California’s housing crisis has reached a turning point, and legislators are finally paying attention. Dozens of new laws have passed since 2017 to encourage new home construction.

However, local governments have found ways to circumvent the 2017 laws to hinder housing growth in favor of the low density neighborhoods favorable in California’s most desirable areas. 2018’s legislative session has seen some effort to close these loopholes and reverse the housing shortage.

More accurate regional housing need

One of these law changes, enacted by SB 828, pushes local governments to increase production to meet regional housing need.

This new bill follows up on progress made in 2017 by SB 166, which required local governments to determine regional housing needs and loosen zoning to meet those needs. But the 2017 law left a loophole open which may have allowed a local government to justify a reduced share of housing required to meet their housing need by using old numbers from when the region was already under-producing new housing. [Calif. Government Code §65584.04(f)(2)]

The new law prohibits prior under-production of housing from calculating into the area’s calculus on regional housing need. Instead, each region needs to strike a balance between the number of low-wage jobs present alongside the number of housing units available to low-income workers. [Gov C §65584(d)(3)]

Additionally, each region needs to strive for a healthy rental vacancy rate, which the new law defines as no less than 5%. [Gov C §65584.01(b)(1)(E)]

The share of cost-burdened households in California is significantly higher than average, especially in the state’s expensive and highly-populated coastal cities. For example, to purchase a median-priced home in Los Angeles, the average household would have to spend 45% of their income each month on their mortgage payment, according to Zillow.

In contrast, this bill defines cost burden as the rate of households paying more than 30% of their income on housing costs. It requires local governments to consider cost burden when making their plans. Each region needs to strive to meet the national average of households which are cost burdened. [Gov C §65584.01(b)(1)(H)]

Modified building codes for low-income housing

Also recently passed, SB 765 attacks the housing shortage by tightening existing exemptions that allow developments to receive streamlined approval when they include housing to lower-income households.

For example, in order to receive the streamlined approval process granted to certain low- and moderate-income housing developments, before the first building permit is granted the developer needs to commit to setting aside units for lower-income households for at least:

  • 55 years for rented units; and
  • 45 years for owned units. [Gov C §65913.4(a)(3)(A)]

This prevents landlords from taking advantage of the law to receive streamlined approval without committing to helping low-income households over the long term.

Further, while previous law was open-ended on the issue, homeless shelters funded by, leased by or constructed on land owned by a city or county are now specifically exempt from the California Environmental Quality Act (CEQA). [Gov C §8698.4(a)(4)]

All of these changes ought to help increase construction of housing for low-income households and to keep more individuals off the street and in shelters.

The only cure for the housing crisis is more housing. Since2007, construction levels have performed far below their historical average, even as the state’s population has steadily continued to grow. For construction to return to the levels needed to keep up with rising demand for housing, adjustments will need to continue to zoning laws across California.