Transcript
Speaker: Hello and welcome once again to John Nerds Out on California Housing Legislation. I'm John Mina Schwartz and it is now 2025. I have talked about what happened with California housing legislation in 2024, both in the legislature itself and the legislation put to voters in the form of ballot initiatives.
Speaker: So now what is happening this year? Well, I want to focus on two really exciting bills that I have just been going through the details of that I think could make a real difference in California housing production if they pass this year.
Speaker: They are both sponsored by California YIMBY, and they are Senate Bill 79 and Senate Bill 677. first these essentially the return 50.
Speaker: the first of these is essentially the return of sb fifty I talked about SB50 in a previous podcast that was submitted in 2019. Did not succeed, but it was massive upzoning around transit stations.
Speaker: The great hope of the pro-housing movement, because it was a fairly straightforward upzoning. It simply said, the zoning standards around transit stations will be raised.
Speaker: It was very ambitious, applying all over the state all at once. And it was so ambitious and raised so much opposition that... Many things actually got passed that had a good effect that were almost smokescreened by the fight for SB50.
Speaker: But in the end, it was quite a bad thing that SB50 failed because California has not really picked up on housing production in the five years since it failed. Even though we've tried a number of fixes, a number of ideas, a lot of them have not really panned out.
Speaker: except for ADUs, accessory dwelling units. And there is an interesting strategic question that that brings up that implicates Senate Bill 79. So I'm going to go into the details of SB 79, but I'm also going to talk a little bit about the alliances that have been made in California housing policy and the compromises that have resulted and what that means for housing production as a whole.
Speaker: The drive to increase production has, of course, led to trying to make it work for everyone who is open to new housing. And by making it work, I mean adding things that other people like perhaps more than the housing as housing.
Speaker: So there has been a critique that these kinds of compromises of putting in all the different things that – make it easier to pass, are simultaneously making it harder to actually get the projects going.
Speaker: So an example of the benefits that have been added on to housing and some of the potential conflict that we're seeing now is if you go back a couple of years to Assembly Bill 2011,
Speaker: That was upzoning of commercial corridors on wide streets. But it wasn't just saying you can build more housing here. It said you have to do it and you have to provide prevailing wage to your employees, so higher wages basically, and apprenticeships and health insurance.
Speaker: And you also have to provide a certain level of income-restricted affordable housing, guaranteed to remain affordable at area median income times X percent for usually 45 or 55 years.
Speaker: And of course, it also only carved out certain areas that everyone agreed were okay to upzone. So one of the questions has become, any of these individually, the 10 or 15 percent affordable or the prevailing wage, the limited – areas, the limited height, any of those on their own might not be a barrier.
Speaker: But when you add them all together, are you making the projects expensive enough that they are not actually happening? We are seeing some projects happen under the commercial upzoning AB 2011, but they are not at vast quantities just yet.
Speaker: And I mentioned ADUs were an exception. Well, accessory dwelling units, those were legalized without any of those requirements. They can be built just like regular housing is built.
Speaker: You don't need to restrict anything by income. You don't need to hire union labor. You can just build it the way you build normal homes. And ADUs are the segment of housing that has boomed since it was legalized.
Speaker: So an academic, Christopher Elmendorf at UC Davis School of Law, wrote an article in the Case Western Reserve Law Review called Plain Bagel Streamlining Notes from the California Housing Wars.
Speaker: And what ah he was saying was, quoting Ezra Klein, actually, that adding all these benefits to what housing should have with it was like the everything bagel, put everything on the bagel.
Speaker: Whereas the plain bagel of ADUs seemed to be what was working. So this has spawned the question, should upzoning just be upzoning? Obviously,
Speaker: Getting the carpenters on board and many other unions was a big deal for the pro-housing movement. It got some very important bills passed. And it is still the case that unions are good things overall and that construction workers are treated poorly and should be treated better.
Speaker: And if legislation can give them a hand up, that is certainly a moral thing to do. I would say that Senate Bill 79, which was sponsored by Scott Wiener, the OG of upzoning, is trying to split the difference here a little bit.
Speaker: it's It is actually designing an upzoning that is just upzoning – that simply takes the transit adjacent areas and allows buildings of significant height and size to be built on them within a half mile radius.
Speaker: But it then takes some of the agreements that were negotiated with unions like the Carpenters that include prevailing wage and some affordability and make that...
