Senate Bill 330, referred to as the Housing Crisis Act of 2019, contains two major parts intended to accelerate housing production over the next five years by streamlining permitting and ensuring no net loss in housing capacity.  Governor Newsom signed SB 330 into law on October 9, 2019, and it will be in effect from January 1, 2020 until January 1, 2025 unless extended via additional legislation.

The first major part of SB 330 establishes various “good government” requirements that affect the processing of housing development projects in every California city and county.  The second part of the law limits the ability of “affected” cities and counties—a smaller but substantial subset of agencies that are designated by the U.S. Census Bureau as “urbanized areas or urban clusters”—to downzone property and regulates the ability of developers to replace existing housing with new housing.

The focus of this blog post is the powerful new, and applicant-friendly, statutory form of vested rights referred to as a “preliminary application,” contained in the first part of SB 330, over which cities and counties have no discretion.


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California cities may be justified to be skeptical when officials from Sacramento offer broad solutions to the state’s pernicious housing crisis.  But the decades-old crisis highlighted by a severe and unsustainable underproduction of new housing is real and getting worse, and the legislature is finally grappling with land use and housing policy proposals that would put meaningful guardrails on otherwise unfettered local control that has long stifled new housing supply.

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According to traditional urban economic models, developers in well-functioning housing markets will choose to build apartments where land is expensive and housing demand is strong.  The theory itself is sound: high rents provide strong financial incentives to developers that should lead to an increasing supply of new multi-family housing.

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California’s ongoing housing crisis has many causes, including, as prominently noted in the Housing Accountability Act, the “activities and policies of many local governments that limit the approval of housing, increase the cost of land for housing, and require that high fees and exactions be paid by producers of housing.”  See, e.g, Cal. Gov’t Code § 65589.5(a)(1)(B).  Fortunately, however, these abuses of the police power are driving the legislature to act.  For example, in explaining the purpose of Senate Bill 50, which we wrote about here, California State Senator Scott Wiener explained that “absent state intervention, communities will continue to effectively prohibit people from living near transit and jobs by making it illegal to build small apartment buildings around transit and jobs, while fueling sprawl and inhumane supercommutes.”

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Declaring there to be a statewide housing emergency, California state Senator Nancy Skinner (D-Berkeley) introduced Senate Bill 330, on February 19, 2019, to suspend certain regulatory restrictions on the development of new housing and to expedite the permitting of housing in certain high-cost regions for a 10-year period.

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Who is responsible for the housing crisis in San Francisco, and what can government do to solve it?  As property values have climbed in San Francisco and surrounding areas, that problem has increasingly vexed elected officials and the courts.  The First District of the Court of Appeal is the most recent to weigh in, with a decision invalidating a local pro-tenant ordinance.  But first, some background.

The Ellis Act is a state statute that prohibits a city or county from “compelling the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease . . . .”  (Gov. Code, § 7060, subd. (d)(a).)  In short, the Ellis Act allows a landlord to withdraw a rental unit from the market.  In 2014, San Francisco Supervisor David Campos sponsored an ordinance requiring landlords to pay a relocation benefit to tenants being displaced due to the landlord’s “repossession” of the rental unit under the Ellis Act.  The payment required was 24 times the difference between the unit’s current rental rate and the “fair market value” of the unit, as calculated by a prescribed schedule.  In theory, the displaced tenant was to be compensated for two years’ worth of the differential between what the tenant was paying and what the tenant would pay as fair market rent.  Tenants were entitled to the payment regardless of needs or assets, and there was no requirement that the payment actually be spent on expenses of relocation.


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Last September we wrote about 616 Croft Ave., LLC v. City of West Hollywood, an opinion from the Court of Appeal for the Second Appellate District upholding a nearly $555,000 in-lieu fee on an 11-unit residential infill project because the fee was “related to the cost of constructing affordable housing units within the City.”  Among other things, we noted that the case “underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions.”

On December 21, 2016, the California Supreme Court denied a petition to review 616 Croft Ave., LLC.  A petition for writ of certiorari was filed on March 15, 2017 (Case No. 16-1137), giving SCOTUS its opportunity to consider the case.


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On November 10, 2016, the U.S. Department of Housing and Urban Development and the U.S. Department of Justice released a “Joint Statement” providing updated guidance on the application of the federal Fair Housing Act to state and local land use laws and practices.

The FHA prohibits a broad range of practices that discriminate against individuals on the basis of race, color, religion, sex, national origin, familial status, and disability.  Among other things, the FHA applies to local government entities and prohibits them from making zoning or land use decisions or implementing land use policies that exclude or otherwise discriminate against protected persons, including individuals with disabilities. The FHA does not pre-empt local zoning laws, however, which are is traditionally reserved to state and local governments, except to the extent such laws may conflict with requirements imposed by the FHA or other federal laws.


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California’s housing crisis is well-understood and documented.  A chief culprit is the fact that the state’s coastal urban areas, for various reasons, do not approve enough new housing to accommodate everyone who seeks to live there.

The lack of new housing development is a function, in part, of the fact that California’s local finance structure essentially incentivizes nonresidential development.  There is also limited vacant developable land in coastal urban areas.


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On September 29, 2016, in a case of first impression, the Court of Appeal for the Second Appellate District addressed the tensions between the requirements of the Housing Accountability Act, Density Bonus Law, and Mello Law (establishing minimum requirements for affordable housing within the coastal zone) with the California Coastal Act. Kalnel Gardens, LLC v. City of Los Angeles, __ Cal.App.5th __ (2016) (Case No. B264434).

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