Thursday, December 28, 2017

New Laws affecting real estate in Califronia as of January 1, 2018

2017 saw approval of the most Radical Housing Laws yet and may force urban development in Marin County and other  suburbs.

Lots to unpack here:

Affordable Housing
Creates streamlined

Creates a streamlined, ministerial approval process for infill
projects with two or more residential units in localities that have
failed to meet their regional housing needs assessment numbers.
This law creates a streamlined "by-right" approval process for infill
projects with two or more residential units or Accessory Dwelling Units in
localities that have failed to produce sufficient housing to meet their
Regional Housing Needs Assessment goals, provided that the project: 1)
approval process for
infill projects with two
or more residential
units or accessory
dwelling units for
certain localities
is not located in a hazard zone (e.g., flood, fire, earthquake, etc.); 2)
dedicates 10% of the units to households making at or below 80% of the
area median income; and 3) pays prevailing wage to projects over 10
The streamlined approval process requires some level of affordable
housing to be included in the housing development. To receive the
streamlined process for housing developments, the developer must
demonstrate that the development meets a number of requirements.
Localities must provide written documentation to the developer if there is
a failure to meet the specifications for streamlined approval, within
specified periods of time. If the locality does not meet those deadlines,
the development shall be deemed to satisfy the requirements for
streamlined approval.
“Infill” is the use of land within a built-up area for further construction.
Each community’s general plan must include a housing element, which
outlines a long-term plan for meeting the community’s existing and
projected housing needs. The housing element demonstrates how the
community plans to accommodate its “fair share” of its region’s housing
needs. To do so, each community establishes an inventory of sites
designated for new housing that is sufficient to accommodate its fair
share. Communities also identify regulatory barriers to housing
development and propose strategies to address those barriers. State law
requires cities and counties to update their housing elements every eight
years. In addition, before building new housing, housing developers
must obtain one or more permits from local planning departments and
must also obtain approval from local planning commissions, city
councils, or county boards of supervisors. Some housing projects can be
permitted by city or county planning staff ministerially or without further
approval from elected officials. Projects reviewed ministerially require
only an administrative review designed to ensure they are consistent
with existing general plan and zoning rules, as well as meet standards
for building quality, health, and safety. Most large housing projects are
not allowed ministerial review. Instead, these projects are vetted through
both public hearings and administrative review. Most housing projects
that require discretionary review and approval are subject to California
Environmental Quality Act review, while projects permitted ministerially
generally are not
SB 35 codified as §§ 65400 and 65582.1 of the Government
Code. Effective January 1, 2018.

Enforcement of
California Housing

The law enhances the authority of the Department of Housing and
Community Development (HCD) to determine if a locality is in
compliance with its general plans for housing development.
The existing Planning and Zoning Law requires a city or county to adopt
a comprehensive, long-term general plan for the physical development
of the city or county and of any land outside its boundaries that bears
relation to its planning. That law also requires the general plan to contain
specified mandatory elements, including a housing element for the
preservation, improvement, and development of housing which must be
submitted to the Department of Housing and Community Development
(the HCD) prior to the adoption of the element or amendment to the
element. The HCD then reviews the draft to determine whether the draft
substantially complies with the housing element.
This law further requires the HCD to also review any action or failure to
act by the city, county, or city and county that it determines is
inconsistent with an adopted housing element or a specified provision
and to issue written findings as to whether the action or failure to act
substantially complies with the housing element. If the HCD finds that
the action or failure to act by the city, county, or city and county does not
substantially comply with the housing element, and if it has issued
findings as described above that an amendment to the housing element
substantially complies with the housing element, this law authorizes the
HCD, after allowing no more than 30 days for a local agency response,
to revoke its findings until it determines that the city, county, or city and
county has come into compliance with the housing element. This law
also requires the HCD to notify the city, county, or city and county and
authorizes the HCD to notify the Office of the Attorney General that the
city, county, or city and county is in violation of state law if the
HCD finds noncompliance or a violation.

