October 17, 2023

Governor Newson signed an extensive housing package consisting of 56 bills to help address California’s long-standing housing crisis by simplifying and expediting the construction of new housing, protecting tenants, and keeping housing affordable on October 11. Coupled with other housing bills previously signed by the Governor, 2023 has in fact turned into one of the most productive and hopeful years we were giddily anticipating in our last Legislative Update.

CAL-ALHFA was actively involved in following and/or supporting 26 of these measures, which are reported here. We thank Governor Newsom for signing these bills, and look forward to working with the agencies and departments charged with implementing these new laws. We are also looking forward to the 2024 Legislative Session, and hope that some of the bills that didn’t reach the Governor’s desk this year will be back in new and improved form in 2024.

Please feel free to contact us if you have ideas about the implementation of these new laws or if you have suggestions for needed new legislation. CAL-ALHFA is here to work with you in these exciting times.

CAL-ALHFA HIGHEST PRIORITY BILLS

SIGNED BY THE GOVERNOR

SB4 allows higher education and religious institutions to use their excess lands to build affordable housing. Called the YIGBY (Yes In God's Backyard) bill, this bill frees up hundreds of thousands of acres for the by right development of affordable housing.

SB423 extends the streamlining provisions of Senator Weiner's SB35 and allows fast tract development of affordable housing and reasonable labor standards for new housing development. It is estimated that over 18,000 units have been built in the Bay Area since the advent of SB35; this bill builds on that success.

ACA 1 ON NOVEMBER 5, 2024 BALLOT

ACA1 ( Aguiar-Curry) reduces the voter threshold for local housing and infrastructure measures from 66.7% to 55%, making it easier for these local measures to be approved. In our last Update we mistakenly reported that the measure had been sent to the Governor’s desk for signature. In fact, the measure was approved by the required 2/3 majority in both the Senate and the Assembly and is now qualified to appear on the November 5, 2024 ballot. If the Amendment is approved by the voters, any other housing or infrastructure measures will be required to pass at the 55% approval level.

Ballot language is currently being developed, and an aggressive campaign supporting ACA 1 will be mounted. CAL-ALHFA will be taking an active role in working on the ballot language and the campaign. We anticipate significant opposition to ACA 1, primarily from Republican Legislators and the Howard Jarvis Taxpayers Association, who characterize ACA1 as an attack on Proposition 13.

ALSO CROSSED THE FINISH LINE

AND SIGNED BY THE GOVERNOR

The following bills each create new ways to speed the development of affordable housing. Collectively, they will have a significant impact on the number of units built or rehabilitated.

Strengthening Existing Tools and Removing Barriers

AB529 (Gabriel) Adaptive Reuse Projects

Requires the Department of Housing and Community Development (HCD) to convene a working group regarding adaptive reuse residential projects, including identifying and recommending amendments to state building standards, and makes other changes to state law related to adaptive reuse projects.

CAL-ALHFA Comment: Converting an office or retail space to housing is not as simple as it might look. The working group will identify the most common difficulties associated with making these conversions and make recommendations for revising the building codes and practices to making these efforts easier.

AB519 (Schiavo) Creates an Affordable Housing Finance Workgroup to design a consolidated application for affordable housing developers to use to access state housing funding programs and a coordinated review process for the application on or before January 1, 2027.

CAL-ALHFA Comment: Creating a one-stop shop for affordable housing finance has been a goal for decades. The working group includes all of the major state and federal programs and has a specific due date. The political will may be high enough to push this through, finally.

AB480 (Ting)  Surplus Lands Act . 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. Adds definitions of key words in the surplus lands act. I.e. “dispose” and “exempt surplus land”. 

CAL-ALHFA Comment: This bill was subject to seemingly endless amendments, and incorporates some language from SB747, a formerly competing bill. Clean-up language will almost certainly be introduced in a new bill in 2024.



CEQA

AB1449 (Alvarez) Extends CEQA exemptions to 100% affordable projects so long as project labor standards established by AB2011 are included.

