Transcript
Speaker: Welcome to John Nerds Out on California Housing Legislation. i am John with you once again in February 2026, here to talk about 2025. twenty twenty five Although I am anxious to get to 2026 legislation, it does seem like it's going to be a somewhat slower year for reasons I will get into.
Speaker: And i don't quite know yet what the biggest battles are going to be in Sacramento in 2026. And there's a lot I did not relate from 2025. So I am going back and finishing that series.
Speaker: This is going to be an episode about a lot of bills. It can't be comprehensive because there were so many, but other than SB 79, of course, the big victory I talked about in previous episodes,
Speaker: I'm going to do some that piqued my interest, some I'm going to describe by the subject matter they cover, some I'm going to describe briefly, some I'm going to dig a little deeper into, but nothing nearly as big as SB 79.
Speaker: SB 79, of course, was the big zoning reform, and as I've said in previous episodes, Zoning reform is necessary, but certainly not sufficient.
Speaker: There are all these things affecting how easy it is or isn't to build housing in California, and there was a lot on the non-zoning ease of construction topics.
Speaker: One example is how quickly buildings are connected up to electricity once they're built. With PG&E being fairly unaccountable, this has been a major issue. If a building has to sit unoccupied, even though it's finished for months, that can be a huge burden, could cause financial strain and even collapse on the part of the developer.
Speaker: Unfortunately, PG&E does have quite a lot of backing politically, and there were a couple of bills this year, and they did not get to the finish line.
Speaker: An example is AB 1404 by Liz Ortega of Hayward. It was focused on just affordable housing, anything with funding from the California Tax Credit Allocation Committee.
Speaker: And it basically said that PG&E and other electrical providers had to connect your housing within 60 days of its being ready. And you would think it was really common sense that affordable housing should get a leg up in this regard.
Speaker: But it was at an uphill battle. At some point, it was amended so that it only lasted for four years. And then it never even made it to a committee vote.
Speaker: And there was another bill on electrical hookups. And apparently this isn't completely dependent on legislation because the California Public Utilities Commission is working on some sort of standards.
Speaker: I don't know how much teeth those are going to have. But there was another bill, AB 1026, which started out with a 15-day clock and was amended. This was by Assemblymember Wilson, co-authored by Haney and Wicks.
Speaker: And in its final form, it actually referred to the CPUC process that they were establishing for time limits. And it was basically putting in more requirements so that the electric companies had to adhere better to those requirements.
Speaker: Also, building around that to have a transparent application process. For example, they had to provide examples of what a complete application would look like, timeframes to say that the application is complete or is not complete, requirements to get back and say specifically what was wrong with an application, things like that.
Speaker: And that, unlike the first one, actually got all the way to Gavin Newsom's desk. And then Gavin Newsom vetoed it. And he said it was because CPEC was already working on standards for this kind of thing, and this would mess up their process.
Speaker: This is something governors do sometimes when possibly they just don't want the thing to happen, but possibly the state agency is saying, we just want to do it ourselves and not have the legislature interfere.
Speaker: But then that can take years. There were some, there were many really, that were about things in the news. Of course, at the beginning of 2025 were the wildfires in Los Angeles, and so there were a lot of bills about wildfire recovery.
Speaker: And here I'll just vaguely gesture at them because I think there were at least 20. Mortgage forbearance, banning price gouging, streamlining rebuilding, generally making it easier to rebuild from the places that wildfires destroyed, but not so much about redirecting development out of fire zones to relatively safe zones.
Speaker: There has also been some extra legislative politics this year that Gavin Newsom made an emergency declaration that prevented people from building duplexes with SB 9.
Speaker: This executive order basically banned using SB 9 in the areas affected by the January 2025 wildfires, which there are different ways to think about that, but there is a lawsuit being threatened by one pro-housing law group.
Speaker: I believe it was filed, actually. There was also a lot of stuff about rental pricing algorithms. One thing in the news was that supposedly there are rent-setting tools that landlords are using that help determine what rent to charge, and the idea is this, is a digitized form of market combination.
Speaker: I am a little skeptical of this, partly because the studies that everyone is citing is only saying that there was a very slight increase to rents in places where this was available versus places it was not, and that rents were going up in all the places studied.
