Lawmakers Rally Votes to Pass Housing Package

California State Capitol SacramentoIn the waning hours of the 2017 legislative session, state lawmakers rallied the votes necessary to reach agreement on a package of housing bills designed to help alleviate the state’s historic housing crisis. The Legislature’s vote to approve the package will provide up to $4.1 billion in bond funding, plus another $250 million annually from a real estate transaction fee, altogether the largest amount of state financing for affordable housing in California history. The package is projected to generate an estimated 70,000 housing units by 2022.

The vote followed amendments to Senate Bills 2 and 3, which were the subject of intense negotiation as leaders statewide sought to stimulate development and respond to growing public pressure to improve housing affordability. Both SB2 and SB3 required a two-thirds approval by the Assembly to pass.

Building Homes and Jobs Act

The Building Homes and Jobs Act (SB 2), authored by Sen. Atkins (D-San Diego), will create a permanent revenue source to fund affordable housing by charging $75 to $225 in document fees on real estate transactions, such as mortgage refinancing. Home and commercial property sales are exempt from the fee. SB 2 is expected to generate approximately $5 billion over the next five years when matched with federal, local, and private funds.

SB 2 was amended August 29th to provide greater local control over the funds. In 2018, half the funds will be made available to local governments to support community planning and half to the Department of Housing and Community Development to fund programs for people experiencing or at risk of homelessness. Beginning in 2019, local governments will receive 70% of the funds, with the remaining 30% appropriated to the California Housing Finance Agency to create mixed-income multifamily residential housing for lower to moderate income households.

“There is no single silver bullet that will solve the crisis; however, SB 2 is a step in the right direction,” said Atkins following the bill’s passage. “It will generate new, ongoing funding to create permanent supportive housing for people who are experiencing chronic homelessness, providing them with services they need to address their physical and mental health issues and relieving pressure on our courts, jails, and emergency rooms.”

Veterans and Affordable Housing Bond Act of 2018

SB 3, the Veterans and Affordable Housing Bond Act of 2018 (Beall, D-San Jose), authorizes a November 2018 ballot measure seeking voter approval for $4 billion in bond funding for rental housing and existing housing programs. Introduced as a $3 billion bond proposal for the construction of new low-income housing, an August 28th amendment increased the bond by $1 billion to provide homeownership subsidies to veterans by extending the Cal-Vet Farm and Home Loan Program.

Streamlining Development

The Legislature also passed several bills related to eliminating local barriers to housing production. SB 35 (Wiener, D-San Francisco) will streamline permitting by eliminating multiple planning reviews “by right” for housing projects that meet certain zoning and affordability standards. Under the bill, projects featuring more than 10 units that qualify for expedited approval would pay union-level or prevailing wages to construction workers, and developers of some larger projects would “have to agree to union-standard work rules or apprenticeship programs.”

Sen. Friedman (D-Glendale) spoke in favor of the bill, saying that it struck the right balance between providing the housing we need and protecting the environment. “The bill targets urban infill areas where residents are less likely to depend on cars, and more likely to rely on public transportation,” she added.

SB 540 (Roth, D-Riverside) will allow local governments to form priority Workforce Housing Opportunity Zones and charge fees for developers seeking approvals within the zone. Local governments that establish the zones will be required to approve proposed developments that meet the plan’s criteria within 60 days. In addition to spurring construction, SB 540 is expected to increase jobs and economic opportunity. The bill was supported by both realtors and the building trades. 

The Legislature also passed SB 166, which will eliminate a loophole in the current housing element law and prohibit communities from permitting units at a capacity lower than what is needed to meet their share of the Regional Housing Needs Assessment for lower and moderate-income households.

In addition, SB 167 strengthens the Housing Accountability Act, also known as the “Anti-NIMBY Act,” by requiring local agencies to base any decisions to prohibit the development of very low- to moderate-income projects or emergency shelters “on a preponderance of the evidence” and allows the courts to impose fees for non-compliance.

“If cities are not doing what they should be doing, they could be found in violation of the Act,” said David Chiu (D-San Francisco).

AB 1505 (Bloom, D-Santa Monica), which would restore the ability of local governments to adopt ordinances requiring that inclusionary housing policies be applied as a condition of permitting for rental housing, will be heard in the Senate today.

The Governor, who has until October 15th to sign the bills, tweeted his support for the package.

LDC will continue to follow the news from today’s legislative session, and will provide you with updates as Gov. Brown takes action on these bills.