This week Governor Newsom signed a series of bills intended to accelerate housing development in California. Two bills – AB 2011 and SB 6 – seek to facilitate residential redevelopment of commercially zoned areas, though they contain stringent requirements that may put their benefits out of reach for many developers. AB 2097 largely eliminates local parking requirements for most residential and non-residential development projects near public transit in order to both facilitate housing and reduce car dependence. AB 2334 makes changes to the Density Bonus Law, granting benefits to a larger swath of 100% affordable projects. Lastly, SB 886 establishes a CEQA exemption for university housing projects meeting certain criteria, following the dispute over UC Berkeley’s enrollment increase earlier this year. Though the new laws are designed to facilitate housing, and particularly affordable housing, the bills do not directly address many of the financial and legal obstacles to residential development in California. Therefore, we anticipate that future Legislative changes will be needed for the Governor to meet his ambitious 2017 pledge to build 3.5 million new housing units by 2025.

Assembly Bill 2097

This bill prohibits public agencies from imposing minimum parking requirements on most residential and non-residential projects within ½ mile of major transit stops, though it does not affect requirements for electric vehicles or disabled accessible spaces that would otherwise apply. Limited exceptions exist, including where existing parking would be affected, although the exception does not apply to small projects (no more than 20 units) and projects of at least 20% affordable housing. Given that parking requirements are often costly and can impede the development of a project, AB 2097 has the potential to spur both residential and commercial development, and encourage denser, infill development near public transit.

Assembly Bill 2011

Assembly Bill 2011, also known as the Affordable Housing and High Road Jobs Act of 2022, creates a streamlined, ministerial approval process for multifamily housing development projects proposed in commercial zones. Qualifying projects must contain affordable housing, meet labor and wage requirements, and be located on urban, infill sites. Additional criteria apply to projects containing both affordable and market-rate units. Further, local governments can insulate themselves from the ministerial process by establishing neighborhood plans, such as specific plans, within which the bill’s benefits will largely not apply.

General Eligibility Criteria

For any development project to qualify for ministerial approval under the bill, it must pay statutorily defined prevailing wages during construction. Larger projects are required to also hire construction contractors that incorporate apprenticeship programs and make health care expenditures for construction workers. Qualifying projects must also be located on an urban, infill site which permits commercial development but which does not border an industrial use. They must also meet a minimum density standard as well as a number of site-specific criteria. For instance, the project site cannot contain tribal resources, or be within a very high fire hazard severity zone. A phase I environmental assessment must also be prepared, and mitigation incorporated if necessary. Further, qualifying projects must also incorporate affordable housing, and additional criteria apply to mixed-income projects – those that are not 100% affordable.

Additional Mixed-Income Development Criteria

Mixed-income projects must be proposed adjacent to large streets. The bill also establishes specific development standards for mixed-income projects, affecting both maximum height and setbacks. Mixed-income projects must also provide both notice and relocation assistance to existing commercial tenants under certain circumstances. Lastly, the local agency may apply an objective planning standard requiring that up to one-half of the ground floor of the development be dedicated to retail use.

Senate Bill 6

SB 6 makes residential development an allowable use in commercial zones, provided that the project is on an urban, infill site and meets additional criteria. These include requirements relating to minimum density, public notice, site location and size, and consistency with the applicable sustainable communities strategy. The project must also meet labor and wage requirements, including hiring a skilled and trained workforce, and interested parties such as labor organizations are empowered by the bill to seek injunctive relief against a project if the developer does not comply. Compliance with the SB 6 criteria also renders a project consistent with applicable objective development standards under the Housing Accountability Act. Additionally, applicants must provide written notice of the project, and potentially relocation assistance, to existing commercial tenants.

Unlike AB 2011, SB 6 does not require any units to be affordable. If affordable housing is included, the project may qualify for ministerial approval under SB 35 (Gov Code, § 65913.4), as SB 6 projects on commercially zoned parcels are now allowed under that process. Most projects eligible for ministerial approval under SB 6 and SB 35 will likely be eligible for ministerial approval under AB 2011 as well, and vice versa, though some requirements are slightly different. However, absent SB 35 eligibility, SB 6 only makes the residential use permitted on the commercially-zoned site, it does not make the approval ministerial, nor does it grant an exemption from CEQA or otherwise alter the applicability of any housing, environmental, or labor law otherwise applicable to the project.

Local governments can exempt specific parcels from SB 6, but must make written findings detailing how the lost residential density will be reallocated or otherwise accounted for at other sites.

Assembly Bill 2334

The Density Bonus Law grants qualifying 100% affordable projects height increases of up to 3 additional stories, or 33 feet, over existing local standards, and prohibits a local government from imposing any maximum controls on density, if the project is located within ¹/₂ mile of a major transit stop. AB 2334 would extend these benefits to projects that are located within a very low vehicle travel area, defined in the bill as an urbanized area designated by the United States Census Bureau where existing residential development generates VMT per capita that is below 85% of other average regional or city travel rates. The bill also prohibits the imposition of any vehicular parking standards in a very low vehicle travel area if a development is 100% affordable.

The bill also requires maximum density under the Density Bonus Law to be determined using dwelling units per acres standard (du/ac) based on the maximum density allowed by the zoning, general plan or specific plan, whichever is greatest. If no planning document uses a du/ac standard, then the local agency must estimate the realistic development capacity of the site, and a developer may provide a study, which must be accepted by the local agency if it takes account of applicable objective development standards.

SB 886

SB 886 builds on SB 118, passed earlier this year in response to a trial court’s injunction which would have prevented UC Berkeley from admitting much of this year’s incoming class (See TLG’s coverage here). SB 118 declared that enrollment changes do not constitute environmental impacts under CEQA, and limited the ability of courts to issue injunctions staying enrollment increases.

SB 886 now establishes a full CEQA exemption for housing projects for UC, CSU, or California Community Colleges students. However, university housing projects must meet stringent criteria to qualify. All buildings must be consistent with the applicable Long Range Development Plan, LEED platinum or better, meet a transit proximity or VMT standard, result in no net additional GHG emissions and reduce GHG emissions in the project area, and meet labor and wage requirements. The exemption also requires all construction impacts to be “fully mitigated consistent with applicable law.”