Assembly Bill 72 codified as Government Code § 65585.
Effective January 1, 2018.

Permits developers to
voluntarily use an
alternate zoning and
approval process in a
housing sustainability

Allows a city or county to create a housing sustainability district to
complete upfront zoning and environmental review in order to
receive incentive payments for development projects that are
consistent with the district's ordinance.
This law provides local governments the option of creating "Housing
Sustainability Districts," which operate as overlay districts to streamline
the residential development process in areas with existing infrastructure
and transit. These districts would be zoned at higher densities, near
public transit, and an EIR on the district would be completed at the front
end. Additionally, 20% of the housing in the district must be zoned at
affordable levels. Any development affordable to persons and families
whose income exceeds moderate-income shall contain no less than 10%
units for lower-income households. Once zoning is complete, the
housing sites within the district would be subject to ministerial approval
and subject to prevailing wage. In exchange for creating Districts,
localities receive incentive payments to encourage their establishment of
these districts, at two stages: a) First, local governments receive an
incentive payment when they create Districts. This payment would be
issued by the HCD upon preliminary approval of the district ordinance
and issuance of the EIR. b) Once a city permits housing units within a
district and demonstrates it has received a certificate of compliance from
HCD, it would receive a second incentive payment. This payment would
be issued by HCD. This law seeks to expedite and streamline local
housing development approval processes by exempting project-level
environmental review. Additionally, this law requires the locality to issue
a written decision within 120 days of receipt of the application.

Assembly Bill 73 codified as Government Code §§ 65582.1 and 66200
et. seq., and Public Resources Code § 21155.10 et. seq.
Effective January 1, 2018.

Ensures that local
agencies cannot
disapprove housing
projects without a
preponderance of
evidence proving that
the project adversely
impacts public health
or safety.

Changes the standard for a locality to disapprove development
from “substantial evidence” which is a relatively low threshold to a
“preponderance of the evidence.”
Purpose: This law seeks to address the severity of California’s housing
crisis by taking a critical look at cities’ approval processes for
development. State courts are often too deferential to localities in
accepting any justification declaring a development not feasible.
Although there is an evident lack of funding, space, and construction,
there are solutions the state can implement to ensure development is
taking place in conjunction with a city’s general plan and zoning
Under current law and the current Housing Accountability Act (HAA), for
affordable projects or emergency shelters, a local government may not
disapprove the development or condition approval in a manner that
renders the project not feasible unless it makes written findings, based
upon substantial evidence in the record, as to at least one of five
elements. For other types of housing projects, the local government may
not deny the proposed housing development or condition its approval
upon lower density unless it makes written findings, supported by
substantial evidence on the record, that it is necessary to safeguard
human health and safety. Substantial evidence, which is a relatively low
threshold, is "such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion." (Richardson v. Perales (1971) 402
United States 389.)
This new law requires a local government to make these findings by a
"preponderance of the evidence" rather than "substantial" evidence. The
preponderance of the evidence standard is higher than the substantial
evidence standard, and the evidence provided has to convince the
decision maker that it is "more likely than not." It is the standard
employed in most civil legal cases and is sometimes expressed in
statistical terms as 50% plus one. The purpose of this provision is to
impose a higher standard on local governments that wish to deny or
impose certain conditions on housing projects that qualify for the
protections of the HAA.
Fines and punitive damages: Under existing law, a court may impose
fines upon a local agency for acting in bad faith. The new law requires a
court to impose a minimum fine of $10,000 per housing unit in the
housing development project if the court finds a violation of the HAA.
Change in zoning or land use designation not valid for disapproval: The
new law provides that a change in a zoning ordinance or general plan
land use designation subsequent to the date the application was
deemed complete does not constitute a valid basis to disapprove or
condition approval of the housing development project or emergency

Assembly Bill 678 and Senate Bill 167 codified as Government Code §
Effective January 1, 2018.

