October 26, 2023

Throughout the year, CSAC has kept you apprised of the status of significant legislation. Now that Governor Newsom has determined final actions on the remaining measures, CSAC will publish a series of articles to spotlight new laws of interest and impact in each policy area. This week, the Housing, Land Use and Transportation (HLT) policy area provides information on new laws impacting CEQA, affordable housing, accessory dwelling units, public contracts and more.

For additional questions, please contact Mark Neuburger or Kristina Gallagher.

Housing and Land Use

AB 42 (Ramos) Tiny homes: temporary sleeping cabins: fire sprinkler requirements. The bill prohibits, until January 1, 2027, a local agency from imposing or enforcing a requirement to provide fire sprinklers in temporary sleeping cabins for people experiencing or at risk of homelessness, provide that this bill does not supersede any other local or state approval process or health and safety standard pertaining to the use of or siting of temporary sleeping cabins, and if certain conditions are met.

AB 356 (Mathis) California Environmental Quality Act: aesthetic impacts. The bill extends the sunset date of a provision of CEQA stating that lead agencies are not required to evaluate the aesthetic effects of a project involving the refurbishment, conversion, repurposing, or replacement of an existing building that is abandoned, dilapidated, or has been vacant for more than one year and which includes the construction of housing.

AB 480 (Ting) Surplus land. The bill makes numerous changes to the Surplus Land Act (SLA), including the disposal process, the authority of the Department of Housing and Community Development (HCD), and penalties for violations. The bill expands HCD’s authority by subjecting disposals pursuant to the mixed-use exemption for larger sites to penalties under the SLA, despite the broader exclusion from the SLA that exempt surplus land enjoys.  The bill also alters specific penalty provisions of the SLA pertaining to land that is sold or leased in violation of the Act.

AB 519 (Schiavo) Affordable Housing Finance Workgroup: affordable housing: consolidated application and coordinated review process. The bill creates an Affordable Housing Finance Workgroup to create a consolidated application for affordable housing developers to use to access state housing funding programs and a coordinated review process for the application. The workgroup will develop recommendations for state administered programs to utilize a consolidated application for various affordable multifamily rental programs.  The bill also requires the Department of Housing and Community Development (HCD), the Tax Credit Allocation Committee (TCAC), the California Debit Limit Allocation Committee (CDLAC), and the California Housing Finance Agency (CalHFA) to provide a plan to update any state-administered program to utilize a single application for funding on or before January 1, 2027.

AB 1033 (Ting) Accessory dwelling units: local ordinances: separate sale or conveyance. The bill authorizes a local agency to adopt a local ordinance to allow ADUs to be sold separately or conveyed from the primary residence as condominiums.

AB 1307 (Wicks) California Environmental Quality Act: noise impact: residential projects. The bill specifies that noise generated by occupants is not a significant effect on the environment for residential projects for purposes of the California Environmental Quality Act (CEQA).

SB 4 (Wiener) Planning and zoning: housing development: higher education institutions and religious institutions. The bill enacts the Affordable Housing on Faith and Higher Education Lands Act of 2023, which requires a housing development project to be a use by right on land owned by independent higher education institutions or religious institutions, until January 1, 2036.

SB 20 (Rubio) Joint power agreements: regional housing trusts. The bill authorizes two or more local agencies to enter into a joint powers agreement (JPA) to create a regional housing trust to fund housing for people experiencing homelessness and persons and families of extremely low-, very low-, and low-income within their jurisdictions. 

SB 91 (Umberg) California Environmental Quality Act: supportive and transitional housing: motel conversion: environmental leadership transit projects. The bill permanently extends existing law that allows for a motel, hotel, residential hotel, or hostel that is converted into a supportive housing or transitional housing project to be exempt from CEQA. In addition, the bill also extends CEQA streamlining provisions for “environmental leadership transit projects” (ELTPs) located within the County of Los Angeles that meet certain specified requirements.

SB 229 (Umberg) Surplus land: disposal of property: violations: public meeting. The bill requires a local agency to hold an open and public meeting if it has been notified by the Department of Housing and Community Development (HCD) that its planned disposal of a parcel is in violation of the Surplus Land Act (SLA).

SB 423 (Wiener) Land use: streamlined housing approvals: multifamily housing developments. The bill extends the sunset on SB 35 (Wiener, Chapter 366, Statutes of 2017) to January 1, 2036. In addition, the bill requires that, in jurisdictions not meeting their housing targets for above moderate-households, projects eligible for SB 35 streamlining must contain at least 10% of the units affordable to very low-income households, as specified; authorizes SB 35 to apply within the coastal zone, beginning January 1, 2025, consistent with the applicable local coastal plan or land use plan, except in areas that are environmentally sensitive or hazardous, as specified; specifies that SB 35 streamlining shall not apply in specified fire hazard zones unless sites have adopted all applicable fire hazard mitigation measures, as specified; and subjects local governments to SB 35 streamlining if they fail to adopt a compliant housing element as determined by HCD; requires the governing body of a city or county to hold a public meeting within 45 days of receiving a notice of intent to submit an application for streamlined approval, for projects proposes in a census tract designated as a moderate- or low-resource area, or an area of high segregation and poverty; among other changes.

