The Homework Newsletter

The HomeWork: March 25, 2024

March 25, 2024

Welcome to the March 25, 2024 Main edition of The Homework, the official newsletter of California YIMBY — legislative updates, news clips, housing research and analysis, and the latest writings from the California YIMBY team.

News from Sacramento

For the 2024 legislative session, California YIMBY’s sponsored and high-priority legislation fits into one of three priority areas. These policy priorities guide our decisions about which bills we work on, including those we sponsor and those we categorize as high-priority. Our list of sponsored and high-priority bills is below, and evolves over the course of the session.

Our 2024 policy priorities framework includes focus on legislation that will promote:

  1. Bending the cost curve: Despite previous zoning reforms, the exorbitant cost of construction in California remains a formidable barrier to housing production. One significant factor driving these costs is the imposition of high, often opaque impact fees, which ultimately burden both renters and home buyers alike. Our 2024 agenda includes legislation aimed at providing fee relief during a project’s construction phase and enhancing transparency around local impact fees.
  2. Refining and expanding housing production laws: Many of our bedrock housing laws are beginning to make a difference, but with time we have listened to our implementation partners and recognize that these policies can be streamlined and strengthened to ensure they deliver on the promise of more homes for Californians – at all income levels. Our legislative activities in this area will focus on updating critical, pro-housing laws. We’re also looking to broaden our legislative efforts to address challenges in the historic district designation process, which at times can obstruct the development of affordable and inclusive housing.
  3. New pathways to homeownership: Homeownership is a critical component to helping families achieve financial security and create generational wealth, yet it remains out of reach for too many Californians, especially communities of color. Our legislative activities in this area will focus on creating new pathways and easing existing barriers to homeownership for the vast majority of working Californians, many of whom earn a good salary, but who are shut out of homeownership by the housing shortage and resulting high home prices.
  4. Keep momentum on ADUs.The YIMBY movement’s advocacy for ADU legalization has led to a construction surge, making ADUs a significant portion of the newly developed housing in numerous cities. The triumph of ADU legalization stands as a prime example for future urban planning and housing reforms in California and offers a blueprint for other states grappling with housing shortages. California should keep the momentum on ADU reform by making it easier to build ADUs in multifamily properties and in the Coastal Zone.

California YIMBY’s sponsored bills for 2024, thus far:

  • SB 937 (Wiener) allows home builders to delay the payment of local development and impact fees until a certificate of occupancy is issued for their project, which will lower “carrying costs” and allow them to complete their projects more rapidly. SB 937 also extends the entitlements for certain projects to give builders more time to complete them.
  • SB 1211 (Skinner) will continue our progress on ADU development and encourage more ADUs on multifamily properties by providing more flexibility around how ADUs can be built alongside existing multifamily housing.
  • AB 1820 (Schiavo) will reduce the uncertainty, cost, and construction timelines for urgently-needed housing by requiring cities to be more clear and transparent about the fees that are required for new housing construction. AB 1820 will require local governments to provide an estimate of the total fees home builders will pay within 10 days of the preliminary building application.
  • SB 312 (Wiener) fixes an error in SB 886 to ensure that projects that qualify for LEED certification receive streamlined approvals prior to their final LEED certification – which can not be granted until construction is complete.
  • AB 2580 (Wicks) requires local governments to monitor how new historic designations could impact their ability to meet housing needs under existing state law, and report new historic buildings and districts to the California Department of Housing and Community Development (HCD).
  • AB 3057 (Wilson) is a technical fix to existing law that will grant local Junior ADU ordinances the same exemption to environmental review that is already granted to standard ADU ordinances.

Our high-priority bills for 2024:

  • SB 450 (Atkins) makes a number of changes to SB 9 (Atkins, 2019) to improve access and certainty for homeowners to the streamlined housing options provided by SB 9.
  • SB 1462 (Glazer) will allow condo developers to use deposits made by buyers during the pre-sale process to cover construction costs, while upholding protections to ensure the buyer is refunded if the project is not completed. The bill is designed to reduce financing costs of new construction, thereby creating an incentive to builders to develop more affordable condos for purchase.
  • SB 1470 (Glazer) clarifies existing law regarding construction defects in new condominiums, allowing builders a window of time to correct any defects before legal action can be taken against them. The bill also raises standards for repair work to ensure that the builder’s obligations to condominium buyers are met.
  • AB 2144 (Grayson) will reduce uncertainty around new home building by requiring local governments to provide evidence in their Annual Progress Reports, required by the state’s Regional Housing Needs Assessment, that they are complying with existing laws regarding transparency in impact fees.
  • SB 1210 (Skinner) which would reduce the cost of housing by lowering and capping utility hook-up fees, such as for water, sewer, electrical, and gas service, on all new housing units.

Please note that the list of bills we have highlighted as sponsored or high-priority may change throughout the year.

We will have more housing legislation news in the coming weeks as bills are refined, amended, and scheduled for committee hearings. Lastly, in an unfortunate development, almost all legislative committees no longer take public comment over the phone (meaning comments must be delivered in person, or in writing). We’ll keep you posted if this changes.

Stay tuned to future editions of The Homework, and follow the California YIMBY Twitter channel, @cayimby, to stay up to date on developments on the legislative session and related news.

Housing Research & Analysis

A Comprehensive Study of Rent Control

Few economic policies have been studied as extensively as rent control, which is an umbrella term for policies regulating when and how much a landlord may raise the rent for a home or apartment.

In “Rent control effects through the lens of empirical research: An almost complete review of the literature,” Konstantin A. Kholodilin sums up the findings of 112 empirical studies on rent control, finding that the theoretical consensus on its effect is largely borne out by empirical research.

Key Takeaways:

  • Rent control effectively caps rents within controlled dwellings, but the extent of its impact varies across countries and research methodologies.
  • Housing shortages, increased rents for uncontrolled dwellings, and reduced residential mobility emerge as unintended consequences of rent control.
  • Rent control negatively affects housing quality, and its impact on homeownership trends varies, with conflicting results from different studies.

Inclusionary Zoning: Are Goals and Outcomes Aligned?

Inclusionary Zoning (IZ) is a policy that requires developers to set aside some of the new homes they build as income-restricted housing, affordable to renters or buyers who make less than a defined amount (typically determined as a percentage of Area Median Income, or AMI). It is often implemented as a “density bonus,” which pairs the affordability requirement with relaxed zoning rules that allow homebuilders to build larger buildings with more homes, on the assumption that the profits from the increase in market-rate homes will compensate for the losses on the below-market-rate homes.

Jacob Krimmel and Betty Wang’s paper Upzoning with Strings Attached: Evidence from Seattle’s Affordable Housing Mandate looks at Seattle’s Mandatory Housing Affordability (MHA) program, which paired a modest upzoning with mandatory inclusionary zoning in 33 “urban villages” around the city, to find out how it affected housing production in and around the upzoned areas.

Key takeaways

  • The MHA program had no effect on overall housing production, but it did affect where housing got built.
  • Development activity shifted away from MHA-upzoned parcels and toward non-MHA parcels nearby in the same neighborhoods.
  • The overwhelming majority of developers chose to pay the in-lieu fee instead of setting aside actual apartments for low-income tenants.

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