Speaker: So it was like, you know, 10% versus 9% or something, or even 10% versus 9.5%. It is still possible to figure out a lot of stuff without algorithms or without using proprietary competitor information just by using what's publicly listed in advertisements.
Speaker: Basically, the key driver is still supply. I think that pricing algorithms may change things on the margins. And to the extent that they are market collusion, it makes sense to do something about it.
Speaker: But it's a pretty small policy. I believe something did pass that prevented using competitor data, proprietary competitor data, in your price setting.
Speaker: And it didn't limit itself to housing. It was more of a market competition rule. Another thing that's in the news, although not quite as up to the minute, is the issue of corporate ownership.
Speaker: the idea that one of the big problems is big corporations buying up homes for rent as opposed to for sale. Now, I've probably said before, corporations owning very large numbers of homes make up a very small amount of the overall market and even a very small amount of the single-family market.
Speaker: There really seems to be some kind of sense of fitness here, this idea that it is inherently wrong to rent out a single-family home, that it's a problem if you have corporations owning a bunch of single-family homes, not if you have a bunch of corporations owning apartment buildings.
Speaker: It remains the fact that ownership of housing is pretty dispersed compared to much of the rest of the economy. A whole lot of rental housing is owned by small owners.
Speaker: Not that that makes them good that they're small businesses. They are also at a level exploitative. But it is possible that if the trend continues, that could get worse, the market could could become more consolidated, and then there would be more market power by these landlords.
Speaker: So AB 1240 by Alex Lee put a hard cap on any corporation owning more than a thousand single family homes for rent. That actually passed the assembly by not a lot with 42 votes in favor.
Speaker: And then in 2025, it never got to its first hearing by Senate judiciary. I'm not sure if that means it's dead or what. We'll see if it comes back this year.
Speaker: Then there was something from Aisha Wahab, Senate Bill 722, which banned non-natural persons, which is to say corporations, from buying any newly constructed single-family homes, townhomes, or condos.
Speaker: That actually failed its first committee, three yes, three no, seven not voting. The only yeses were Wahab herself, Durazo, and Ashby.
Speaker: Scott Wiener and Jesse Aragon did not vote on it, which again is not is essentially opposing it because it does not help it cross the line.
Speaker: And it seems pretty clear that focusing on new construction has a very direct impact depressing construction, that if you are ruling out non-owner occupants, then you are going to see less of these new homes built.
Speaker: So I agree, I probably would have voted against that too. There are a number of areas where a lot of the pro-housing legislation over the last few years is limited, and there were some bills that were working on chipping away at those limitations. So for example, previously historic zones could ban SB9 lot splits to make more lots for homes.
Speaker: Assembly Bill 1061 changed that and did allow these lot splits to happen as SB 9 contemplates in historic districts. Now that's historic districts.
Speaker: An SB 9 project still under this new law cannot demolish or alter an existing historic structure. But historic districts are really the cheat that some cities have been using, saying, you know, a neighborhood getting up in arms and saying,
Speaker: It'll be so horrible if we let any duplexes in here. Let's designate our neighborhood a historic district. This was signed into law by Gavin Newsom. It was originally submitted by Sharon Cork-Silva.
Speaker: Another place that we were not so successful was the coastal veto. So right now in the designated California coastal zone, It is difficult even to build ADUs because the Coastal Commission and the cities that implement local coastal plans are able to reject them for the usual slate of reasons just because it's coastal.
Speaker: And there was a bill that was allowing ADUs to be built there without a coastal veto. And there was another, AB 357, that allowed student and faculty housing to be built without a coastal veto.
Speaker: And as a sign of the strength of the Coastal Commission and its allies, they turned into not bypassing the commission or local coastal plans and not making these approvals as mandatory as they are elsewhere, but they turned into streamlining bills.
Speaker: So they were designed to speed up the process, but they didn't necessarily make approvals mandatory when the process was followed. Going back to the non-zoning ways...
Speaker: to make housing easier to build, a large issue is building codes. You can learn a lot more about this on the podcast UCLA Housing Voice with Shane Phillips.
