Summary:

Here is a quick read overview of SB-330, SB-4, SB-6, SB-7, SB-8, SB-9, and SB-10.

A new state-level bureaucracy has been established to oversee the process.  As a result, local municipalities now have limited administrative authority, subject to state-level mandates, which significantly reduces their control over regional development. This shift in power dynamics is a critical factor in transforming the Housing landscape.  It should be a cause for concern for local communities.

In many cases, government agencies compete and act as counterforces, thereby delaying approvals.

These competing forces lead to ongoing delays because there is no incentive to comply with the Law, but rather to maintain power and authority over the development process.

Municipalities have not recognized that they have lost oversight and can only respond within state mandates.

In many cases, developers must hire lawyers and force municipalities to comply.  The Law is clear: if the city does not comply and a limitation is required, it must pay the applicant’s attorney fees.

The insecurity introduced by these changes has led to unprecedented uncertainty in financial projections.  The added complexity of the planning process, strategic analysis, market assessments, demand versus supply, absorption, and the involvement of multiple government entities and departments tasked with oversight have made financial projections challenging and unpredictable—this uncertaintywarrantsr serious consideration in the real estate industry.

The second problem is the unreliability of data from our institutions.  However, by navigating bureaucratic processes and ensuring the reliability of our data sources, we can significantly improve the accuracy of our financial projections and provide reassurance in these uncertain times.  Reliable data sources are crucial to shaping our economic future, and the audience should be acutely aware of this.

Article:

Amid data reliability challenges, localized data collection is crucial to the process.  This involves the developer getting ‘boots on the ground,’ collecting local data, and working with local municipalities to ensure they comply with the transition to state approval mandates.

Database tools and participant interviews can further enhance the accuracy of our forecasts, enabling us to shape our financial future effectively.  What are the local demands, vacancies, capitalization rates, and availability of financing? What are the rents, absorption, and absorption rates?  Notably, data from for-profit companies can be more reliable than data from government agencies, such as the Department of Labor Statistics.

Federal Level: Affirmatively Furthering Fair Housing:

Past President Obama issued a regulation known as AFFH (Affirmatively Furthering Fair Housing).

https://www.hud.gov/AFFH

https://www.hud.gov/sites/dfiles/FHEO/documents/AFFH%20Fact%20Sheet.pdf

https://www.hudexchange.info/programs/fair-housing-planning/

https://www.federalregister.gov/documents/2023/02/09/2023-00625/affirmatively-furthering-fair-housing

The AFFH regulation, initiated by President Obama, profoundly impacted the suburban landscape.  Its objective was to foster the development of progressive urban mini-cities and transition them into suburban areas.  This entails suburbs absorbed by larger cities, subject to federal zoning and development-control mandates.

The AFFH regulation focused on eliminating single-family zoning and promoting the construction of medium- to high-density, low-income Housing, thereby reshaping suburban areas into mini-urban, downtown-style communities.  This effort shifted low-income people and those considered less desirable to the suburbs.

AFFH works by holding the U.S. Department of Housing and Urban Development (HUD) hostage, specifically the Community Development Block Grant (CDBG) program.  Suburbs are ineligible for millions of dollars in HUD grants unless they eliminate single-family zoning, provide low- and moderate-income Housing, and agree to consolidate and densify commercial and residential districts, such as stack-and-pack neighborhoods in urban areas.

Non-compliance will result in the withholding of highway funds.  Any objections from my local municipalities could lead to lawsuits against suburban municipal leaders for discrimination, brought by civil rights groups or the federal government.

Then, in 2016, with President Trump, the process was put on hold.  Still, when President Biden’s White House staff acquired the electronic signature device, it was reactivated and accelerated on steroids.

https://www.hud.gov/AFFH

State level: California.

The restructuring of land use and development control is a pivotal issue, requiring legislation to clarify who is responsible for zoning and development.  This shift in power dynamics is a critical factor in transforming the Housing landscape.

Forced to replace local municipal control with state-level, bureaucratic-controlled, mandated regulations is the key to destroying the historic suburban lifestyle, and it appears to be the legislative objective patterned after AFFH.

The California Legislature’s actions have significantly altered the landscape for local municipalities.  The passage of multiple bills has effectively stripped these municipalities of their authority to approve land use and Housing development projects.  Instead, these approval authorities have been transferred to a state-level bureaucracy, leaving local municipalities with only ministerial approval rights.  This shift has a profound Impact on the Housing landscape, marking a significant change in the traditional approval process and underscoring the gravity of the situation.

