In California, Governor Newsom went from a recall election to signing three of the biggest housing bills in years. It’s action spurred by the housing affordability crisis that has long been the norm in the Golden State. Here’s a rundown on the new laws and my take on them.
The New Laws
Beginning January 1, Senate Bill 9 gives most homeowners the option to build two homes or a duplex on plots zoned for single homes. In some cases, those homeowners can also split lots and build two additional homes. Units on a single lot are limited to four, and lots in environmentally sensitive areas and historic districts are excluded. It’s estimated that this could lead to around 660,000 new housing units in the state over the next several years.
Senate Bill 10 allows California cities to bypass environmental review so that they can build up to 10 units on a single-family parcel near urban infill developments or transit hubs.
Senate Bill 8 is a more technical bill that extends an existing bill through 2030. It accelerates approval processes for housing projects and limits fee increases on housing applications.
According to Newsom, the “California Comeback Plan” is a $10.3 billion plan that will produce 40,000 housing units, plus another $12 billion that will create over 44,000 new housing units and treatment beds for people struggling with homelessness.
The Expected Impact
Legislation, of course, moves slowly and it’s going to take at least a few years for these laws to translate into expanded housing. While I do agree it’s a step in the right direction to address the woeful housing shortage, I don’t know how much it really will help in the long run and I’m doubtful it will result in a flood of new construction because it’s not just the zoning that is a barrier to building more housing. The existing permit fees in most counties are onerous. One of my clients (in San Mateo county) built an addition with the idea of creating an Accessory Dwelling Unit for his adult daughter after she finished college. The entire structure was built and just needed about another $20,000 worth of work to complete but the permits to legalize it we’re going to run him $140,000 separate of any construction costs. Add the price of labor, the shortage of tradespeople and the ever-increasing costs of building materials and I doubt we’ll be seeing a flood of new housing being built anytime soon.