Speaker: But basically, building codes have been accreting a lot of detritus over the decades. And we have gotten to this point where the International Building Code, which is what applies to multifamily buildings and all commercial buildings,
Speaker: is really captured by not developers, but a range of interests, including vendors and just random suburbanites who are adding all these requirements just on the basis that they sound good and don't get a lot of pushback, partly because multifamily developers are not a very well-organized interest anymore.
Speaker: By contrast, the International Residential Code, IRC, that applies to single-family homes and duplexes, That's a also a private process that has a quasi-public status.
Speaker: There, those who build single-family homes are a major interest, and there is some sort of countervailing pluralist force where one person proposes you know some new kind of fireproofing, and the developers push back and say, this is how much it's going to cost. Are you going to set housing back that much? Yeah.
Speaker: That's not necessarily a great way to do it either way, but it does mean that we have this overbuilt building code for bigger buildings and a more streamlined residential code for single-family homes.
Speaker: and there's a lot of interest in fixing that. Now, a true fix might be a complete overhaul to the whole process even. You know, get rid of the International Code Commission. International is a misnomer, by the way.
Speaker: But making a whole new process is more than anyone can chew right now. But Assembly Bill 6 by Chris Ward was a bill that commissioned a study to explore ways to reduce the cost of missing middle housing, like 3 to 10 units,
Speaker: And in particular, explore if it would make sense to apply the International Residential Code to buildings up to 10 units. And that actually passed the assembly with 79 votes, but then it was held in Senate appropriations.
Speaker: I think that it will have something like it coming back this year, but maybe under another number. So that's where the bill for missing middle housing in the building codes ended up. But here is another important bill about building codes that did succeed, or its content did. And that was Assembly Bill 306 by Schultz and Rivas.
Speaker: And that did not seek to alter the building code, it sought to stop altering it. To literally stop updating the California building code on the normal three-year cycle for the equivalent of two cycles, that is six years, from 2025 2031. And this actually passed the assembly more or less unanimously It passed out of its committees, 12-0-0, so no one even abstaining from housing committee, 14-0-1 from assembly appropriations committee, and then passed the assembly floor in April, 71 yes, 0 no, 9 not voting. So basically unanimous.
Speaker: Now that was the assembly. It never went to the Senate, but it still succeeded because Gavin Newsom was putting together a housing omnibus that he wanted to tie to the budget.
Speaker: And he apparently seized on this alongside the much more newsworthy changes to the California Environmental Quality Act, he seized on this bill and he said, I'm also taking the content of this bill and putting it in my budget trailer bill and I expect people to pass it as contingency of passing a state budget for the year.
Speaker: And once it was in there, well, it was voted in on partisan lines. Democrats, yes, Republicans, no. But I actually didn't realize at the time that this was one of the things that had been incorporated in, because that meant that it not only got passed pretty easily, but it also went into effect on July 1st, 2025.
Speaker: twenty twenty five And it's interesting that something so big was such a consensus matter. This was passed more or less unanimously. And it basically said, okay, we have been updating these building codes every three years. That's the normal process.
Speaker: And they just make everything more and more expensive. And we need to catch our breaths. There are a number of exceptions, like relating to home hardening, emergency standards to protect health and safety,
Speaker: fire prevention district proposals, and importantly, they also made an exception for standards to implement single stair. which again is the concept that buildings can be just as safe, especially if they have a small footprint, if they have one staircase instead of two, which is the current norm for international building code.
Speaker: Where there has been a process kicked off at the state level to do single stair, that would of course be a building code update, but it would be in the interest of more housing, not less. So there was an exception for that.
Speaker: And that sped through. And it certainly sets up the prospect of doing more wholesale reforms over time, or simply developing a process that creates a lot more recommendations for cost-saving measures that do not affect safety.
Speaker: Now I'm going to go into more detail in one thing that was, I thought, a very interesting saga. So a few years ago, a bill was passed that required parking unbundling.
Speaker: So what does that mean? So we're talking about off-street parking, you know, parking that is built as part of building a new apartment building. you know, your garage. And the norm is that when you get an apartment in a building with parking, usually that comes bundled with a parking space.