The competition between two different bureaucracies (state and local) for approvals has created chaos for buildings attempting to get their projects approved.  Both state and local governments are filled with public Employee labor union members who hold monopoly powers and do not want to relinquish them, regardless of the costly and disruptive Impact on the real estate development community.  This competition underscores the challenges real estate developersface in navigating the approval process, evoking audience empathy for their struggles.

California planned the control and reformulation of neighborhoods by elected officials and unelected state bureaucrats.  The targeted elimination of Single-family homes is to be replaced by high-density stack-and-pack Housing.

https://www.hcd.ca.gov/planning-and-community-development/affirmatively-furthering-fair-housing

https://www.allianceforhousingjustice.org/post/understanding-affh

The American dream of homeownership was replaced by an alleged “Housing affordability crisis,” all designed to allow large corporations to purchase Housing stock and rent it to the middle class.  The dream of middle-class homeownership for most families is dead.

Partial summary of new laws:

California has eliminated single-family zoning in favor of high-density, stack-and-pack multi-story dwellings, including both apartments and condominiums.

SB-330

Approved by the Governor, Chaptered by the Secretary of State, and became effective January 202020.

California has eliminated single-family zoning in favor of high-density,  stack-and-pack multi-story dwellings, including both apartments and condominiums.

This applies only to affected jurisdictions with populations exceeding 5,000 that are not located within an urbanized area.  The Department of Housing and Community Development (HCD) maintains a list of candidates who have had a significant Impact on their department’s processes.  For these “affected jurisdictions,’ S.B. 330 imposes stricter regulations and timelines for development projects, which can make the process more challenging and costly.  The Impact of S.B. 330 on these areas is substantial, as it significantly alters their development processes and helps address California’s Housing crisis.

The objective is to streamline the development process while addressing California’s Housing crisis.

https://cayimby.org/legislation/sb-330/

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB330

SB-4 Planning and zoning: Housing development: higher education and religious institutions.

Senate Bill 4, the Affordable Housing on Faith Lands Act, is a new Law allowing religious institutions and nonprofit colleges to build affordable Housing on their properties.

Key features include:

Allows rezoning without most local permitting and environmental review laws.

End the misuse of the California Environmental Quality Act, often used to block affordable Housing.

Incentivizes religious institutions to repurpose their land for affordable Housing.

https://cayimby.org/legislation/sb-4/

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB4

SB-6- Residential development: available land in commercial zones

Approved by the Governor.  Chaptered by the Secretary of State, Chapter 667, Statutes of 2019.

Major provisions.

Enacts, until 29 January 2029, the Neighborhood Homes Act, which establishes a Housing development project as an allowable use on a neighborhood lot, defined as a parcel within a commercial zone where office and retail uses are permitted, so long as the parcel is not adjacent to an industrial use.  This act is designed to encourage residential development in commercial zones, potentially changing the landscape of these areas.

Requires a Housing development project on a neighborhood lot to comply with all of the following:

Under the Housing element Law, the density of residential Housing development must meet or exceed the appropriate density to accommodate Housing for lower-income households.

The development project must comply with all local zoning, parking, design, public notice, and hearing requirements, as well as local code requirements, ordinances, and permitting procedures that apply in a zone that allows Housing at the density required by this bill.  Suppose more than one zoning designation in the city or county meets this requirement.  In that case, the zoning standards that apply to a neighborhood lot are the same ones that apply to the closest parcel that allows for residential use at that density. If the existing zoning on the parcel allows denser residential use, the existing zoning applies.

All other local requirements for a neighborhood lot, except those that prohibit residential use or allow residential use at a lower density than that provided by this bill.

The development included a deed restriction requiring that at least an unspecified percentage of the units provide affordable Housing costs or rents for lower-income households.

The developer certifies that the project is either a public work or will pay the prevailing wage and use a skilled, trained workforce across all contractor levels.  This is designed to promote unionization and require union workers.

The project consists entirely of residential units, or a mix of retail, commercial, office, or residential uses, except that it may not include a hotel or other transient lodging and must allocate at least 50% of its square footage to residential uses.

The local agency requires any unit rented for more than 30 days.  This is primarily to discourage short-term rentals such as Airbnb.

Allows local agencies to exempt a lot zoned for commercial retail or office use from the bill if the local agency concurrently reallocates the lost residential density to other lots so that there is no net loss in residential density, but only if the lots are

Suitable for residential development, using an existing definition in the Housing Element Law, and

Subject to an ordinance that allows for development by right.

