What Does Governor Brown's Proposed Housing Bill Mean For Affordability in California?

Governor Jerry Brown with Los Angeles mayor Eric Garcetti and others. Photo by Neon Tommy.

For a very long time now, California cities—especially those in coastal regions like LA County and the Bay Area—have done a really awful job of allowing new housing to be built. Homeowners' opposition to change and desire to grow their property values has left us with a historic housing shortage and, as a result, an affordability crisis of epic proportions.

Governor Jerry Brown wants to do something about this, and his solution is built around two inescapable realities:

  • First, we'll never be able to subsidize our way out of this mess. Those eligible for subsidized housing based on their income number in the millions of households, and building them with public money would cost hundreds of billions of dollars that we don't have.
  • Second, selfish local opposition to new development probably isn't going to go away completely, and it takes just a few committed opponents to stop, stall, or downsize good projects. Spread that kind of opposition across a city and you have yourself a good old-fashioned housing crisis. If we want more housing we will need reduce the barriers to building it, especially when it includes units affordable to low income households. The best way to do that will be to limit the ability of local residents to sue and delay projects based on frivolous complaints about "character," parking, perceptions about changes to property values and "the type of people" that new housing will attract (perceptions that are often wrong, by the way), and so on.

The Governor's proposed trailer bill, "Streamlining Affordable Housing Approvals," can be boiled to one critical idea: housing development projects that include a minimum number of affordable units should be able to proceed withouta full environmental study and without being unduly threatened by lawsuits and angry neighbors. 

Multifamily developments, where they meet basic general plan and community plan guidelines and provide between 5 and 20 percent of their housing for low income households, would be approved "by right"—that is, ministerially—without the need for a protracted approvals process. If it checks the boxes, it moves ahead. There's no ambiguity—or considerably less, at least. Importantly, since discretionary approval is not required for these projects, CEQA review is not triggered, removing a major source of project delay and a frequent target of litigation.

There are a lot of people out there who know a lot more than me about city planning (in the formal City Planner, government employee sense of the word), so take my analysis with a grain of salt. Hopefully some actual City Planners will chime in if I got anything wrong or missed any key issues. That said, here's what I think is worth paying attention to in this bill:


The Good Stuff

More state involvement in housing tends to reduce segregation and exclusion, so, generally speaking, this is probably the right direction for California to be moving.

1. It has the potential to cut project timelines by years.

When CEQA requires a full environmental impact report (EIR), that process typically takes more than a year to move through the City. That hurdle is removed by this law, so long as the project includes sufficient affordable housing and isn't located on sensitive sites such as wetlands, farmland, flood plains, and earthquake fault zones. When the project is submitted for review, the City must respond within 30 days with a confirmation that it conforms to the general plan and zoning standards, or a written explanation of why it does not. The onus is really on the City, because if they don't respond within this time frame then the development is assumed to conform. Design Review cannot exceed 90 days, and does not trigger discretionary review.

Since CEQA review and other discretionary reviews are eliminated, additional delay resulting from litigation is probably less likely, since these are the pressure points most often exploited by no-growth activists. Altogether, this means projects delivered much more quickly and, as a result, at lower cost. That can mean lower rents on new homes and allows for the supply of housing to catch up to demand more quickly, limiting rent increases on existing units

2. It encourages developers to build projects that are consistent with the general plan. 

This has been a sticking point and the only legitimate complaint of the Coalition to Preserve LA and their mis-named Neighborhood Integrity Initiative. Since even uncontroversial projects require lengthy review periods, including environmental review, and face numerous other bureaucratic obstacles and the whims of neighborhood residents, there's a strong incentive to "go big or go home" and seek out additional zoning rights that allow them to build bigger projects. If a project is going to take 3-5 years regardless, you might as well go all out. This impulse will still exist since our general plan and zoning districts are so out of date, which prevents us from building the type of city most people would like to see (or even building what was built 50 years ago).

That said, a streamlined process may open up the market to more small- and medium-sized, locally-based developers who can't currently compete in the complex world of mega-project development. The market for large projects with 100+ units will remain, but this bill could help us get more of the "Missing Middle" housing that's been largely absent from developments over the past few decades.

Diagram of "missing middle" housing types, by Opticos Design.

3. It also encourages the City to actually keep its general plan and community plans updated.

Governor Brown's bill won't do Los Angeles much good if our general plan and community plans aren't brought into the 21st century. Our codes are desperately out of date, which is why so many projects have required general plan amendments in recent years—the fact is that a high-rise is not out of place in Hollywood (just ask the guy bankrolling the Neighborhood Integrity Initiative, who works in a 25-story building at Sunset and Vine), but building one by-right is still usually illegal there without intervention by City Council. This law would give City leaders the incentive they need to invest serious resources into keeping our plans up to date.

