California is currently facing an affordable housing crisis. According to a recent report by the California Housing Partnership, the state needs to build 1.2 million affordable homes to meet the needs of low-income renters. To address the housing crisis, various policies have been enacted to either increase the supply of new housing or preserve the existing affordable housing.
A popular tool used to increase the housing supply is density bonuses, a type of financial incentive that promotes the development of denser lots that include units for low- and moderate-income families. Two recent reforms to density bonus laws, AB 682 and AB 1551, both passed in 2022, expanded density bonuses to shared housing and mixed-use developments. By one estimate, density bonuses could deliver a 50% increase in unit density for most new developments.
But a policy proving to be even more impactful is zoning reform. A set of policies in recent years have changed the California zoning code in a variety of ways, from promoting denser development around transit, to allowing additional dwelling units by right for homeowners. Possibly the biggest change to California’s zoning laws was SB 9, passed in the spring of 2021, which looked to end the chokehold of single family zoning by allowing for duplexes and fourplexes on lots previously zoned for single-family housing.
SB 9 in theory opened the floodgates for the development of new housing. However, a study from the Terner Center for Housing Innovation at UC Berkeley concluded may be financially valuable for just 5.4% of the state’s 7.5 million single-family lots. It is still too early to tell how significant this zoning change will be.
Also worth looking at in terms of zoning is California’s 6th Cycle of Housing Elements. Housing Elements are comprehensive plans that cities must release every eight years that showcase how they will address their housing needs. The 6th cycle of updates just concluded in 2023.
In the past, Housing Elements have failed to properly allocate housing development and address the state’s housing needs, often allocating housing to lots that are unrealistic to develop. So, several policies have been passed to ensure the 6th cycle’s success. The reforms focus on increasing and allocating housing targets based on various factors, requiring more evidence and analysis for housing plans, and mandating regular updates on housing elements. Additionally, the state Department of Housing and Community Development (HCD) was given greater authority to oversee housing elements and enforce the aforementioned policies.
An early study from UCLA found that the 6th cycle has led to some positive rezoning, finding that there was a 65% chance a city would rezone to increase housing capacity. California is also pursuing measures to streamline the construction of new homes, so that new housing projects can avoid the regulatory delays and obstacles that have slowed and stunted development in the past.
Most significantly on this front, the state passed SB 35, which allows new developments to bypass the standard process of discretionary reviews and public hearings, and instead guarantees approval as long the development meets a set of requirements. Chief among these requirements is the development’s commitment towards providing 10% or 50% of units as affordable units depending on if the county the development is located in meets its low-income Regional Housing Needs Allocation (RHNA) goals. Additionally, SB 6 and AB 2011, both passed in 2022, expanded SB 35’s approval process for housing projects to apply within commercial zones, without the need for rezoning.
Another bill, SB 330, the Housing Crisis Act of 2019, streamlined the housing approval process by limiting public hearings, freezing zoning rules, and speeding up EIR reviews. SB 330 also protected housing supply and tenants by requiring replacement affordable housing and a right to return for tenants when housing is demolished, and by preventing cities from downzoning and issuing subjective rules meant to discourage development.
Protecting the state’s existing affordable housing is just as important as expanding that supply, which is why NCRC’s California partner, RISE Economy, has worked on a set of laws centered on keeping homes in the hands of existing tenants.
With a concern that new development could displace existing residence, Rise helped pass SB 1079 in September 2020, which limited the ability of big corporations and investors to take ownership of homes in bulk during the foreclosure auction process by ensuring that sellers sell homes individually and not bundled together.
Further on this front, Rise is looking to pass bills that would establish greater transparency in the housing market, and would grant existing tenants first bid over their rental property if it goes on the market. Those efforts bore fruit earlier this month with the passage of SB 423, which one progressive advocacy organization in the state has called “the most powerful affordable housing law in recent history.” The package, which will enable cheaper developments by removing the existing requirement that streamlined projects must use union labor, passed after backers found common ground with labor leaders who had resisted the idea for years. This comes as a result of a growing relationship between the construction unions and housing activists, who have in the past not always seen eye to eye.
While in many ways California is behind the curve in addressing its housing needs, it has helped put them ahead of the curve when it comes to experimenting with new housing policies. Other states are watching closely. Oregon, Washington, and Maine followed the lead of SB9 by abolishing single family zoning. Ultimately, California serves as an example of where the nation’s housing crisis could be headed, but also, perhaps, of how to address it.
Benjamin Selman was an NCRC Communications and Development Intern.