Provides that its provisions do not alter or lessen the applicability of any Housing, environmental, or labor Law applicable to a Housing development authorized by the bill, including, but not limited to, the California Coastal Act of 1976, the California Environmental Quality Act (CEQA), theCalifornia Housing Accountability Act (HAA), density bonus laws, obligations to affirmatively further fair housinglaws, and state or local Housing and tenant protection laws.

SB-7 Regional Housing need: determination

The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city, which includes, among other mandatory elements, a Housing element.

https://digitaldemocracy.calmatters.org/bills/ca_202320240sb7

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB7

SB-8 extends the Housing Crisis Act of 2019 to jumpstart more Housing production.

https://www.yimbylaw.org/unit-replacement

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB8

SB-9 provides homeowners with additional tools to construct critically needed new Housing and help alleviate California’s Housing shortage.

SB-10 establishes a voluntary, streamlined process for cities to zone for multi-unit Housing, making it easier and faster to construct Housing.

Governor Newsom Signs Historic Legislation to Boost California’s Housing Supply and Fight the Housing Crisis | California Governor

Single-family Zoning: Can History be Reversed? | Joint Center for Housing Studies (harvard.edu)

The City of Minneapolis and the state of Oregon have passed similar measures, as have many other planners across the country.

High-Density Urban vs. Suburban Housing:

Are California and the Federal Government intending to torpedo our suburban lifestyle and attempt to transplant high-density Housing into our communities?  This is not just a possibility but a reality we are facing. They are willing to participate in the process, and we must remain concerned and engaged with this issue.

How will we feel when we wake up one day, and the federal or state government mandates force us to relocate our living quarters into a stack-and-pack high-density cluster dwelling against our will?  This is not just a hypothetical scenario but a real threat to our freedom.  Our property is too valuable for us to keep for ourselves.  It would be best if we sold for the benefit of others. Pressure is building because this type of Housing unit is the only option available, as state and federal governments have banned ssingle-familyhousing. This should alarm us and motivate us tactically.  Hopefully, the newly elected Trump administration will counter the momentum gained.

How would we like to be forced to relocate to a quasi-independent living unit within a Section 8 federally sponsored Housing project,t where we are among the few paying our way?  Our taxation subsidizes all our neighbors.  How would we like to live among our neighbors/members of society in the inner city, where compulsory tax redistributions from our support cover 80% or more of their Housing and family living expenses to enhance their quality of life?  Your obvious response would be, How could that ever happen here in the USA?

Hopefully, the newly elected Trump administration will counter the momentum gained.

Cluster Housing was initially defined as placing Housing near one another, reducing land and yard space in favor of increased open space to enhance community amenities.  Larger open spaces within the development serve as a buffer for adjacent land uses.

Many developers prefer high-density or cluster zoning and Housing to maximize density, Play, and profits.  In cluster Housing, homeowner associations assume responsibility for management and maintenance.

Vertical high-density Housing, also known as stack-and-pack, refers to neighborhoods characterized by tightly packed, multi-story residential units.   This enables more efficient control, lower expenses, and significantly higher population density.  Population density can increase even more as the buildings become taller, allowing for more units in smaller ground space (footprint).  Four to ten stories for high-density residential occupancy will be the norm.

Suburban areas, on the other hand, consist primarily of low-density residential, commercial, and industrial communities locatedoutsidem urban areas but within commuting distance of Employment.  Suburban communities usually have their own political and governmental services jurisdictions.  Suburban populations grow as people seek autonomy from the tightly controlled rules and hectic, congested lifestyles of densely populated urban areas.

Freedom of movement enables families who can afford to relocate to the suburbs to avoid traffic congestion, crowded commercial corridors, clustered shopping areas, substandard schools, environmental issues, and crime.

The freedom to own more land and open space makes it worthwhile for people to commute into a city for work.  Suburbs typically offer a higher standard of living for a comparable income compared to a metro or urban lifestyle.

The difficulty of financial projections, exacerbated by ongoing intrusive government overreach, will remain a barrier.  Complexity can be a curse, but the clever mouse will always be able to find its way through the maze.

Even with a comprehensive projection model, our work is not yet complete.  We must actively review the strengths and weaknesses of our forecasts and make necessary adjustments.  This ongoing process of fine-tuning is where our expertise and judgment come intoPlayy, leading to more accurate and reliable financial forecasts.