California Affordable Housing Updates

California Affordable Housing Updates: What Lawyers Need to Know Now

Estimated reading time: 7 minutes

California land use and municipal law attorneys: we see you. You’ve got your work cut out keeping up with the state’s ever-evolving patchwork of affordable housing regulations. It almost seems as if California launches new statutes and initiatives aimed at solving its housing crisis on a daily basis. We also know it’s time-consuming to make sense of these rapid-fire changes to California’s affordable housing policy and understand how those new laws interact with the existing regulatory framework. And let’s not even get started on all the related litigation and new case law coming out regularly.

Behind all that is the worry that you’ll miss a crucial change and fail to spot a risk for the California real estate developers and municipalities you represent. Don’t worry. We’ve got you. The talented team of CEB contributors, editors and writers spend their days poring over every California affordable housing law change, litigation filing and court decision to update our Primary Law and Secondary Sources content. They also post regularly to the DailyNews section on our front page to ensure urgent issues are flagged promptly. 

This blog post is a collection of recent updates to California’s affordable housing law and policy so you can catch up. 

SB 423 streamlines approval for California affordable housing projects

SB 423, which took effect January 1, 2024, extended the existing provisions from 2018’s SB 35 that streamlined the approval process for new affordable housing developments in California cities behind on their state housing goals. SB 35 will now be in effect until 2036 rather than January 1, 2026, as initially planned. And note: SB 423 broadened SB 35’s reach to include the coastal zone, which was previously exempt. 

As a reminder, SB 35 allows certain urban “infill” multifamily projects to undergo a streamlined approval process. It applies to cities not meeting their state-mandated housing creation goals, which is most cities in the state. To qualify for speedier approval, projects must include a minimum number of affordable units, determined by whether above-moderate-income or low-income units are in the shortest supply. Specific labor standards also apply to these projects.  

In expanding SB 35 to coastal communities, SB 423 addresses criticism of the Coastal Commission created under California’s landmark 1976 Coastal Act, which approves all coastal development permits. While the Commission’s original priorities included affordable housing, the California legislature gave that responsibility back to local governments in 1981. Since then, the Commission has lacked the authority to make housing on the coast more affordable. Many also felt it was more of a hindrance than a help and put too many obstacles in the way of much-needed development. 

Thanks to SB 423, qualifying proposed coastal affordable housing developments can now take advantage of SB 35’s streamlined approval process. There is still debate around SB 35’s impact on the housing crisis, but land use and municipal law attorneys should explore how this can benefit client projects. 

We covered SB 423 in a recent CEB DailyNews article summarizing for subscribers a range of new California laws that took effect on January 1, 2024. A CEB writer also focused on the topic in the first issue of our new ClimateBrief, a DailyNews column devoted to climate and environmental law coverage for California practitioners that will explore the issue across practice groups. 

Affordable Housing on Faith and Higher Education Lands Act

Also new in 2024 is the California Affordable Housing on Faith and Higher Education Lands Act — i.e., SB 4, the Yes In God’s Backyard (YIGBY) bill. This new California land use law allows religious groups and certain nonprofit colleges to build affordable housing on their properties and bypass most local permitting, zoning and environmental review rules. The hope is the law removes many roadblocks that religious groups and nonprofit colleges have historically encountered when working with developers to build affordable housing. This includes time-consuming and costly rezoning applications, as well as California Environmental Quality Act (CEQA) liability and related litigation. 

This new law could significantly benefit affordable housing in California, with a report from UC Berkeley’s Terner Center showing approximately 171,000 acres of land in the state are now eligible for development. Projects must meet a host of criteria, not the least of which is that nonprofit colleges must be “independent institutions of higher education.” That excludes the University of California, California State University and California Community College systems, for example.

As detailed in our DailyNews coverage of the new law, other criteria include: 

1. Projects must be residential, though a few ancillary uses are permitted
2. With few exceptions, 100% of the units must be affordable to lower-income households
3. Properties must be subject to a recorded deed restriction maintaining the affordability of the homes for at least 55 years for rentals and 45 years for those that are owner-occupied
4. Projects must provide off-street parking for up to one space per unit
5. Projects must pay prevailing wages for all developments over 10 units and follow specific labor standards for those over 50 units
6. The site must be owned by the institution on or before January 1, 2024
7. The project must not require the demolition of deed-restricted affordable housing, housing subject to rent control, or housing that tenants have occupied within the past 10 years

Those are just some highlights; more can be found in our DailyNews update. 

The Affordable Housing on Faith and Higher Education Lands Act gives religious groups and non-profit colleges a unique opportunity to increase the state’s affordable housing stock. They will no doubt turn to their trusted California land use lawyers for guidance on what could be a flood of new projects. 

Litigation alert: California joins housing suit against La Cañada Flintridge

California municipal law attorneys should watch this case. In a sign Governor Newsom’s administration won’t tolerate California cities that put unnecessary roadblocks in front of affordable housing developments, the state has asked to join a pending housing suit against  La Cañada Flintridge. The case is California Housing Defense Fund v. City of La Cañada Flintridge, pending in Los Angeles County Superior Court, and the state applied to intervene.  

The suit alleges La Cañada Flintridge violated the California Housing Accountability Act (HAA) (Gov. Code, § 65589.5) and the Housing Element Law (Gov. Code, §§ 65580 et seq.) in denying approval of a mixed-use project that would have built 80 mixed-income residential dwelling units, along with 14 hotel units, and 7,791 square feet of office space.

If the state’s intervention and the suit are successful, La Cañada Flintridge would be forced to reverse the denial and allow the building of the mixed-use project. Along with this reversal, the state is also pursuing a declaratory judgment that the city did not have a compliant housing plan (also known as a housing element), as required by state law, in place when it denied the mixed-use project.

The lawsuit raises a host of issues for municipalities grappling with how to comply with California’s efforts to combat the housing crisis while considering local needs. Municipal officials and councils — as well as the lawyers who advise them — should stay informed.  We wrote in depth about this case as a DailyNews item and will continue to keep watch. 

These are just some recent developments in California’s affordable housing law we’ve covered in the past few months. CEB subscribers who monitor our DailyNews posts have seen these updates and others. They’ve likely taken action for their clients to leverage opportunities and mitigate risk.  

If you’d like CEB to be your ally in staying on top of the latest changes in California land use law, please contact us today for more information and a demo. We’d be happy to help you make sense of this evolving area to give you an edge as you serve clients.