Is state’s most con­tro­ver­sial new hous­ing pro­duc­tion law work­ing?

Times-Herald (Vallejo) - - LOCAL NEWS - By Marisa Ken­dall

Time was run­ning out for All Souls Epis­co­pal Parish.

The con­gre­ga­tion had spent months on its plan to build an apart­ment build­ing for low-in­come se­niors on its prop­erty in Berke­ley, but all that work threat­ened to un­ravel late last year when a group of neigh­bors ap­pealed a key zon­ing ap­proval. With just a month to go un­til a ma­jor fund­ing dead­line — and $5 mil­lion at stake — the church couldn’t af­ford to wait out the ap­peal.

In­stead, All Souls in­voked a new and con­tro­ver­sial state hous­ing law — Se­nate Bill 35 — that put its project on the fast­track and al­lowed it to by­pass hur­dles like zon­ing ap­peals. Now the 37-unit project is set to break ground in June.

“Cer­tainly, it made a big dif­fer­ence,” said Phil Brochard, the rec­tor of All Souls. “Would it have been built with­out SB 35? I like to be­lieve it still would have been built. But it would have been a much longer road. It would have cost the tax­pay­ers, the city, the state and the fed­eral govern­ment a lot more money.”

The All Souls project is one of more than 40 around the state that have used SB 35 since the law went into ef­fect in Jan­uary 2018. The law’s am­bi­tious goal was to ease the state’s chronic hous­ing short­age, but it has sparked an out­cry from some lo­cal of­fi­cials up­set by the state’s usurp­ing of their con­trol. The law re­quires most cities to fast-track res­i­den­tial and mixed-use projects that meet cer­tain af­ford­abil­ity and other stan­dards.

So far, Cal­i­for­nia city of­fi­cials have ap­proved or are still con­sid­er­ing more than 6,000 homes pro­posed un­der the law — in­clud­ing about 4,500 in the Bay Area, ac­cord­ing to this news or­ga­ni­za­tion’s anal­y­sis of anec­do­tal re­ports and city and county data.

The ma­jor­ity are sub­si­dized units for low-in­come renters, in­clud­ing the home­less, se­niors and peo­ple with dis­abil­i­ties — which ad­vo­cates say is ev­i­dence that the law is pro­tect­ing the re­gion’s most vul­ner­a­ble res­i­dents. In some cities, of­fi­cials are ap­prov­ing projects out of fear that if they don’t, they’ll be hit with an

SB 35 ap­pli­ca­tion that they might like even less, but can’t re­ject. Other com­mu­ni­ties are fight­ing the law, spark­ing mul­ti­ple law­suits.

Sen. Scott Wiener, D-San Fran­cisco, drafted SB 35 to force re­luc­tant cities to ap­prove hous­ing in a cli­mate where res­i­den­tial pro­duc­tion hasn’t kept up with boom­ing de­mand. Cities and coun­ties that fail to ap­prove enough hous­ing (95% of Cal­i­for­nia ju­ris­dic­tions as of June) are sub­ject to the law, which forces them to au­to­mat­i­cally green­light cer­tain res­i­den­tial and mixed-use projects if they meet a city’s zon­ing and plan­ning rules.

The law also ex­empts those projects from the Cal­i­for­nia En­vi­ron­men­tal Qual­ity Act (CEQA) and other ob­sta­cles. That means projects that could other­wise spend years in pub­lic hear­ings and fight­ing CEQA law­suits now must be ap­proved in 90 to 180 days, de­pend­ing on their size.

But largely miss­ing from the equa­tion are the types of large mixed-in­come and mixed-use projects that could make a siz­able dif­fer­ence in the state’s hous­ing in­ven­tory. The vast ma­jor­ity of SB 35 pro­pos­als that have been ap­proved or are un­der re­view are for fewer than 100 units, and some are as small as two or four units. Just five in­clude of­fice, re­tail or ad­min­is­tra­tive space. In the Bay Area, nearly half the units in the pipeline are in one project — the mas­sive Vallco mixed-use de­vel­op­ment in Cu­per­tino, which is caught up in a law­suit chal­leng­ing its SB 35 el­i­gi­bil­ity. The law­suit has yet to be re­solved, and the project is mov­ing for­ward.

SB 35’s strict rules — re­quir­ing as much as half of a project be sub­si­dized, low­in­come hous­ing, and man­dat­ing a builder pay work­ers the lo­cal pre­vail­ing wage, for in­stance — aren’t worth the added ex­pense for many mar­ket-rate de­vel­op­ers, said Oak­land-based land-use at­tor­ney Todd Wil­liams.

“In the­ory, SB 35 is an in­ter­est­ing and po­ten­tially ef­fec­tive tool, but we just haven’t seen the im­pact yet in prac­tice,” he said.