Seeks to identify
solutions to the state’s
housing crisis using
the housing element
planning process

Requires a more detailed and broader housing element planning
process with an eye toward removing obstacles that may hinder a
locality from meeting its general housing plan.
Background: Every local government is required to prepare a housing
element as part of its general plan. The housing element process starts
when The Department of Housing and Community Development (HCD)
determines the number of new housing units a region is projected to
need at all income levels (very low-, low-, moderate-, and above moderate
income) over the course of the next housing element planning
period to accommodate population growth and overcome existing
deficiencies in the housing supply. This number is known as the RHNA.
The Council of Governments (COG) for the region, or HCD for areas
with no COG, then assigns a share of the RHNA number to every city
and county in the region based on a variety of factors.
In preparing its housing element, a local government must show how it
plans to accommodate its share of the RHNA. The housing element
must include an assessment of housing needs and an inventory of
resources and constraints relevant to the meeting of these needs.
Included in this analysis is an assessment of both governmental and
nongovernmental constraints upon the maintenance, improvement, or
development of housing for all income levels, including the availability of
financing, the price of land, and the cost of construction.
Governmental and nongovernmental constraints: Existing law
requires the housing element to include an analysis of potential and
actual governmental and nongovernmental constraints upon the
maintenance, improvement, or development of housing for all income
levels. The analysis of governmental constraints must include land use
controls, building codes and their enforcement, site improvements, fees
and other exactions required of developers, and local processing and
permit procedures.
This new law would require the analysis of governmental constraints to
also include any locally adopted ordinances that directly impact the cost
and supply of residential development. Nothing under existing law would
prevent a local government from providing this information, but this law
requires all local governments to undertake this expanded analysis of
governmental constraints.
Existing law requires the analysis of nongovernmental constraints to
include the availability of financing, the price of land, and the cost of
This new law also require the analysis of nongovernmental constraints to
include information about any requests to develop housing at lower
densities below those specified in the housing element's analysis of
density levels zoned to accommodate the local government's share of
the RHNA, the length of time between receiving approval for a housing
development and submittal of an application for building permits for that
housing development that hinder the construction of a local
government's share of the RHNA, and any local efforts to remove
nongovernmental constraints that create a gap between the local
government's planning for the development of housing for all income
levels and the construction of that housing..
Existing law also requires a local government's housing element to
address and, where appropriate and legally possible, remove
governmental constraints to the maintenance, improvement, and
development of housing. This law would expand this analysis by
requiring the housing element to also address and remove
nongovernmental constraints
Annual general plan report: This law requires charter cities to comply
with requirements for the submittal of the annual general plan report, and
adds that the report shall include the following: 1) the number of housing
development applications received in the prior year; 2) the number of
units included in all development applications in the prior year; 3) the
number of units approved and disapproved in the prior year; and 4) a
listing of sites rezoned to accommodate that portion of the local
government's share of the regional housing need for each income level
that could not be accommodated on sites identified in the housing
element's site inventory. This must also include any additional sites that
may have been required to be identified under No Net Loss Zoning law.

Assembly Bill 879 codified as Government Code §§ 6500, 65583 and
65700, and Health and Safety Code § 50456.
Effective January 1, 2018.

Authorizes local
governments to
establish Workforce
Housing Opportunity
Zones by preparing an
Environmental Impact
Report pursuant to the
Environmental Quality

