It’s time for RSG’s annual California Legislative e-blast! The budget was no doubt a significant topic of focus and some programs and proposals are still on the backburner, but there are important housing, economic development, and LAFCO matters for our clients to consider:
Housing
Governor Newsom signed 32 housing bills into law this year, many of which provide streamlining to high priority topics such as meeting RHNA goals, accountability, and some CEQA streamlining for certain projects. Here are the bills that have caught our attention this year:
SB 440 (Skinner) – authorizes two or more local agencies to form what are known as Regional Housing Finance Authorities to collaborate on funding affordable housing, including but not limited to raising tax increment financing through an EIFD and several other TIF mechanisms in state law today.
AB 346 (Quirk-Silva) – allows CTCAC to reallocate some of the state LIHTCs for 4% federal tax credit projects to 9% federal tax credit projects in years in which CDLAC’s tax exempt bond program is oversubscribed.
AB 846 (Bonta) – requires CTCAC to adopt regulations to establish a limit on annual rent increases for tenants in existing tax credit projects, and requires CTCAC to annually assess the rent increase limit.
SB 937 (Wiener) – mandates that local agencies cannot seek payment of development impact fees for certain residential fees until a certificate of occupancy.
AB 2430 (Alvarez) – prohibits cities and counties from imposing monitoring fees on 100% affordable housing developments that are governed by a regulatory monitoring agreement with the California Housing and Community Development (HCD), California Housing Finance Agency (CalHFA), or the California Tax Credit Allocation Committee (TCAC). This aims to reduce financial burdens on affordable housing projects and encourage their development under the state’s Density Bonus Law.
AB 1893 (Wicks) – amends the Housing Accountability Act (HAA) to update the criteria for housing development projects to qualify for the “Builder’s Remedy.” This provision allows projects to bypass local development standards in areas without a compliant housing element. Additionally, the bill broadens the definitions of actions that local governments can take that would be considered disapproval of housing projects under the HAA, thereby enhancing protections for developers seeking to address housing shortages.
AB 2663 (Grayson) – mandates that local agencies collecting inclusionary housing in-lieu fees must post specific information on their websites regarding the total amount of fees collected and how those funds were spent. This transparency is aimed at enhancing accountability and ensuring that the public is informed about the use of these fees in supporting affordable housing initiatives.
AB 2667 (Santiago) – modifies housing element laws and the Annual Progress Report (APR) process to strengthen the requirement to affirmatively further fair housing (AFFH). These changes aim to enhance local governments’ responsibilities in promoting fair housing practices and ensuring equitable access to housing for all communities.
AB 1053 (Gabriel) – permits borrowers to request funding from the Housing and Community Development (HCD) as either a construction loan, a traditional permanent financing option, or a combination of the two. This flexibility is intended to support a wider range of housing projects and improve access to necessary funding for development.
SB 1037 (Wiener) – establishes new legal remedies for the Attorney General to enforce the adoption of housing element revisions and ensure compliance with state laws requiring local governments to ministerially approve planning or permitting applications for housing development projects. This aims to enhance accountability and streamline the approval process for housing initiatives.
AB 3093 (Ward) – introduces two new income categories—Acutely Low Income (ALI) and Extremely Low Income (ELI)—into the Regional Housing Needs Allocation (RHNA) process and housing element law. This change aims to enhance the focus on supporting the housing needs of these vulnerable income groups, ensuring more targeted planning and resource allocation for affordable housing initiatives.
AB 2243 (Wicks) – serves as a cleanup bill for the Affordable Housing and High Roads Jobs Act of 2022 (AB 2011). This legislation is designed to streamline the review process for certain housing developments on commercial properties, addressing the ongoing housing crisis in California, and ensuring that California can effectively address its housing challenges while fostering economic growth and community development.
We also note that while the Governor did sign AB 3190 (Haney) that expanded prevailing wage requirements on projects using state tax credits, it does not go into effect because the Governor did not sign the accompanying funding measure, AB 3160 (Gabriel). Does this mean that prevailing wage requirements could come later in state tax credit projects? We will see.
Economic Development
AB 98 (Carrillo) – effective January 1, 2026, this bill establishes new limitations on where local agencies may approve certain warehouse uses, and requires most cities and counties to update their circulation elements by January 1, 2026. It also empowers the South Coast Air Quality Management District to collect community input on how penalties they collect for air pollution regulations are to be handled.
We also saw several tax increment financing bills signed by the Governor in addition to SB 440, including:
- AB 761 (Friedman) – provides an exception to the typical 45-year duration of an EIFD by allowing an EIFD to collect tax increment for 75 years when used to pay debt services on a federal Transportation Infrastructure Finance and Innovation Act loan for passenger rail projects in LA County.
- AB 1819 (Waldron) – allows an EIFD at least partially in high or very high fire hazard severity zones to finance heavy equipment for things such as undergrounding of utilities and other wildfire mitigation measures.
- AB 2488 (Ting) – offers the ability of the City of San Francisco to designate downtown as a tax increment financing district called “Downtown Revitalization and Economic Recovery Financing District” that until December 2032 allows property owners who convert office to residential uses the ability to receive TIF revenues for up to 30 years. Prior versions of the bill allowed this statewide.
- SB 1140 (Caballero) – Streamlines EIFD formation, provides some explicit broadening of authority, including
- Two public hearings (instead of three)
- Authorizes both EIFDs and climate resilience districts to fund projects to improve air quality
- Some streamlining of notice mailings during the formation and administrative phases.
LAFCO
AB 3277 (Committee on Local Government) – LAFCOs will now only be required to confirm the amount of property tax to be exchanged during a district formation if the applicant/agency is requesting a share of the 1% ad valorem property tax pursuant to Government Code Section 56810.
We would be remiss if we did not mention AB 2986 (Carrillo) which would establish a task force for possible incorporation of East Los Angeles, and would mandate that the County of Los Angeles (not LA LAFCO) conduct a report on the feasibility including review of the two prior efforts. The bill is currently inactive so it remains to be seen if it returns.
ABOUT RSG
RSG is a creatively charged consultant to California public agencies. We collaborate with the people responsible for creating vibrant places to accomplish their goals. The inspired leaders at RSG create stronger communities capable of achieving bolder futures by bringing more than four decades of native knowledge to each engagement. As diverse as the agencies we work with, our services span real estate, economic development, fiscal health, and housing initiatives.
RSG are active members of several professional organizations advocating for community development interests in California, including the San Diego Housing Federation, Nonprofit Housing Association, California Association for Local Economic Development, and the California Association of Local Agency Formation Commissions, where we engage on legislation for our clients as part of our consulting practices.
If you are interested in learning more about RSG and our team, visit our website at www.rsgsolutions.com or check out our new podcast series “RSG Insider” where you will get a chance to meet our team and learn about some of the services we offer. RSG Insider is available on our exclusive YouTube channel and most podcast services.