CAL ALHFA Comment. Long sought exemption for these projects. CEQA is often used as a last-ditch effort to kill an affordable project.

AB1307 (Wicks) For purposes of residential projects reviewed under the California Environmental Quality Act (CEQA), provides that the effects of noise generated by occupants and guests on human beings is not a significant effect on the environment. Further provides that public universities are not required, in an environmental impact report (EIR) prepared for a residential or mixed-use housing project, to consider alternatives to the location of the project if specified requirements are met.

CAL-ALHFA Comment: HUGE WIN FOR THE GOOD FOLKS!!!

AB1633 (Ting)  Provides that a disapproval under the Housing Accountability Act (HAA) includes a local agency's failure to make a determination of whether a project is exempt from the California Environmental Quality Act (CEQA), abuse of discretion, or failure to adopt certain environmental documents under specified circumstances, and makes several other changes, until January 1, 2031.

CAL-ALHFA Comment: Puts local agencies on the spot to conform their practices to HAA requirements, and make decisions timely. 

ARTICLE 34

SB469 (Allen) This bill provides that Article 34 requirements do not apply to housing developments that receive funding from specified state housing programs.

1) 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).

2) An allocation of federal or state low-income housing tax credits from the California Tax Credit Allocation Committee (TCAC).

3) Money appropriated from the Affordable Housing and Sustainable Communities (AHSC) program.

CAL-ALHFA Comment: A simple, no-nonsense solution to work around an ancient, racist provision of the state constitution. Passed with virtually no opposition. Next step: Repealing Article 34 itself.

STREAMLINING/PROCESSING

AB821 (Grayson) Requires a local agency to approve developments that are consistent with its general plan but not the applicable zoning ordinance, or to make the zoning ordinance consistent with the general plan within 180 days, and provides a legal remedy to ensure compliance.

CAL-ALHFA Comment: Forces local agencies to conform their general plans and zoning ordinances, a tactic sometimes used to kill or hopelessly delay affordable housing projects.

SB341 (Becker) More appropriately aligns pro housing incentives to projects where local programs are the applicants. Exempts developers from pro housing bonus points requirement.

CAL-ALHFA Comment: Enables developers to work in unfriendly territory without penalty. Good for YIMBYs, bad for NIMBYs.

AB84 (Ward) Expands the eligibility of affordable housing developments that can use the state’s welfare property tax exemption, which exempts housing affordable to low-income residents from local property taxes. The law would create more certainty on the exemption and provide a hold-harmless clause for tenants whose incomes grow above the current threshold of 80 percent of area median income after move-in.

CAL-ALHFA Comment: Using the property tax exemption from the time a project is approved allows additional financial resources (those which would have been used to pay property taxes) to be used for other development purposes.

SB482 (Blakespeare) This bill explicitly requires the Department of Housing and Community Development (HCD) to offer capitalized operating reserves to supportive housing units developed under the Multifamily Housing Program (MHP).

CAL-ALHFA Comment: Provides up-front funding for ongoing capital reserves. Desperately needed to make SHP projects financially feasible over their lifetimes.

AB346 (Quirk-Silva) Allows the California Tax Credit Allocation Committee (CTCAC), for any calendar year in which the California Debt Limit Allocation Committee (CDLAC) has declared a competition for the award of tax-exempt bond authority for qualified residential rental projects, to reallocate some of the $500 million in enhanced state low-income housing tax credits (LIHTCs) made available from 4% federal credit projects to 9% federal credit projects.

CAL-ALHFA Comment: Maximizes efficiency of TCAC/CDLAC resources.

REDEVELOPMENT

The redevelopment working group formed by Asm. David Alvarez continues its work in identifying redevelopment resources and strategies. CAL-ALHFA remains committed to this process and the working group and will report on its progress moving forward.