This law authorizes a local government to establish a Workforce
Housing Opportunity Zone (WHOZ) which includes and upfront
environmental review (EIR) pursuant to the California
Environmental Quality Act (CEQA). The importance of this is that
CEQA has reportedly been used as a barrier to housing projects
even after those housing projects have been subject to lengthy
public discussion and scrutiny, and have been approved by local
This law permits a locality to establish a WHOZ by preparing an EIR
pursuant to CEQA and adopting a specific plan. For the next five years,
absent unforeseen environmental conditions, a locality may not deny a
development that meets the mitigation requirements under this bill, and
is located within the WHOZ. In effect, this law eliminates project-specific
environmental review, which could allow for housing developments
within the WHOZ to proceed in an expedited manner.
Within a WHOZ, at least 30% of the total units constructed or
substantially rehabilitated in the zone must be sold or rented to
moderate- or middle-income persons or families; at least 15% must be
sold or rented to lower-income persons or families; and at least 5% must
be restricted to very-low income persons or families. No more than 50%
of the total units constructed or substantially rehabilitated may be sold or
rented to persons or families of above moderate- income.
This law makes the local government eligible to apply for a grant or no interest
loan from the Department of Housing and Community
Development and possibly other funding.
This law is related legislation to Senate Bill 35 which creates a
streamlined, ministerial approval process for infill developments in
localities that have failed to meet their regional housing needs
assessment numbers.

Senate Bill 540 codified as Government Code § 65620 et. seq.
Effective January 1, 2018.

Recording Tax

Revenues Allocated to
Housing Fund.
Recording fees to be
increased to between
$75 and $225 per
transaction. Sales
transactions and
transfers to owner-occupiers
A fee of $75 is imposed at the time of recording of every real estate
instrument, paper or notice which is required or permitted to be
recorded. The fee shall not exceed $225 per transaction.
However, the fee does not burden purchase transactions or sales in
general based on the two following exemptions. First, the fee is not
imposed for any document recorded in connection with a transfer
of real property that is a residential dwelling to an owner-occupant.
Second, the fee is not imposed whenever a documentary transfer
tax (DTT) must be paid which is whenever real property is sold for
valuable consideration.
The most common circumstances when the fee would be imposed
are refinances or reconveyances.
The funds generated by this fee are dedicated as follows: 20% of all
funds are specifically dedicated to affordable owner-occupied
workforce housing. Overall, the allocation is 70% of revenues will
go to local governments for housing and 30% is distributed by the
Department of Housing and Community Development and the
California Housing Finance Agency
A fee of seventy-five dollars ($75) shall be paid at the time of recording
of every real estate instrument, paper, or notice required or permitted by
law to be recorded per each single transaction per parcel of real
property, not to exceed two hundred twenty-five dollars ($225). “Real
estate instrument, paper, or notice” means a document relating to real
property, including, but not limited to, the following: deed, grant deed,
trustee’s deed, deed of trust, reconveyance, quit claim deed, fictitious
deed of trust, assignment of deed of trust, request for notice of default,
abstract of judgment, subordination agreement, declaration of
homestead, abandonment of homestead, notice of default, release or
discharge, easement, notice of trustee sale, notice of completion, UCC
financing statement, mechanic’s lien, maps, and covenants, conditions,
and restrictions.
Exemptions: The fee will not be imposed on sales transactions or on
any transfer to an owner occupant. Specifically, the law exempts
transfers in which the documentary transfer tax must be paid or in
connection with a transfer of real property that is a residential dwelling to
an owner-occupier.
Funds Allocated to Affordable Housing
Generally, this law dedicates 20% of the funds to affordable workforce
housing and 70% to local governments for housing.
The precise allocation of funds is as follows:
Jan 1, 2018 to Dec 31, 2018 (first year):
A) 50% of money to update local government housing elements
B) 50% to HCD to assist with homelessness programs
Beginning Jan 1, 2019 (in perpetuity):
A) 20% of ALL money collected goes to affordable owner-occupied
workforce housing
B) 70% of money collected goes to local governments/ distributed based
on HUDs block grant formula
90% of money will be allocated similar to HUD Block Grant distribution
10% of money will be allocated equally to non-entitlement areas
C) 30% of money in the fund is distributed by HCD and CalFHA:
- 5% appropriated by the Legislature to the Multifamily Housing Program
- 10% appropriated by the Legislature to affordable homeownership and
rental housing opportunities for ag and farm workers
- 15% to CalFHA to create mixed income multifamily residential housing
for lower to moderate income households (up to 80% AMI)
- Remainder allocated to local governments

Senate Bill 2 codified as Government Code § 27388.1 and Health and
Safety Code § 50470 et. seq.
Effective January 1, 2018.

