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 45 housing bills into law this year; while the attention has been focused on SB 79 that allows for more housing near transit stops in 8 counties with high quality transit stops, other new legislation signed into law affects all of California communities. Here are the bills that caught out attention:
SB 79 (Wiener) is among eight production streamlining bills signed by the Governor this year. This bill requires that an eligible housing development project located within ½ mile of a transit-oriented development stop be permitted as a transit-oriented housing development on any site zoned for residential, mixed, or commercial development. Generally, this means a local agency may not deny a project solely due to height. These stops are in eight specific counties (LA, Orange, San Francisco, Alameda, Santa Clara, San Mateo, Sacramento, San Diego). The bill also protects tenants by imposing state standards to protect rent-controlled units and in some cases assistance to tenants, although these standards do not exceed local tenant protections such as those in Berkeley, Los Angeles, and San Francisco. When tenant assistance is triggered, this includes moving costs plus three month’s rent, the right to return at a rent affordable to the tenant, and subsidized rent during construction.
AB 253 (Ward) aims to address what can be a bottleneck in some building departments that cause plan checks to take time. Until 2036, applicants are allowed to hire a private professional provider to perform the plan check if the city or county building department anticipates the review will take more than 30 days. Cities and counties are required to report on the use of these private professional providers in their annual housing report, beginning with the report due April 1, 2027.
AB 893 (Fong) designates “campus development zones where certain affordable or mixed income projects are able to take advantage of streamlined, ministerial review, including CEQA exemption for such projects. Generally, campus development zones are areas within ½ mile of a UC, CSU, or CCC. The bill also amends existing law to confirm that easements shall not make properties in commercial corridors or commercial zones ineligible for streamlining provided by AB 2011 (Wicks, 2022).
AB 507 (Haney) this bill amends the Planning and Zoning Law to broaden the streamlining and ministerial review process for qualified adaptive reuse projects, including buildings less than 50 years old or certain historic structures in most zones. Construction will need to meet certain labor standards including but not limited to prevailing wage.
AB 238 (Harabedian) – provides borrowers impacted by the Eaton Wildfire, Palisades Fire, and Straight-line Winds the authority to request forbearance on their residential mortgage loan. The eligibility is limited to loans secured by residential real property improved with 4 or fewer residential units, and that the borrower affirm that they are experiencing a financial hardship due to the disaster. For mortgage servicers, forbearance may be anywhere from 90 days to 12 months, and servicers are not permitted to assess late fees or charge interest during the forbearance period.
AB 726 (Avila Farias) permits local agencies to report in their housing element annual progress reports the number of existing deed-restricted units with an average affordability no greater than 45 percent of area median income that are at least 15 years old and have been substantially rehabilitated. In this case, substantially rehabilitated means that the average cost per unit is at least $60,000 with fund awarded from the city (or for unincorporated areas, the county), inclusive of loan principal and interest forgiveness. This bill also requires that for such reports due beginning April 1, 2027, the agency report for each housing application listed whether the project is subject to a replacement housing or relocation assistance pursuant to local, state, or federal law. Finally, for reports due beginning April 1, 2027, the agencies shall also report information pertaining to the demolition of housing units.
AB 670 (Quirk-Silva) makes an important change to how agencies may fulfill their affordable housing RHNA requirements, by allowing up to 25% of their need for low, very low, extremely low, and acutely low income units to be fulfilled by conversion of existing multifamily buildings to affordable housing. This information may be reported beginning with the annual progress report due on April 1, 2027. This has been a topic much discussed by local agencies for some time. It also adds more required disclosures in the annual progress report agencies file with respect to demolished and replacement units beginning April 1, 2027.
SB 262 (Wahab) amends what types of prohousing local policies to include “policies that keep people housed” and enumerates several examples of such policies that may be considered by HCD when evaluating whether a local agency merits prohousing status. The bill also provides some leniency to small rural jurisdictions to make it easier for them to obtain and maintain their prohousing status.
AB 686 (Reyes) changes how borrowers can work with HCD to approve payoff of full or partial MHP loans as well as extract equity from older developments for purposes such as purchase of a limited partner interest of a tax credit investor in the project, payment of (subject to limits) any unpaid deferred developer fee for the project, payment for necessary repairs and rehabilitation of the project, and the establishment or replenishment of department-approved project reserves. This bill intends to free up debt financing so that HCD may deploy it to other housing projects.
Economic Development
AB 339 (Carillo) –except for emergency or other exigent circumstance, this bill requires public agencies to give no less than 45 days written notice to recognized employee organizations before issuing a request for proposals. The bill further goes onto exempt certain construction work or highly specialized data, software, or services related to construction work.
AB 417 (Carillo) is another CALED-supported tax increment financing reform bill from the same author as other amendments to EIFD law. This particular bill streamlines administrative processes for EIFDs and CRIAs, such as extending the due date for annual reports from June 30 to seven months after the close of the fiscal year, allowing the tax increment limit to be adjusted automatically without amendment when a taxing agency joins the formation of an existing TIF district, reducing the number of public hearings and flexibility on public hearing notices required for CRIA formation.
SB 782 (Perez) – creates a subcategory of climate resilience districts to finance disaster recovery efforts and allows for streamlining of some of the procedures for formation in such districts that meet defined criteria.
Real Estate
AB 961 (Avila Farias) – supported by CALED, this bill extends the sunset date for immunity from liability for preexisting hazardous materials for innocent landowners and prospective purchasers pursuant to the California Land Use and Revitalization Act of 2004. Under the new law, the sunset date is extended to January 1, 2037. Qualified parties, including an innocent landowner, bona fide purchaser, or contiguous property owner that qualify for immunity from liability from certain state statutory and common laws for pollution caused by a release or threatened release of hazardous material if specified conditions are met, including entering into an agreement for a specified site assessment and response plan.
AB 226 (Calderon) – requests and authorizes the California Infrastructure and Economic Development Bank (also known as iBank), to issue bonds to finance the cost of claims, increase liquidity and the claims-paying capacity, and refund previously issued bonds upon request of the California FAIR Plan Association. The California FAIR Plan Association is a joint reinsurance association in which all insurers licensed to write basic property insurance participate in administering a program for the equitable apportionment of basic property insurance to persons who are unable to otherwise obtain insurance.
We also should note that the Governor vetoed Chula Vista’s special legislation (AB 76, Alvarez) which would have provided special exemptions to the City from the surplus land act by reducing affordability requirements for their University Innovation District. This veto provides a reminder to local agencies that while special legislation may be a path for some agencies, exceptions are rare.
LAFCO
SB 489 as part of broader efforts to enhance the Permit Streamlining Act, this bill requires that local agency formation commissions to adopt and post on their website policies and procedures, along with any forms necessary to complete an application for any change of organization or reorganization. The law did not specifically require posting of forms.
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, and California Association for Local Economic Development, where we engage on legislation for our clients as part of our consulting practices.
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