowable residential density” in density bonus law to refer to the highest number of housing units allowed by local zoning laws, plans, or land use regulations.

AB 510 (Jackson) – Would require each city and county to establish a local land trust, for the purposes of holding and developing real property within the jurisdiction. The bill would require the local land trust to be governed by the city council or board of supervisors of the local government. The bill would also exempt a development project on land within a local land trust from CEQA.

AB 519 (Schiavo) – Would require HCD to establish a workgroup to develop a consolidated application for the purposes of obtaining grants, loans, tax credits, credit enhancement, and other types of financing for building affordable housing, and developing a coordinated review process for the application. The bill would require the workgroup to include representatives of the department, the California Housing Finance Agency, the California Tax Credit Allocation Committee, and the California Debt Limit Allocation Committee. The bill would require the workgroup to receive the application and to work directly with applicants and specify the responsibilities of the lead agency.

AB 529 (Gabriel) – Would require the California Building Standards Commission, in consultation with HCD, to revise fire, safety, health, structural, seismic, and environmental elements of the California Existing Building Code that apply to adaptive reuse projects. The bill would require building standards to better facilitate the development of adaptive reuse projects. The bill would also add the expansion of adaptive reuse projects to the list of specified pro-housing local policies.

AB 578 (Berman) – Would cap the 0.42 percent interest payments that cover monitoring costs for HCD’s Multifamily Housing Program at $150 per unit per year adjusted for inflation.

AB 584 (Limón) — Would establish the Laborforce Housing Financing Act of 2023, defining “laborforce housing” and creating a fund for building projects managed by public entities and nonprofit housing providers.

AB 671 (Ward) – Would allow a local agency or community land trust that is a recipient of CalHome program funds to purchase residential real property in fee-simple, construct accessory dwelling units or junior accessory dwelling units on the property, and separately lease or convey each dwelling unit on the property to separate households.

AB 799 (Luz Rivas, Friedman, Ward, & Wilson) – Would amend the purpose of the Homeless Housing, Assistance, and Prevention program to provide ongoing grant funds to address immediate homelessness challenges using evidence-based or data-informed frameworks. The bill would also require California Interagency Council on Homelessness to establish and update statewide goals based on data needed for solutions to homelessness, and would implement a 5th round of funding with additional program requirements.

AB 821 (Grayson) – Would require localities to amend zoning ordinances that are inconsistent with their general plan within 90 days and by deeming certain applications for housing development projects complete for purposes of the Permit Streamlining Act. The bill would require localities to approve or disapprove the application at any of the five hearings required by the act. The bill would prohibit localities from disapproving the housing development project or requiring the project developed at a lower density, unless it first makes written findings supported by a preponderance of the evidence.

AB 835 (Lee) — Would task the State Fire Marshal with studying increasing the maximum height for apartment buildings with one staircase.

AB 894 (Friedman) – Would require localities to allow properties with unused parking spaces to share them with other people or organizations. The bill would also require localities to count shared parking spaces towards parking requirements for new developments or existing properties. Additionally, the bill would allow the use of a professional planning association’s methodologies to determine the number of shared parking spaces that can be reasonably shared between different uses. Lastly, the bill would require public agencies, private landowners, or lessors to consider the feasibility of shared parking arrangements before constructing new parking spaces, especially if state funds are being used.

AB 919 (Kalra) – Would establish requirements for owners of rental properties who intend to sell to allow residents of the property or other entities to make an offer to purchase the property.

AB 930 (Friedman) – Would allow two or more local governments to jointly form a tax  district to raise revenues through various tax and fee means for housing and infrastructure. The bill would provide for the establishment of a governing board of each district that would representatives of each participating local government.

AB 932 (Ting) – Would lower the requirement of a locality to approve a junior ADU from 60 days to 45 days.

AB 976 (Ting) – Would make permanent a prohibition on owner occupancy requirements for ADUs

AB 978 (Patterson) – Would require a person seeking judicial review of the decision of a lead agency made pursuant to CEQA to carry out or approve a housing project to post a bond of $500,000 to cover the costs and damages to the housing project incurred by the respondent or real party in interest.

AB 1033 (Ting) — Would allow accessory dwelling units to be sold or conveyed separately from the primary residence.

AB 1035 (Muratsuchi) – Would prohibit the management of a mobile home park from increasing the gross rental rate for a tenancy for a mobile home space more than 3 percent plus the percentage change in the cost of living over the course of any 12-month period.

AB 1287 (Alvarez) – Would ensure that density bonus incentives are allowed in the California Coastal Zone, while also creating a new moderate income category to combine with existing lower income options.

AB 1307 (Wicks) — Would specify that noise generated by unamplified voices of residents is not a significant environmental effect for residential projects under CEQA.

AB 1332 (Carrillo) — Would require local agencies to develop pre-approval programs for accessory dwelling unit plans by January 1, 2025.

AB 1431 (Zbur) — Would create a two-year pilot program in up to four counties offering housing subsidies to eligible individuals to reduce housing insecurity and prevent homelessness.

AB 1449 (Alvarez) — Would exempt public agency actions related to affordable housing projects from CEQA.