Package of 15 housing

The housing bills discussed above are part of a package of 15 housing
bills that were signed into law. These laws are intended to streamline
new housing developments, enforce the Housing Accountability Act, and
provide a permanent source of funding for affordable housing projects.
This package of laws also included the following:
SB 3 (Beall) authorizes $4 billion in general obligation bonds for
affordable housing programs and a veteran's home ownership program.
SB 3 must be approved by voters next November.
"Senate Bill 3 gives California the opportunity to build $15 billion in
much-needed affordable housing for working families, seniors, vets, and
the homeless," said Senator Jim Beall (D-San Jose). "Together, SB 3
and the housing bills signed today represent a historic step to expand a
limited housing supply and counterbalance the skyrocketing market that
threatens our future and economy. More Californians will be able to live
in the community where they work and spend less time on congested
SB 166 (Skinner) ensures that cities maintain an ongoing supply of
housing construction sites for residents of various income levels.
AB 571 (E. Garcia) makes it easier to develop farmworker housing by
easing qualifications for the Farmworker Housing Tax Credit.
"I truly want to commend Governor Brown, Speaker Rendon and
Chairman Chiu for leading the charge to address our state's severe
housing crisis," said Assembly member Eduardo Garcia (D-Coachella).
"I was proud to support this comprehensive package of bills, anchored
around SB 2 and SB 3, which established a funding mechanism for
these critical measures, and play my part advocating on behalf of rural
Californian communities, like those in my district that have been
historically underserved. AB 571 eases eligibility requirements for a state
tax credit for developers to build migrant housing. Farmworker labor
fuels our economies, yet these areas lack the necessary investments to
spur growth and prosperity. These modifications to the Farmworker
Housing Assistance Tax Credit Program, along with other programs
established within this historic bill package, will help ensure the essential
right to safe, affordable housing for more of our hard working families
and veterans across California."
AB 1397 (Low) makes changes to the definition of land suitable for
residential development to increase the number of sites where new
multifamily housing can be built.
"No one should be denied a place to call home," said Assembly member
Evan Low (D-Campbell). "This housing package will help make our
Golden State shine bright again."
AB 1505 (Bloom/Bradford/Chiu/Gloria) authorizes cities and counties to
adopt an inclusionary ordinance for residential rental units in order to
create affordable housing.
"The skyrocketing cost of housing is forcing millions of Californians to
make stressful financial decisions every month just to keep the eviction
notice off their front door," said Assembly member Richard H. Bloom (DSanta
Monica). "Our housing problem is real and devastating to families,
seniors, and young adults in communities throughout this state. Today's
signing of AB 1505 ensures that real affordable housing is built so our
teachers, grocery clerks, car mechanics, and retired seniors - those who
we interact with every day and who make up the fabric of our
communities - can also afford to live in our communities."
"People shouldn't have to the leave the state in order to find affordable
housing or achieve the American dream of home ownership," said
Senator Steven Bradford (D-Gardena.)
"Skyrocketing housing costs have squeezed California's working and
middle class for too long," said Assembly member Todd Gloria (D-San
Diego). "I am proud to join the Governor and my fellow legislators to
pass a historic package of bills that makes specific and tangible progress
to give some relief to those struggling to pay their rents and mortgages.
We have more work to do on housing affordability and I look forward to
building on this year's achievements in the months ahead. Our goal must
remain a roof over the head of every Californian at a price they can
AB 1515 (Daly) allows housing projects to be afforded the protections of
the Housing Accountability Act if the project is consistent with local
planning rules despite local opposition.
"The Housing Accountability Act fosters and respects responsible local
control by providing certainty to all stakeholders in the local approval
process, and preventing NIMBYism from pressuring local officials into
rejecting or downsizing compliant housing projects," said Assembly
member Tom F. Daly (D-Anaheim). "AB 1515 strengthens the provisions
of the HAA and provides courts with clear standards for interpreting the
HAA in favor of building housing."
AB 1521 (Bloom/Chiu) gives experienced housing organizations a first
right of refusal to purchase affordable housing developments in order to
keep the units affordable.