Speaker: more of a benefit, make the project more feasible, easier to approve than just the plain bagel version. So the idea is open up all the opportunities, but give the everything bagel ones a better opportunity.
Speaker: So what does this look like in practice? Well, Senate Bill 79 looks at transit stops, which is mostly, as it's defined, rail stops.
Speaker: Heavy rail, light rail, BART, Amtrak, ah VTA, LA Metro. Around those stations, you get your higher height and your bigger buildings.
Speaker: It does actually divide them out somewhat by service level. Because it's saying we shouldn't treat all rail stations equally. Some of them have more capacity. Some of them don't.
Speaker: I'm going to be a little cynical here and say i suspect this was meant to mollify Marin County. Because Marin County has a very influential senator who basically got Marin exempted from Senate Bill 50 back in the day.
Speaker: And they don't want to be upzoned by their system, which is called the smart rail system, in the same way that BART stations are. And it is true that they have less capacity and less use at the moment.
Speaker: So a bit of a pre-compromise there, but it is it is somewhat thought through in saying, here are the higher capacity transit and the lower capacity transit. Let's upzone them all, but highest capacity the most.
Speaker: The three things that SB 79 specifies are three of the core elements of density.
Speaker: Height, dwelling units per acre, and floor area ratio. So height is pretty straightforward. Dwelling units per acre is, of course, how many homes you can have per acre. So, you know, 50 homes in half an acre is 100 homes per acre.
Speaker: And then floor area ratio is how much floor space you're building compared to your actual lot, compared to the amount of dirt you have. So floor area ratio is your built floor area divided by your lot area.
Speaker: So if you build a 2,000 square foot home on a 4,000 square foot lot, divide 2,000 by 4,000, your floor area ratio is 0.5. If you build an 8,000 square foot apartment building on that same lot, 8,000 divided by 4,000, then that's two.
Speaker: But importantly, it doesn't matter for your FAR how many stories you go. So that 8,000 feet on 4,000 square feet land
Speaker: Could be four stories, each of which is 2,000 square feet, so you're taking up half the lot. Or it could be eight stories, each of which is 1,000 square feet, so you're taking up a quarter of the lot.
Speaker: The idea is to reduce bulk somewhat, to make your cityscape not a continuous set of rectangles, to create some kind of let-up in the streetscape and some level of open space in the spaces you have to leave.
Speaker: So, what are the standards that are imposed in terms of height, density, and f FAR? Well, the highest density place in the half or quarter mile radiuses of transit stops is in a tier one transit stop. So think of a BART station like heavy rail.
Speaker: The height limit is 75 feet. So seven stories. The maximum density is 120 acre. The floor area ratio is 3.5. And importantly, it says that the government shall not enforce any other local development standard or combination of standards that would prevent achieving ah floor area ratio of up to 3.5.
Speaker: So that gives them some ability to wiggle out of other miscellaneous standards that are set. Like, for example, if they say your balconies have to, i don't know, cannot go past the lot line or something.
Speaker: or they have to your balconies have to be set back within the lot line, and you can show that that's preventing you from reaching your desired density, then you get rid of that.
Speaker: So that's 75 feet. And then you can actually make a 3x2 table, because then within not a quarter mile, but a half mile, 65 And then you have another set of two standards for a quarter mile and a half mile of a tier two stop.
Speaker: And then a quarter mile and a half mile of a tier three stop. So not to go through them all individually, But the lowest version is between a quarter and a half mile of a tier three stop.
Speaker: And that's 45 feet, 60 units per acre, and four area ratio of two. However, there are some big butts to these standards that allow you to go higher in some cases.
Speaker: First, there is another bonus if you are immediately adjacent to the stop. They call it an adjacency intensifier, and it's whatever the standard set in that three by two table was.
Speaker: If you're right next to the station, you get another 20 feet of height, you get another 40 units per acre of density, and you get another one added to the floor area ratio you can do.
Speaker: Then you can also apply for the density bonus. So really, the way the density bonus works is you add more affordable units, and then that allows you to add more market rate units over the density.
Speaker: So if you're starting at 75 feet, and then you add density bonus, then maybe you can get to 100 feet, or maybe even 150 with recent amendments to density bonus law.
Speaker: So that is the starting point, not the absolute maximum. However, I will say that it will take a lot of density bonuses in practice. The way construction works right now, usually when you're building under current standards, under current construction methods,
Speaker: Either you build up to seven or eight stories with concrete on the first and or second floor and wood above that, or you build a steel and concrete building, and that usually needs to be like 15, 17, 18 stories more.