BEHAVIORAL HEALTH FINANCING AND SERVICES

AB531 (Irwin)

The Behavioral Health Infrastructure Bond Act of 2023

Creates the Behavioral Health Infrastructure Bond Act of 2024 (Bond) to, subject to voter approval, authorize $6.380 billion in general obligation (GO) bonds to finance permanent supportive housing for veterans and others, as well as unlocked and locked behavioral health treatment and residential settings for individuals experiencing homelessness or at risk of homelessness with severe behavioral health challenges. Allows for by right streamlined, ministerial review for capital projects funded by the bond. The bond measure will be on the March 5, 2024 ballot.

SB326 (Eggman)

The Behavioral Health Services Act

 This bill revises and recasts the Mental Health Services Act (MHSA) as the Behavioral Health Services Act (BHSA) if voters approve amendments to the MHSA at the March 5, 2024 statewide primary election. This bill clarifies that county behavioral health programs are permitted to use BHSA funds to treat primary substance use disorder conditions and makes conforming changes throughout the BHSA. This bill restructures current MHSA funding buckets. This bill enhances the current process for local planning of various services funded by the BHSA, and for oversight, accountability, and reporting of BHSA funds

CAL-ALHFA Comment: These bills were sponsored by the Governor’s office and are considered the foundation of the Governor’s latest effort to combat homelessness by creating more resources for persons with Behavioral Health problems. 

HOMEOWNERSHIP

AB572 (Haney)

Caps annual increases in regular assessments on deed-restricted affordable housing units in certain homeowners associations (HOAs) at 5% plus the percentage change in cost of living, not to exceed 10% greater than the preceding regular assessment, for certain HOAs that record their original declaration on or after January 1, 2025.

CAL-ALHFA Comment: Local agencies have a long history of participating in home ownership programs, and were concerned that their investments in affordable home ownership were at risk over the rising (and often unaffordable) cost in Home Owner Association dues. This bill limits the increases that can be charged going forward, but is not retroactive. Some home owners are still at risk because of this.  

BACK NEXT YEAR?

Not all of the bills CAL-ALHFA supported this year passed this session. We contacted the authors of these bills to see whether or not they will be reintroduced, but no decisions have been made yet. We will follow up in mid-November.

SB440 (Skinner) Empowers local governments to join forces to create regional housing finance agencies to address the unique affordable housing needs in their communities. 

CAL-ALHFA Comment: High priority C-A bill. Enables local agencies to join forces in targeted, smaller bond and the proposals without state approval.

SB225 and Community Anti-displacement and Preservation Program (CAPP) (Caballero) Establishes a program to provide revolving short-term acquisition capital and long-term public subsidy to acquire unsubsidized affordable homes and preserve them as permanently affordable. 

CAL-ALHFA Comment: Expands the supply of Naturally Occurring Affordable Housing (NOAH) by developing a process by which non-profits can acquire these properties and maintain their affordability. Strong support for preserving existing affordable housing supply.

SB83 (Wiener) Public utilities.

Requires expedited connection within eight weeks of project receiving a green tag.

CAL-ALHFA Comment: Essential for the speedy completion of affordable housing projects. Many projects have been languishing for months waiting for utility connections, particularly PGE utilities. This problem continues as the bill was furiously lobbied by the utilities, which eventually killed it. 

SB393 (Glazer) Would require a person or organization who brings a CEQA lawsuit to disclose any financial support they receive.

CAL-ALHFA Comment: Maybe next year. Big opposition from special interest groups not wishing to disclose their supporters.

AB578 (Berman) Caps HCD monitoring fees so that more money can be leveraged to building housing.

CAL-ALHFA Comment: Author is probably negotiating with HCD.

AB1657 (Wicks) $10 Billion bond bill on hold until after March 2024 election.

CAL-ALHFA Comment: Part of deal with Governor to clear the way for AB531.

AB1053 (Gabriel) Would reduce affordable housing costs by funding HCD loans during construction.

CAL-ALHFA Comment: HCD has had difficulty in administering their existing loan and grant portfolio in a timely manner. We are concerned that construction loans, which must be processed quickly, may get stuck in HCD bureaucracy.

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Mary Ellen Shay, ED, CAL-ALHFA

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