Tightens Up Existing
Law to reduce local
barriers to the
development of ADU’s
C.A.R. Sponsored
This is a follow up law to the 2016 law, AB 2299, which among other
things created a single standard for the Accessory Dwelling Unit
(ADU) permit review process regardless of whether a local
government has adopted an ordinance or not. This new law made
clarifying changes to better reflect the intent of AB 2299 including:
ADUs may be rented out; parking requirements cannot exceed one
parking space per unit or per bedroom whichever is less and; and
that “tandem parking” means when two or more cars are lined up
behind one another.
In 2016, AB 2299 made a number of changes to state law in order to
ease some of the local barriers to the development of ADUs. These
changes were numerous and included reorganizing existing law to apply
one standard for the ADU permit review process regardless of whether a
local government has adopted an ordinance or not, changing specified
ADU building and parking standards, and placing limitations on utility
connection fees and capacity charges and requirements. However, there
is a need for additional clarifying language to better reflect the intent of
AB 2299.
This law makes several changes to ADU law, which include among
1) Provides that a local agency's ADU ordinance shall include that the
ADU may be rented separate from the primary residence, but may not
be sold or otherwise conveyed from the primary residence.
2) Provides that parking requirements for ADUs not exceed one parking
space per unit or per bedroom, whichever is less.
3) Removes the option for local agencies to prohibit offstreet parking in
setback areas or through tandem parking where that parking is not
allowed anywhere else in the jurisdiction.
4) Defines "tandem parking" as two or more automobiles that are parked
on a driveway or in any other location on a lot, lined up behind one
5) Provides that no setback shall be required for an existing garage that
is converted to a portion of an ADU.
Assembly Bill 494 and Senate Bill 229 codified as Government Code §
Effective January 1, 2018.


No Prohibition of
Efficiency Units near
school or transport

Prohibits a city, county, or city and county from limiting the number
of efficiency units in certain locations near public transit or
university campuses.
This law prohibits local governments from placing limitations on the
number of efficiency units within one-half mile of public transit, or where
there is access to a ride sharing car within one block, or within one mile
of a University of California or California State University campus. The
sponsor offered examples of several local ordinances that set a higher
square footage for efficiency units and in some cases limit the total
number of efficiency units either by percentage of the building or by
placing a cap on the total number of efficiency units in a jurisdiction. This
law preempts those ordinances. A developer seeking approval for
efficiency units would have to go through the building approval process
including an environmental review or any conditional use permit required
for the building.
Efficiency units have a minimum floor area of 150 square feet and may
also have partial kitchen or bathroom facilities
Assembly Bill 352 codified as Health and Safety Code § 17958.1.
Effective January 1, 2018.


Affordable Housing

Allows for a city or county to create an affordable housing authority
which encompasses the entire city or county
Authorizes a city or county to adopt a resolution creating an affordable
housing authority with boundaries that may be identical to the city or
county. The authority must sunset in 45 years and is required to use its
resources to increase, improve, and preserve the community’s supply of
affordable housing. C.A.R. supported AB 1598 after it was amended to
add “workforce housing” – defined as available to 120% AMI - to the
types of housing that may be preserved and created under this authority.
Assembly Bill 1598 codified as Government Code § 62250 et seq.
Effective January 1, 2018.

No comments:

Post a Comment