Speaker: seventeen eighteen stories or more In between that doesn't pan out so well. But there are new construction methods, specifically using mass timber, new kinds of manufactured wood, that might not be so finicky and allow for 10, 12, 14-story buildings to be made in a more cost-effective way.
Speaker: So on top of that, there is another benefit you get if you go with the higher affordability and with prevailing wage labor standards.
Speaker: And that is, if you follow effectively those standards, then you get what is called streamlined ministerial approval, which is basically the city has to approve your application lickety split.
Speaker: They can't exercise much judgment. They just have to make sure all the boxes are checked and all the rules are followed and be extremely nice to you, basically. Mm-hmm. So what it does is it takes over the criteria for another bill that was passed a couple of years ago, Senate Bill 423.
Speaker: And it says, if you were near transit in the way that this bill specifies, and also you meet the SB 423 criteria... which include things like be in a multifamily zone, be in a city, be in a place allowing residential, don't be in a vulnerable coastal area, fire zones, other environmentally sensitive areas, and offer the prevailing wage, apprenticeships, healthcare, and a certain level of affordability, which I think is going to be ah along the lines of 10 or 15% affordable.
Speaker: Then you also get streamlined ministerial approval. So the idea is 100% market rate project could get approval under Senate Bill 79 passed.
Speaker: But a 10% affordable project that also pays its workers better would get much faster approval. And in the development world, time is money. So this can be a benefit.
Speaker: Of course, one of the things that's in Senate Bill 423 that is not carried over into this bill is that Senate Bill 423 only applies if you are in a city that for the last several years has been underbuilding on its obligations.
Speaker: It has not been building the housing indicated in its eight-year plan, which is an amount imposed on it by a regional planning process.
Speaker: If you do an SB 79 project and it adds the 423 bagel toppings, then it doesn't matter how much your city is building. You still get the streamlined approval.
Speaker: Now, one of the things about 423 is it requires... is that requires your building to be consistent with current city zoning. So you can't use it in a single family area.
Speaker: But guess what? Under SB 79, if you happen to have a single family area that's next to transit, like, oh, I don't know, Rockridge in Oakland, then suddenly you can use it there.
Speaker: You could build an eight-story building next to Rock Ridge BART on top of a single-family home if SB 79 is passed into law as currently written.
Speaker: Also, it opens up some level of building in the coastal zone, specifically coastal areas, coastal cities, where it is already zoned multifamily.
Speaker: This was an exemption of SB 423, but in the case of SB 79, if we have a transit station in a built-up city in the coastal zone, then that will be opened up 45678-story development.
Speaker: so senate bill seventy nine is california going big It is saying transit is the place to build. It is the best place to build. We need to be doing it everywhere all at once.
Speaker: But plain bagels as well as everything bagels. So I'm very excited by Senate Bill 79. um It does not change – one small critique. It does not change parking requirements.
Speaker: ah Now, mostly that is irrelevant because we already had a bill a few years ago, AB 2097, which took all the transit stations that are in this bill and eliminated parking requirements within the half mile radius, which is the same radius of this bill.
Speaker: However, there are some kinds of transit that are upzoned, transit stop, that are upzoned in SB 79 that were not covered in 2097. And an interesting example, if there is a bus route that has enough service, and if that bus route has a transit priority lane that it uses, you know, like a bus only lane, anywhere along its line, then the stops on all of that line are upzoned.
Speaker: This has to be bus routes that have frequencies of 15 minutes every 15 minutes or faster. But there are some places where this could have a lot of impact because Oakland has bus only lanes in on Broadway downtown for about six blocks.
Speaker: But a lot of major routes that go a very long distance away from Broadway use those transit priority lanes. So not just the six, but also potentially the 51, potentially the 72, potentially the 57, not because it goes on Broadway, but because it has some priority in Emeryville.
Speaker: So this could be quite a thing for Oakland in particular. So that's SB 79. I will be anxiously tracking its progress and supporting it and trying to see what happens to it in amendments. And I suspect there will be an update to it in a future podcast episode.
Speaker: The second I want to mention is Senate Bill 677. This was also introduced by Scott Wiener, but it is co-authored by Buffy Wicks. So two big champions still. And this comes back to some other sets of bills that I have mentioned at some length.