SB 469 (Allen) Housing: publicly funded low-rent housing projects. This bill provides that Article 34 requirements do not apply to housing developments that receive funding from specified state housing programs. Article 34 requires local voter approval of any “low-rent housing project” that is “developed, constructed, or acquired in any manner by any state public body.” Cities, counties, housing authorities and agencies are all “state public bodies” for the purposes of Article 34.  As a result, if any of those entities participates in development of a “low rent housing project” and that participation rises to the level of development, construction, or acquisition of the project by the agency, approval by the local electorate is required for the project.

This bill provides that the term “low-rent housing project,” as defined in Section 1 of Article 34 does not apply to any development composed of urban or rural dwellings, apartments, or other living accommodations that consists of the acquisition, rehabilitation, reconstruction, alterations work, new construction or any combination of lodging facilities or dwelling units using any of the following:

• Money appropriated and disbursed by the Business, Consumer Services and Housing (BCSH) Agency, Department of Housing and Community Development (HCD), and the California Housing Finance Agency (CalHFA).
• An allocation of federal or state low-income housing tax credits from the California Tax Credit Allocation Committee (TCAC).
• Money appropriated from the Affordable Housing and Sustainable Communities (AHSC) program. 

Last year, the legislature passed SCA 2 (Allen/Wiener, Chapter 182, Statutes of 2022), which repeals Article 34 all together, subject to voter approval. 

SB 482 (Blakespear) Multifamily Housing Program: supportive housing: capitalized operating reserves. The bill requires the Department of Housing and Community Development (HCD), to offer capitalized operating reserves to supportive housing units funded by the Multifamily Housing Program (MHP) and adds “supportive housing” to the list of definitions that apply to program activities in the MHP. Capitalized operating subsidy reserves (COSRs) provide upfront subsidies to cover deficits in annual operating revenues for housing developments, primarily used for permanent supportive housing for extremely low-income individuals.

COSRs are a vital financing tool to create long-lasting permanent supportive housing. A COSR is money upfront to cover losses by supportive housing for 15-20 years. By financing shortfalls upfront, banks are more comfortable providing money to these developments. HCD has provided COSRs in programs like No Place Like Home and the Veteran’s Housing and Homelessness Prevention Program. However, these programs are running out of funding, and HCD is consolidating programs to increase efficiency. SB 482 requires HCD to offer COSRs in its MHP program, the flagship housing program at HCD. In this way, HCD can directly fund supportive housing through MHP without developers having to apply for additional programs.

SB 555 (Wahab) Stable Affordable Housing Act of 2023. The bill creates the Stable Affordable Housing Act of 2023 (Act) and requires the Department of Housing and Community Development (HCD), no later than December 31, 2026, to develop, adopt, and submit to the Legislature a Social Housing Study for achieving the social housing unit goals set forth in the Act, for the purposes of studying the development of social housing through a mix of acquisition and new production.

SB 684 (Caballero) Land use: streamlined approval processes: development projects of 10 or fewer residential units on urban lots under 5 acres. This bill requires local agencies to ministerially approve subdivision maps for specified projects in urban areas that include 10 or fewer housing units.

SB 747 (Caballero) Land use: surplus land. This bill defines the term “dispose” for these purposes to mean the sale of the surplus property or a lease of any surplus property entered into on or after January 1, 2024, for a term longer than 15 years, including renewal options, as specified.

Transportation and Public Works

AB 334 (Rubio) Public contracts: conflicts of interest. This bill gives public agencies the local control to contract with the same independent contractors on multiple phases of a public project, clarifying that in doing so would not violate any conflict-of-interest rules. 

AB 400 (Rubio) Local agency design-build projects: authorization. The bill allows local governments to continue the utilization of existing state law which allows them to use the Design-Build (DB) procurement process for qualifying public works contracts in excess of $1 million using either a low bid or best value process. This bill achieves this by extending the existing January 1, 2025 sunset date to January 1, 2031 on the statutory DB authority.

AB 744 (Carrillo) California Transportation Commission: data, modeling, and analytic software. This bill requires the California Transportation Commission (CTC), to convene relevant state agencies to assess the procurement and implementation of data, modeling, and analytic software tools to support various state goals, and requires the CTC to develop, by July 1, 2025, a proposal to procure and a process to provide access to data, modeling, and analytic software tools, among other provision.

AB 1673 (Pacheco) Outdoor Advertising Act: local governmental entities: relocation. This bill clarifies that relocation of billboard advertising sign displays will not be unduly restricted and that local governments realize revenue from advertising agreements.

SB 706 (Caballero) Public contracts: progressive design-build: local agencies. This bill allows counties, cities and special districts to use the progressive design-build (PDB) project delivery method for construction contracts. Until January 1, 2030, the bill authorizes local agencies to use the PDB process for up to 10 public works projects in excess of $5 million for each project.

In PDB, there are two phases. In the first phase the awarding entity (i.e., County) would choose a DB entity using the best value process to complete preliminary plans, provide a cost estimate and a final design. Then the second phase, where the DB entity and the awarding entity would agree to a final design, cost, and schedule. If there is no agreement, there is an “off ramp,” where the awarding entity can keep the first phase design plans and contract out with another entity to finish the rest of the project. This is different than the traditional DB, where the awarding entity contracts with one single entity to design and construct a project at a set price before the design work begins, which does not include the “off ramp.”