Why this article is important: California’s legislature continues to tackle the state’s decade long housing shortage.
Growth encouraged near transit stops
California’s legislature recently passed Assembly Bill 79 to encourage the addition of units to the state’s anemic housing inventory. Specifically, government codes were enacted which enable builders to do their thing: increase the housing stock in neighborhoods where public transit is highly accessible.
This law allows a housing development project located near an existing or proposed major transit-oriented development stop on any parcel zoned for residential, mixed, or commercial development. [Calif. Government Code §§65912.157(a)]
These codes also allow transit agencies to adopt zoning standards for transit-oriented development on district-owned land located within one-half mile of a major transit stop. This enables public transit points to become high density locations to reduce transit subsidies. [Gov C §§65912.158(b); 65912.156(m); (p)]
The new laws allow property located within 200 feet of a pedestrian access point to a transit stop to increase the allowable height limit by an additional 20 feet, the maximum density standard by an additional 40 dwelling units per acre, and the floor area ratio by 1 prior to the application of density bonus law. [Gov C §§65912.157(e); 65912.156(a)]
This enables builders to meet local housing demand by constructing taller buildings in denser residential structures near public transit.
Further, the new law applies a streamlined approval process to these transit-oriented housing developments, no longer subject to a conditional use permit or other hearings for approval. Builders can respond quickly to housing demand, saving time and costs. [Gov C §65912.159(a)]
However, developments containing more than 10 units must provide units accessible to low-income households equal to either:
- 7% which are dedicated to extremely low-income households;
- 10% to very low-income households; or
- 13% to low-income households. [Gov C §65912.156(i)]
However, when the local inclusionary housing requirement requires a higher percentage of units set aside for low-income housing, then the local inclusionary housing standard takes precedence. [Gov C §65912.156(i)(2)]
All units set aside for low-income households need to maintain affordability of those units for 45 years for ownership or 55 years for rental units. [Gov C 65912.158(a)(2)]
“Affordability” is defined as:
- 30% of 30% of the area median income for extremely low-income households;
- 30% of 50% of the area median income for very low income households; and
- 30% of 60% of the area median income for low-income households. [Calif. Health & Safety Code 50053(b)]
YIMBY power
Organizations such as California Yimby (short for “yes-in-my-backyard”) along with dozens of cities and counties with large populations sponsored these new laws. All part of the response to our ongoing zoning debate about housing starts in California, which the legislature with preemptive capacity is best suited to deal with.
California generally needs more housing to meet the needs of a growing and very mobile population. The legislature understands the state needs to preempt local not-in-my-backyard (NIMBY) enthusiasts to get there.
Across the state, unnecessarily-restrictive local zoning has resulted in:
- reduced construction;
- an unstable housing market for lack of a physical supply which in turn artificially inflates home prices beyond income growth; and
- stunted homeownership and abnormal turnover by tenants and homeowners.
The push for transit-oriented housing makes sense. The focus is on tenants who, given the opportunity, will rely on public transit for transportation to jobs. Eventually, housing near transit locations reduces the ownership of cars and the number of cars on the road (things that benefit everyone involved).
For real estate agents, the supply-and-demand imbalance comprising high mortgage rates, high levels of hugely overpriced for-sale inventory and low housing turnover rates is caused by strangulation through local zoning ordinance enforcement. Brokers and agents realize local zoning in pricy coastal locations subjects them to an artificially restricted stream of income.
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