Speaker: in this podcast, and that is Senate Bill 9. And that is the duplex law. That is the law that on paper allowed duplexes in every single family zone in California.
Speaker: In practice, we have not been seeing all that many duplexes spring up, which we were hoping they would spring up just like ADUs, but there were a lot of compromises made to pass Senate Bill 9.
Speaker: Some of them were fixed with Senate Bill 450, which passed, I believe, last year. But there were some big compromises that were left in because, as I mentioned at the time, the legislature perceived that as the deal and they needed to keep to the deal.
Speaker: Well, once again, 677 goes big. goes big And it says, everything that appears to be a hindrance to building duplexes, we are sweeping aside.
Speaker: The first one, and the really big one, is owner occupancy. Currently, if you want to split a lot under SB9, you have to certify that you intend to live on that on one of those homes, somewhere on that lot, for three years.
Speaker: 677 does not amend that. It deletes it entirely. It says no more owner-occupancy requirements. For duplexes as well as lot splits, Senate Bill 9, Senate Bill 677 bans localities from imposing their own owner-occupancy standards.
Speaker: Another really big change is that right now there are a number of local standards like lot coverage, height, setbacks, all those things that that were not actually changed much by Senate Bill 9.
Speaker: But what Senate Bill 9 did was it said, if your standards physically preclude a unit from being 800 square feet, you know, if there's not enough lot to build on unless you, you know, go up a second story or go further into the setback or whatever, then the local standard does not apply.
Speaker: Well, that's all well and good as a concept. And that was a concept that was used for ADU legislation. But if you're building new homes, new duplexes, often you're building them for sale, and 800 square feet is not very big for for sale homes. 800 square feet is good for compact two-bedroom ADU, but it's not good for, say a family home with three bedrooms where more space makes it more marketable, and where, frankly, we have the land to build those bigger units.
Speaker: So 677 strikes the number 800 that section and substitutes 1,750. under 677, if it's passed, you would able to break through local standards so now under six seven seven if it's passed you would be able to break through local standards to build two homes that are each 1750 square feet on the same lot.
Speaker: That's big, in my opinion. That would allow a basic suite of townhomes, two townhomes or maybe four townhomes on a big lot. It also makes a number of other smaller changes. um I'll run through those quickly.
Speaker: Localities may not add other random standards to their SB9 approvals. Right now, it applies only to single-family zoned areas. Under 677, it would apply anywhere allowing a home of four units or less.
Speaker: It adds a prohibition on HOAs from unreasonably restricting duplexes or lot splits or adding requirements that make them unreasonably more expensive.
Speaker: The front setback only applies to the original lot line so that if you split it into two, that doesn't create an extra front setback if there's a new front line. No setback is required between the units unless it's required but by the building code.
Speaker: There are – localities are banned from requiring a certain level of affordability on the projects. And it requires a locality to pass an ordinance to implement the duplex lot split law and clear that ordinance with the state housing and community development department.
Speaker: Oh, yes, this was another big one. If the home is less than 1,750 square feet, there is no impact fee. That is another benefit ADUs get, and it is a big benefit because impact fees can be 10, 20, in some places as much as $60,000. And then if it's over 1,750 square feet, then the impact fee is charged proportionately. And I'm not quite sure how to calculate that just yet, but I think it means that usually you'll only pay a fraction of the regular impact fee.
Speaker: There was a provision that the same person could not split one lot and then split an adjacent lot. And also it banned people working in concert with that person from splitting an adjacent lot.
Speaker: All that is gone. All that is repealed. There is 90-day statute of limitations on challenging certain aspects of a lot split. There is no driveway width requirement over one that is already allowed in the zone.
Speaker: So that's, again, something that cities sometimes require, and now they can't. And if there are non-conforming zoning conditions, that is already something the city cannot require you to correct before your lot split.
Speaker: before doing your lot split But this adds, you cannot be required to correct non-conforming subdivision conditions. So that's conditions imposed when your subdivision was originally made.
Speaker: There's a wide range of conditions that can be put on that because the Subdivision Map Act is very generous to cities. So that is another thing that cities could previously do to hold up lot splits and now are not allowed to.
Speaker: Also, it does something to try to bring SB 9 into the coastal zone. And it seems a little wishy-washy, but I can see where they're coming from.
Speaker: It's saying there's a deadline for local governments in the coastal zone of July 1st, 2026 to harmonize the applicable provisions of this law, the duplex law and the lot split law, into their local coastal plan.