AB 1485 (Haney) — Would allow both the state’s Housing and Community Development department and the Attorney General’s office to intervene in legal actions involving violations of certain housing laws, including the Housing Accountability Act, Density Bonus Law, and the Housing Crisis Act of 2019.

AB 1490 (Lee) — Would streamlines permit approvals and fee exemptions for adaptive reuse projects for 100 percent affordable housing.

AB 1492 (Alvarez) — Would provide property tax welfare exemptions for mixed-income housing developments based on the number of affordable housing units available.

AB 1505 (Rodriguez) – Would appropriate $250,000,000 to the California Residential Mitigation Program for the purpose of implementing seismic retrofitting for soft story Multifamily Housing.

AB 1633 (Ting) – Would expand the Housing Accountability Act to apply when a locality fails to issue a project an exemption from CEQA for which it is eligible, fails to adopt a negative declaration or addendum for the project, to certify an environmental impact report for the project, or to approve another comparable environmental document.

AB 1657 (Wicks) – Would place an affordable housing bond before voters in Fall of 2024. If adopted, would authorize the issuance of bonds in the amount to be determined.

AB 1661 (Carrillo) — Would exempt accessory dwelling units from code requirements regarding splitting electric or gas metering from the main home.

AB 1700 (Hoover) – Would specify that population growth, in and of itself, resulting from a housing project and noise impacts of a housing project are not an effect on the environment for purposes of CEQA

SB 4 (Wiener) –  Would allow affordable housing development as a by-right use on land controlled by religious institutions and independent institutions of higher education.

SB 83 (Wiener) — Would require electrical utilities to connect development projects to the grid within eight weeks after notification of project readiness or pay applicants a penalty of  $o.25 per square foot per day.

SB 91 (Umberg) — Would eliminate the 2025 sunset for CEQA exemptions for converting motels, hotels, or hostels to supportive or transitional housing.

SB 225 (Caballero) – Would establish a program to provide revolving short-term acquisition capital and long-term public subsidy to acquire unsubsidized affordable homes and preserve them as permanently affordable.

SB 239 (Dahle) – Would require that CEQA lawsuits be resolved within 365 days of the filing of the record of proceedings with the court.

SB 240 (Ochoa Bogh) — Would permit local agencies or nonprofit affordable housing sponsors to be potential priority buyers of surplus state property for transitional housing for formerly incarcerated individuals.

SB 294 (Wiener) – Would prohibit floor area ratio (FAR) standards less than 2.5 on projects with 11 to 20 units, or an FAR less than 1.25 for every ten housing units on a project with 20 or more units.

SB 352 (Padilla) – Would require the California Workforce Development Board to examine housing costs by county and create a formula to ascertain how much the local minimum wage must be for a full-time worker to reasonably afford housing and basic expenses in that county.

SB 393 (Glazer) – Would require a person or organization who brings a legal action regarding a project under CEQA to disclose information about any financial support they receive.

SB 395 (Wahab) — Would mandate that landlords file termination or rent increase notices with the Secretary of State within 10 days and would establish the Statewide Rental Reporting Database.

SB 405 (Cortese) — Would require local planning agencies to notify property owners prior to  adding a site to the jurisdiction’s housing element sites inventory and would require local planning agencies to post the housing element sites inventory on its website.

SB 423 (Wiener) – Makes the SB 35 streamlining process permanent, expands its application to the California Coastal Zone, and makes changes to the labor standards required for market-rate housing projects.

SB 440 (Skinner) — Authorizes local governments to establish regional housing finance authorities to raise funds and provide technical assistance for affordable housing development.

SB 450 (Atkins) — Would reform SB 9 with a 60 day approval shot clock, HCD enforcement, and clarification that local SB 9 standards must align with zoning in the area.

SB 460 (Wahab) – Would prohibit landlords from inquiring about an applicant’s criminal history, requiring an applicant to disclose their criminal history, or requiring an applicant to authorize the release of their criminal history.

SB 466 (Wahab) – Would modify the Costa-Hawkins Rental Housing Act to allow for the imposition of rent control on units older than 15 years, rather than only on units constructed before 1995.

SB 469 (Allen) – Would expand Article 34 exclusions to include housing built with funding from state or federal low income housing tax credits or state funding sources.

SB 482 (Blakespear) – Requires HCD to offer capitalized operating reserves to supportive housing units developed under the Multifamily Housing Program.

SB 567 (Durazo) — Would extend AB 1482 with various protections and requirements for rental properties, including dropping the maximum annual rent increase to 5 percent and making eligible certain additional kinds of properties.

SB 571 (Allen) – Would require a development applicant within a high or very high fire hazard severity zone to include an evacuation plan with its local development application. The bill would subject the evacuation plan to the independent approval of the locality.

SB 684 (Caballero) – Would allow jurisdictions to extend tentative map approvals by up to 24 months.

SB 745 (Cortese) – Would require the California Building Standards Commission to propose mandatory building standards to reduce the potable water demand of new buildings by 25 percent from current design requirements and to minimize the use of potable water for non-potable uses. Would require the commission to adopt mandatory building standards that require new buildings to capture graywater and use alternative water sources for non-potable building and landscaping water uses.

SB 834 (Portantino) – Would authorize the issuance of bonds in the amount of $25,000,000,000 for a new home construction and homeownership program.