Speaker: with your rent, and you don't pay extra. Sometimes you pay extra, but I don't think that's the norm. In some places, that is legally required. But you can see how not charging for a parking space, which costs a lot of money, really encourages car use because whether you have a car or not, you have the space for it, so why not use your car more? Why not get that car or get a second car and park the second on the street because you have that one free space?
Speaker: And there is a lot of research that bundled parking does have this effect. So there was a bill a couple years ago, as I said, that said new buildings you know built after you know um our effective date must unbundle parking, must charge for it separately.
Speaker: It was limited to a list of, I think, eight or so urban counties, including Alameda County. And I believe it did have a sunset, but it was still effective for all buildings. I think 16 units or more.
Speaker: So I mentioned Alameda County because the thing that came in 2025 was Senate Bill 381 by Aisha Wahab of Hayward. So that is Alameda County in the East Bay.
Speaker: And it seems like Aisha Wahab sees parking as an essential amenity and as something that it's bad to charge for.
Speaker: Because SB 381 was broadly a pro-tenant bill. And it was about various fees, about banning various fees, such as late fees that were more than 2% of rent, processing fees for taking payments, pet fees that were different from pet deposits, screening fees, except if you were just charging your actual cost as a landlord.
Speaker: And so it had all these reforms that were designed to rid tenants of fees, and And one of them was that it literally said, no landlord shall charge for a parking space.
Speaker: Literally required bundling statewide. And Wahab knew that this bill had been passed because 381 repealed it in full, just took a red line through the whole thing.
Speaker: So that was very disappointing. You know, she does come from a suburban area, but you'd think she could... Look at the research some and think about how literally many people do not need cars and you are, by forcing bundling, you are forcing them to pay for other people's parking spaces.
Speaker: And she was joined in put in pushing forward this bill by someone else from an overlapping district, Liz Ortega, also from Hayward. You know, this was not the direction of the legislature, but Ayesha Wahab was chairing the Senate Housing Committee that year, and SB 381 was making some progress.
Speaker: But it seems like in the end, the legislature did notice that this very retrograde thing was happening. And I suppose the pro-housing people especially noticed.
Speaker: And what happened was SB 381, lot of its provisions were moved to an omnibus bill that did a whole lot of other things. And this omnibus bill, confusingly, was SB 681.
Speaker: And it kept a lot of the prohibitions on various kinds of junk fees. it remained So SB 681, which did succeed, capped a lot of fees. Additional fees were capped at 5% of rent except for utilities.
Speaker: Processing fees for taking payments are banned. Pet fees are banned. Pet deposits are allowed. Screening fees are still limited to the landlord's actual cost and so forth.
Speaker: Capping on late fees in particular was removed, but critically, when 381 became 681, when the fee-specific bill became an omnibus bill, everything about parking was removed from that bill.
Speaker: So basically... However it was done, it wasn't done by a vote. We don't have things like committees voting on actual amendments to bills. It's all authors' amendments, and that's kind of done behind the scenes.
Speaker: But however it happened, the idea that parking is a human right and that it has to be provided for free with your apartment was when they put the kibosh on it.
Speaker: So I'm pretty happy about that, that it still protected tenants, but did not push cars on them in the process. Another big thing that's coming up, I believe it'll actually be on the ballot this June, is a housing bond.
Speaker: So from time to time, the state puts forward for the voters to approve the state borrowing money to build a lot of housing. And there were actually several different housing bond bills, and eventually they combined a number of them and got it over the line.
Speaker: This one passed the Assembly 65 to 11. It split the Republicans. So, like, all Democrats supported it. Five out of 16 Republicans who voted voted yes.
Speaker: And it is $10 billion dollars of that $5 billion is paying for affordable multifamily housing. $1.7 billion is for supportive housing, so for people who might be experiencing or at risk of homelessness.
Speaker: $1 billion dollars is down payment assistance, and that really just pumps money into the housing market. I don't like that, but it's really popular. And other miscellaneous stuff like infrastructure to support new infill housing that the bill might also pay for.
