California Cuts the Red Tape on New Affordable Housing Plan

California has another tool in its toolbox to help close the housing gap. It’s legislation that will make it easier to convert dilapidated strip malls, half-empty office buildings, and weed-filled parking lots into multi-family housing.

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Governor Gavin Newsom signed Senate Bill 6 and Assembly Bill 2011 on September 28th. The legislation will allow the adaptive reuse of properties that are zoned for retail, offices, and parking in suburban and rural city centers.

The new rules are expected to help California reach a goal of 2.5 million new housing units by the end of the decade. One million of those homes need to be affordable, according to the Statewide Housing Plan.

It will also help eliminate resistance from local governments, unions, environmentalists, and developers. Supporters are calling it a win-win for housing and for run-down commercial areas that make some cities look like ghost towns. (1)

Two Policies, One Goal

Lawmakers approved both bills to satisfy two sides of a dispute involving unions, developers, and other groups. The powerful State Building and Construction Trades Council of California supported SB 6 along with builders and business groups. The California Conference of Carpenters and the Service Employees International Union of California supported AB 2011. (2)

After weeks of tense negotiations and no deal, lawmakers decided to approve both bills. They each give developers different options, but they both work toward the same goals. They both make it easier and faster to build homes in vacant or underused commercial space. They both have requirements for the amount of affordable housing produced. And they both guarantee that workers will be paid union wages.

They are also both designed to keep new development near city centers and transit corridors which will help support the state’s carbon reduction goals. Developers will have the option to follow whichever policy works best for a specific project.

Senate President Pro Tem Toni Atkins called it a “game changer when it comes to producing desperately needed housing for all income levels.” SB 6 author, Senator Anna Caballero, also sees this as a way to expedite the process of building as many as 2 million housing units. Assembly member Buffy Wicks, who wrote AB 2011, says the legislation provides land to build homes, incentives to attract workers to the construction industry, and reduces the red tape to get projects going in areas that make sense for transit-oriented affordable housing.

YIMBY CEO, Brian Hanlon says this legislation “could unlock the potential for millions of affordable homes in California.” He says: “California has a huge amount of under-utilized and abandoned commercial properties that could see rapid development of subsidized affordable housing… and would include good jobs with fair wages for construction workers.” (3)

Closing the Housing Gap in California

This is just the latest in a long list of bills to create more housing in California. Among the more significant ones is Senate Bill 9, or what’s known as the California Home Act. It was approved last year, and allows single-family homeowners in most parts of California to divide their properties into two lots, and build as many as two homes on each lot. It also streamlines the permitting process. (4)

That bill follows several other bills in recent years that allow more housing density, including ADU’s on properties with single family homes. As reported by The Atlantic, there’s been an ADU boom since new laws made them legal and desirable. They’ve reportedly increased 1,421% from 2016 to 2021. About one out of every seven California homes is now, reportedly, an ADU.

The newest adaptive-reuse legislation is another step for California in the affordable housing direction. Governor Newsom says it will help address what he calls the golden state’s “original sin” of housing affordability. Both bills go into effect on July 1st of next year. The JDSupra website has a concise list of features for both bills. If you want to take a look, you’ll find a link in the show notes for this episode (at newsforinvestors.com).

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Links:

1 -https://www.forbes.com/sites/jamiegold/2022/09/30/california-passes-adaptive-reuse-legislation-to-address-housing-crisis/?sh=61f273824648

2 -https://www.latimes.com/california/story/2022-09-28/california-affordable-housing-commercial-properties

3 -https://cayimby.org/california-yimby-statement-on-governor-signing-major-housing-legislation/

4 -https://www.theatlantic.com/ideas/archive/2022/10/california-accessory-dwelling-units-legalization-yimby/671648/

5 -https://www.jdsupra.com/legalnews/governor-newsom-signs-major-development-2869605/