In 2023, Governor Newsom maintained a practice of approving numerous bills intended to break down local barriers to housing construction. We highlight just a handful that we believe have the most potential.
AB 976 and 1033 & SB 104: These bills are intended to bolster the production of accessory dwelling units (“ADUs”) by allowing the leasing and sales of ADUs, making their financing easier, and issuing grants to cover some development costs.
Facing an impending ban on ADU leasing, AB 976 permanently authorizes ADUs to be rented to third parties, allowing homeowners to leverage the forecasted rental income for loans to build ADUs. AB 1033 repeals a state ban on selling ADUs separately from a main residence, and enables local governments to decide whether to permit ADU sales as condominiums. The changes are intended to allow property owners to leverage forecasted rental income or sales proceeds to obtain ADU construction loans and provide more affordable options for those in need of housing. SB 104 provides an additional $25 million to a successful state ADU grant program. It assists homeowners with up to $40,000 for pre-development costs such as design and site prep.
SB 423: The bill extends and expands SB 35, the 2017 law that streamlined multifamily housing projects with least 50 percent affordable units in jurisdictions failing to meet their state-mandated housing production requirements. SB 35 was set to sunset on January 1, 2026.
In addition to extending the fundamentals of SB 35 until January 1, 2036, SB 423 made some important amendments: streamlining now applies to projects with as low as 10 or 20 percent affordable units, depending on the jurisdiction. And some projects may now be streamlined in the previously exempt “Coastal Zone” an approximately 840-mile band on California’s coast which is protected under California’s Coastal Act.
AB 1633: Clarifies and expands the Housing Accountability Act’s (“HAA”) definition of “disapprove the housing development project” to include cases where a local agency declines to certify an EIR, fails to exempt a project from the California Environmental Quality Act(“CEQA”), or abuses its discretion by not adopting a negative declaration.
A statement from the office of the bill’s author, Assemblyman Phil Ting, summed up this way: “AB 1633 strengthens the HAA, clarifying that CEQA cannot be used to endlessly delay or block housing projects, once all legal requirements have been met. The legislation does not alter CEQA in any way.”
Ting’s office said a San Francisco project highlighted CEQA’s misuse. In 2021, The SF Board of Supervisors stalled a 500-unit infill project, which included affordable housing. The Board postponed the project’s approval even though it complied with all planning and zoning laws and CEQA, and demanded additional, unspecified, environmental review, placing the project indefinitely on hold.