4. Duh! More affordable housing! 

This probably goes without saying, but we need a lot more affordable housing, and this would encourage private developers to build more of it at no cost to the state or local governments. Perversely, a lot of developers avoid the density bonus—a state program that allows private developers to build more market-rate units if they include some affordable ones—because it adds delay and uncertainty to their projects. This reverses that dynamic, speeding up projects that include 5, 10, or 20 percent affordable housing (depending on the location of the development and the affordability level). Every time a developer fails to take advantage of the density bonus it's pure loss from the perspective of the city since it's affordable housing on the developer's dime, so anything we can do to encourage participation is an unqualified success.


Questions and Concerns

1. Until Los Angeles updates its general plan and community plans, this law won't do us much good. 

As discussed above, our city plans are way out of date. Since the governor's law is built around compliance with existing plans, developers can't build what we really want them to build until we update them. That's gonna take several years at the very least, and you can guarantee that folks like Michael Weinstein and Robert Silverstein will sue to stop or delay their implementation, so there will be many neighborhoods that will have to wait for housing relief until the city catches up.

2. How does the Governor's bill relate to the density bonus law? 

In 2014, the state legislature updated the density bonus law with Assembly Bill 2222. One of the changes it instituted was to increase the affordability requirement to 55 years (originally 30) on density bonus projects. Brown's law would require a 30-year restriction on affordable units, which seems to put it somewhat at odds with AB 2222. Is this intentional? Will builders ultimately just covenant affordable units for 55 years to take advantage of the density bonus and this law? Are there any caveats or catch-22s that will prevent them doing so?

Increased participation in the density bonus can yield more market-rate and affordable housing, even with lower thresholds. Table by author.

3. What's with the affordability thresholds? 

For projects built within 1/2 mile of a "major transit stop," at least 10 percent of units must be affordable to low income households (those earning less than 80 percent of area median income) or 5 percent to very low income households (less than 50 percent of AMI). For projects outside these transit priority areas, at least 20 percent of units must be affordable to individuals with incomes under 80 percent. I missed this in my first read-through, but this language appears to be deliberate, and it would imply that a two-person household earning 150 percent of area median income would be eligible so long as both residents earned under 80 percent AMI.

So I have two questions on this: First, why do projects near transit have a lower affordability requirement? If anything, wouldn't we want more built at these locations? Second, is my interpretation of the 20 percent requirement correct? Is the governor introducing a new affordable housing product to the landscape, or am I misreading/overthinking it?

4. How is ministerial approval consistent with design review? 

Here I'll have to concede my own ignorance, since I'm really not familiar with the process of design review—what's on the table, what's not, who's involved, etc. My very simple understanding, though, is that design review is essentially a conversation with community representatives (in the form of the Planning Commission, Neighborhood Councils, or whoever) about the physical, aesthetic features of the project. The law states that design review "shall not in any way inhibit, chill, or preclude the ministerial approval provided by this section and the effect thereof," which to me sounds contrary to the idea of design review. How can a process that is inherently value-driven be anything but discretionary? Does this diminish the role of design review? (I've heard many complaints about the design review process so this isn't intended as a defense of the practice, but my personal stance is neutral because it's not something I'm knowledgeable about. I do believe, however, that we need to do a better job of acknowledging that "beauty has a price.")

5. How can the review of zoning variances and conditional use permits be ministerial?

From the bill: "The review of a permit, license, certificate, or any other entitlement, including ... the enactment and amendment of zoning or design review ordinances or guidelines, the issuance of zoning variances, the issuance of conditional use permits ... shall be ministerial." As with design review, zoning variances and conditional use permits (CUPs) seem inherently discretionary—they rely upon the judgment of an individual or panel with decision-making authority. If a developer requests a variance from existing zoning law, such as a reduction in the on-site parking or set-back requirements, that sounds to me like 1) we're not conforming to the requirement that are "consistent with objective general plan and zoning standards in effect at the time," and 2) the decision to approve said variance can't be made ministerially, because there is no checklist for a City employee to reference and say "yep, you meet the requirements for this." By its very nature, a variance requires special consideration, which is another way of saying discretion. Again, perhaps a real City Planner can clarify.

Share Your Comments / Input

So that's my understanding of the bill in its current form. If anyone has responses to any of the above, or has identified some additional benefits or questions about the bill, please share them in the comments and I'll update this post as necessary.