A bill signed into law last month — AB 1485 — seeks to change that by ex­pand­ing SB 35 to in­clude more mid­dle-in­come projects.

Out of at least 44 projects pro­posed through­out the state un­der SB 35, just two have been deemed in­el­i­gi­ble for SB 35 sta­tus — in Los Al­tos and Berke­ley — and both de­ci­sions sparked law­suits. Twenty-eight have been ap­proved, and the rest are pend­ing. (Cities have be­tween three and six months to point out flaws that would make a project in­el­i­gi­ble for SB 35 sta­tus). Those num­bers come from an anal­y­sis of anec­do­tal re­ports con­firmed by city and county plan­ning de­part­ments, but no of­fi­cial, statewide count of SB 35 projects ex­ists — so the num­bers could be higher. The Cal­i­for­nia Depart­ment of Hous­ing and Com­mu­nity De­vel­op­ment is work­ing on com­pil­ing a count, but it’s un­clear when it will be com­pleted.

“I think SB 35 is hav­ing the ef­fect in­tended,” Wiener said. “It’s stream­lin­ing projects. It’s shift­ing the dy­namic when cities con­sider projects. And I think it will ac­cel­er­ate over time. When you have a new tool, it takes a while for de­vel­op­ers, for at­tor­neys, for city plan­ners, for city coun­cils to get their head around it and be will­ing to use it.”

But some cities have re­sisted tooth and nail. Hunt­ing­ton Beach, for ex­am­ple, sued the state in Jan­uary, claim­ing SB 35 is un­con­sti­tu­tional.

In San Fran­cisco, co-liv­ing startup Starcity used SB 35 when it ap­plied to build a 16-story res­i­den­tial build­ing in the city’s SoMa neigh­bor­hood.

“We were sick and tired of the lengthy process that’s re­quired to get a mean­ing­ful amount of hous­ing sup­ply built,” said CEO and Co­Founder Jon Dishot­sky.

Af­ter qual­i­fy­ing for fast­track ap­proval un­der the law, Dishot­sky said, his project was ex­empt from re­quire­ments in­clud­ing an en­vi­ron­men­tal im­pact re­port, a shadow study, a wind study, a noise study, trans­porta­tion de­mand man­age­ment, and more. An ap­proval process that Dishot­sky said could have taken at least four years was cut to six months, and Starcity plans to break ground next year.

But the quick turn­around came with a trade­off — about 53% of Starcity’s 270-unit project has to be rented at be­low-mar­ket rates to com­ply with both SB 35 and San Fran­cisco’s sep­a­rate af­ford­able hous­ing rules.

That’s a tough man­date for a com­pany like Starcity, which un­like most af­ford­able hous­ing de­vel­op­ers, doesn’t use pub­lic fund­ing to off­set the costs of sub­si­diz­ing be­low-mar­ket hous­ing.

“We’re sort of stuck in this place po­ten­tially where you have an amaz­ing con­cept,” Dishot­sky said, “that is in jeop­ardy of whether or not it can get built.”

Even in cities that have yet to re­ceive a project ap­pli­ca­tion un­der the new law, SB 35 is hav­ing a no­tice­able im­pact.

“Ev­ery­one knows the de­vel­oper could in­voke SB 35 at any time, so that cre­ates a strong in­cen­tive for the city to work through any is­sues and ap­prove the project,” Wiener said.

That’s what hap­pened in South San Fran­cisco ear­lier this month. As the City Coun­cil con­sid­ered a mixed-use de­vel­op­ment that would in­clude 800 apart­ments near the city’s BART sta­tion, of­fi­cials dis­cussed com­pli­ance with sev­eral new hous­ing laws — in­clud­ing the pos­si­bil­ity that if the coun­cil re­jected this project, the de­vel­oper would come back with an SB 35 pro­posal that coun­cil mem­bers would have to ap­prove, even if they didn’t sup­port it.

Reluc­tantly, Coun­cil­man Mark Ad­diego pointed out that ig­nor­ing those laws would sub­ject the city to enor­mous fi­nan­cial risk.

“I need to tell the pub­lic how de­mor­al­iz­ing it is to sit here as your elected leader and un­der­stand that the hand is be­ing forced,” he said. “For the most part, when it comes to hous­ing, we are no longer in con­trol of our own des­tiny.”

The coun­cil voted 4-1 to ap­prove the project.

SB 35 is get­ting hous­ing ap­proved quickly, even if it’s not at the scale sup­port­ers would like to see, said Ray Bram­son, chief im­pact of­fi­cer for the San Jose-based non­profit Des­ti­na­tion: Home.

“I think it is a tremen­dously valu­able tool,” he said. “It’s some­thing that’s go­ing to be slow go­ing at first, but once cities start to adopt pro­cesses for how they’re go­ing to ac­cept SB 35 ap­pli­ca­tions, I think we’re go­ing to see a lot more of these com­ing through.”

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