Speaker: you know And they are supposed to amend their local coastal plan to permit these duplex projects, quote, consistent with policies of the local coastal program to the greatest extent feasible.
Speaker: So they are being told, you need to allow duplexes and lot splits. And if you need to protect actual coastal interests, coastal access, then of course you do that.
Speaker: But you don't just get to be NIMBYs and say, we're the coast, we get to stay single family. So if all this comes together, then we could get a lot more duplexes and other larger complexes when you add together duplexes and ADUs.
Speaker: So I look forward to that. 6.77 also makes a number of cleanup changes to Senate Bill 423, which I mentioned before. So 423 is making it easier to build mixed income housing in cities that are not building enough housing.
Speaker: So one example of a cleanup, a relatively small cleanup is right now 423 doesn't apply if what it's demolishing is on a federal, state or local historic register.
Speaker: Well, this cuts out local, only state and federal. That makes sense to me because local registers are probably a lot easier to manipulate. Another really big change is 423 says if a city is underbuilding based on how much housing has been built, then 423 kicks in to different degrees depending on the nature of the underbuilding.
Speaker: But what period do you measure how much housing has the city been building? Well, in the past, it actually took the eight-year cycle that is applicable to cities.
Speaker: So the beginning of 2015 to the beginning of 2023, for example, that's eight years. And it measured them in halves. So you were only getting Senate Bill 423 applied to you if after four years of monitoring, it turned out that you were behind.
Speaker: Well, this changes it from four-year periods to two-year periods. And because we're we're just finishing up, i think we just have finished up with the second year of the Bay Area RENA cycle, which is 2023 to 2031, if this passes, then suddenly a whole lot of cities around the Bay have to recognize much earlier than otherwise that they are behind on their RENA cycle.
Speaker: And they have to start allowing projects under SB 423. There's one other interesting change, and this applies to both the amendments to SB 9 and the amendments to 423.
Speaker: So both duplexes and bigger mixed income housing. but And it is sort of the same concept of amendment applying to both. And it is specifically about emergency rebuilding.
Speaker: All of these laws have previously excluded places in fire zones, places in wetlands, places in farmland, etc. However, this makes an exception, again, both for duplexes and for mixed income projects.
Speaker: It says, if there was a home on your lot, no matter where it was, and that home was damaged or destroyed by, quote, earthquake, other catastrophic event, or the public enemy, end quote, then you can use these laws.
Speaker: So the idea is we had all these fires in l LA in the Palisades, the Pacific Palisades, but the Pacific Palisades are a fire zone.
Speaker: So right now, so far, the state government has been falling over itself to say, oh of course, we're going to build this back. We're going to make it really, really easy for everyone to build back.
Speaker: You know, Gavin Newsom issued a waiver of CEQA to say if you're building, then you're going to get your environmental clearance really quickly. Well, what this bill says is if you're if you have a bunch of single family homes and they're in an area where we have decided that there is going to be housing, fire zone be damned, then let's make it denser housing.
Speaker: And I think there are different feelings about that. But I think that it is pretty unlikely that we abandon these areas. And i think that it's possible that in many cases, denser housing can be more fire safe because it's newer and it can house more people.
Speaker: So given that managed retreat is not on the table at the moment, this is certainly the equitable way to go because so many rich people live in these fire zones and which by excluding fire zones from all our upzoning bills, we are keeping them exclusive single family areas.
Speaker: Now, again, on the other hand, not everyone in these fire zones was rich. I'm aware of that. Although I would say they were still in the process of pulling the ladder up by keeping single family zoning. But the other thing is that building a duplex where a oneplex was could actually allow people to get back some of their equity because they make that duplex or they make a second house on the lot.
Speaker: They sell it off. Bam. There's money that they didn't have that they lost when their house was burned down. So this will raise some interesting debate, but I think it is a better direction than we've gotten from the governor or from the mayor of Los Angeles about how do we balance density and environmental risk.
Speaker: There are other fascinating bills this year, which I'm happy to ah keep moving to cover, but not in this episode. ah Please support Senate Bill 79. Please call your senator or state assembly member.
Speaker: And please also support Senate Bill 677. You can follow their progress on leginfo.legislature.ca.gov. In future episodes, I will also be talking about CEQA reform and social housing coming back once again, and third-party permitting reform.
Speaker: But that's all the time I have for today. Thanks for listening, and until next time, keep on learning.