Speaker: There was another bill the for a social housing bond. There was a bill for a youth housing bond. Those did not move forward. But that will be going before the voters. Another bill that I found interesting that did not succeed was one that would have taken another big axe to single-family zoning,
Speaker: but in a different direction. So the idea was, this was AB 647 by Assemblymember Gonzalez, and it basically said, you can build up to eight units on a single-family lot, and that means zoned for eight or fewer units or having an existing single-family home, and no discretionary review, no hearing, it all has to be allowed, as long as one of the eight homes...
Speaker: or one of the homes, no matter how many there are, is deed-restricted affordable. So it has a covenant that says it will only be rented or sold to households making at or below 80% of area median income.
Speaker: This is what is sometimes defined as low income in the affordable housing world. In California, I believe that low income is usually defined as 60% of area median income, so 80% is a bit more.
Speaker: It's less than moderate though. So that would have been interesting because you could imagine, you know, have a lot of eight plexes pop up. I did not put in my notes if there were height limitations or anything like that.
Speaker: However, it appears to have passed out of the housing committee But then the local government committee, it says hearing canceled at the request of author. So I think that it died at that point. And now as of January, 2026, it was turned into a completely different non-housing bill.
Speaker: So that is done. But it was an interesting direction. you know, usually you don't get ah deed restricted affordable housing for homes as small as eight units. But if you could do it on a small lot, and especially if you could get single stair, and you can build eight units at the moment with single stair, you can have you know four per floor and up to three floors with one staircase.
Speaker: It's possible that the land costs would have been small enough that that would have been feasible. It would have to be carving out a new market niche. It would probably take some time for the market to figure it out, but it might be possible.
Speaker: So it's an interesting direction for really using single-family zoning and making something new that's not just duplexes. Another thing about cost of construction remains the issue of impact fees. And cities and schools and special districts are able to charge impact fees on new housing, which have a lot of conceptual problems and a lot of practical problems. They end up exclusionary in practice.
Speaker: And there has been a push to limit those and to make them more rational. And one of the changes recently in a previous year, I think it was just last year, or 2024, I should say, was a bill that said if you have impact fees,
Speaker: You can assess them, but not until the building is ready for occupancy. Because then, you know, you don't need to get as much money up front. You don't need to borrow as much. You know, you if you need to pay these fees, then you do it at a time when the project is much further along and much more certain.
Speaker: So, you know, cost of money is reduced. SB 499 was a bill this year that unfortunately kind of rolled this back a bit. It allowed park fees to be charged up front.
Speaker: if they were public or safety or fire or emergency services for park and recreational facilities, if those facilities had an emergency purpose. Now, I'm not sure if evacuation counts as an emergency service, but this was largely a park district bill. It was opposed by California YIMBY and other housing groups. Buffy Wicks and Scott Wiener and Alex Lee voted against it.
Speaker: It did get decent majorities, but a lot more in the Senate than the Assembly, interestingly. It got 31 votes out of 40 in the Senate, and it got 46 votes out of 80 in the Assembly. But it did make it all the way through and was signed by the governor.
Speaker: The last one that I'm going to go into in depth is not about housing production, which I know is one of my most common focuses, but is about rent control.
Speaker: you know I believe that rent control is a good thing that reduces harm to tenants. I don't think it is the solution to the housing problem because it does not solve the supply issue.
Speaker: If you pursue rent control on its own, then you get protected tenants chasing supply, a limited supply, and that works itself out one way or another.
Speaker: At worst, it can end up with tenants who are protected if they're already there, But then there's no new homes for their kids. There's no new homes for people who are moving in.
Speaker: And everything just stagnates. And there are actually some European countries that have done better on tenant protections than on building housing, where you do get interesting stuff where you have people who've been keeping their apartments for 50 years and they make a lot of money subletting.
Speaker: I'm thinking of Sweden here, by the way. A lot of other European countries do much better at this, but Sweden doesn't. But anyway, right now, California has rent control in some big cities to the extent that the law allows. But in 2019, we got Assembly Bill 1482 that created some statewide rental housing protections for housing built 15 years ago or more.
Speaker: but it was rolling. Unlike local rent control, it is not a fixed date that stays the same forever. It is once an apartment building turns 15 years old, then it becomes subject to these caps.
