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