Speaker: The thing is that right now, it the caps allow for significant increases. They allow inflation plus 5% with a maximum of 10%. So for a couple of recent years, inflation was 4% or more. And so you were allowed increases of 8% or 9% under 1482. It also exempted single-family homes and condos in condo buildings.
Speaker: And it was set to sunset in 2030. AB 1157... so ab b eleven fifty seven by Assemblymember Kalra with many, many co-authors, including Bonta, Alex Lee, Matt Haney, would have changed this to something a lot closer to real rent control.
Speaker: It would have gone from inflation plus five to inflation plus two. It would have applied to single family homes and condos, and it would have changed the maximum. So regardless of inflation, it would have said no more than 5%. Currently, it's 10%. And it would have removed the 2030 sunset.
Speaker: So we basically would have had statewide rent control for buildings 15 years old and more. This bill did fail. It got through its first committee, but not its second. It was proposed in the assembly, as you can tell from its name.
Speaker: Assembly housing, it passed with seven votes in favor, five votes no. Interestingly, no one abstained. The big pro-housing people, Haney, Lee, Wicks, all voted yes, who were on that committee.
Speaker: The nos, the five nos, there were three Republicans and two Democrats. The two Democrats were sort of on the outer suburb or exurb side. Avila Farias, Contra Costa, and Wilson of Solano County.
Speaker: And then it went to Assembly Judiciary, and then it had an actual vote. It wasn't bottled up. Often you will see that it was withdrawn from a hearing at the request of the author.
Speaker: Well, here it did get a hearing and it got a vote. It got four yes, three no, five not voting. So it did not pass the majority threshold, and it failed in that committee. So the four who voted yes were, of course, progressive Democrats,
Speaker: The three who voted no were all Republicans, but the five who did not vote at all were all Democrats. interestingly, and they were, again, broadly, I would say suburban.
Speaker: Because this is something I have some dislike when people vote against, I am going to take the time to name the no votes, or in this case, those who were Democrats and did not vote for it.
Speaker: They were Stefani of San Francisco, Bauer-Cayen of Contra Costa, Pacheco and Zburr of Greater Los Angeles, and Papen of San Mateo County. So this was really a Bay and SoCal thing, and three of those no vote recorded were basically the Bay suburbs. Stefani is San Francisco and San Mateo, but it's like the west of San Francisco.
Speaker: So that was somewhat disappointing, but it is going to be, i think, a big fight whether California is going to have some true form of rent control. course, if you got that true rent control, then the question becomes, does that actually facilitate more building because people feel safer?
Speaker: Or does it not actually form some kind of compromise? And do people just accept that and say, okay, we're going to think about other things now? That is what I wanted to cover for this episode.
Speaker: Thank you for listening about the 2025 legislative cycle. For 2026, we're certainly going to hopefully get a cleanup bill for SB 79. There are always little things you find after the fact.
Speaker: or that were done kind of hurriedly at the last minute. It will probably be this year focusing more on non-zoning issues to support housing, building codes, impact fees, and possibly coming back to condos.
Speaker: which I've talked about on previous episodes. It is a little more complicated this year because the new housing chair is someone who is kind of on the left NIMBY side, in my opinion. Monique Limon of Santa Barbara was a no vote on SB 79 and has passed some legislation to carve out very specific exemptions for housing housing that one area was concerned about. It banned it in, you know, it banned it in something like, you know, a city that is between 200 250,000 and, you know,
Speaker: has a pediatric hospital I'm making this up, but it was very specifically and clearly intended to exempt a particular area from a particular project, which is not a good sign.
Speaker: It goes to show that, you know, you can have pro-housing leadership like the Senate pro tem, and a lot of their decisions are being made on bases other than housing.
Speaker: And it can have unexpected impacts on housing based on just who is chosen for the higher level political reasons. So at the very least, I would say maybe not a big year for ambitious pro-housing stuff like SB79, but of course no one was going to do SB79 the year after SB79 passed, so that may not be an issue.
Speaker: So I look forward to talking about the bills that are coming up this year. Maybe I can give it a little closer to real time. although I don't know if I can manage that, but we will see.
Speaker: Thank you for listening. I hope you enjoyed and found this useful. I will see you in another episode, and until then, keep on learning.
