Voters in San Francisco and California will again confront a formidable ballot during the election on March 5, 2024, with an array of qualified City measures and one state proposition to consider. Key measures related to real estate and housing are as follows:

San Francisco Proposition A (Affordable Housing Bonds): Proposition A would allow the City to borrow up to $300 million by issuing general obligation bonds to construct, develop, acquire, and/or rehabilitate affordable housing. Of that $300 million:

• Up to $240 million of bond proceeds would be used for new rental housing, including senior and workforce housing, for extremely low-income, very low-income, and lower-income households.
• Up to $30 million would be used to preserve existing affordable housing that is affordable for lower-income and moderate-income households.
• Up to $30 million would be used to serve extremely low-income, very low-income, and/or lower-income households who need safe and stable housing and are experiencing street violence, domestic violence and abuse, sexual abuse and assault, human trafficking, or other trauma relating to homelessness.

The measure proposes to raise these funds through an estimated average tax of 57 cents per $100 of assessed property value. For rent controlled units, landlords can pass through to tenants 50 percent of this real property tax increase. The Citizens’ General Obligation Bond Oversight Committee would audit the expenditure of these bond proceeds.

One of the major drivers of the measure is the City’s need to meet its state-mandated Regional Housing Needs Allocation of over 46,000 affordable housing units by 2031, which we’ve written about here and here.

Support and Opposition: Proposition A was placed on the ballot by an 11-0 vote of the Board of Supervisors, the ordinance for which was signed by the Mayor. Proponents of Proposition A, including Board of Supervisors President Aaron Peskin, the SF Democratic County Central Committee (DCCC), SPUR[1], TogetherSF, SF YIMBY, the San Francisco Labor Council, the San Francisco Chronicle, the Council of Community Housing Organizations, the San Francisco Tenants Union, and the Mission Housing Development Corporation, argue that the measure provides essential affordable housing for working parents and families, teachers, firefighters, nurses, veterans, and seniors on fixed incomes. Opponents, including Larry Marso, argue that the City should push back against state-mandated housing levels, reign in borrowing, and protect against rising property taxes on existing home owners.

Proposition A requires a two-thirds vote to pass.

San Francisco Proposition C (Real Estate Transfer Tax Exemption and Office Space Allocation): For any property owner that receives permission to convert a property from commercial to residential use before January 1, 2030, Proposition C would exempt its initial post-conversion transfer from the transfer tax, up to a combined limit of 5 million square feet of space converted. The measure also allows the Board of Supervisors to amend the transfer tax without voter approval (but not to increase it), and permits office space that has been converted or demolished to be returned to the Proposition M allocation pool for allocation to new office developments of at least 50,000 square feet.

Support and Opposition: Proposition C was placed on the ballot by the Mayor, and is supported by certain members of the Board of Supervisors, the Housing Action Coalition, GrowSF, SF YIMBY, SPUR, TogetherSF, YIMBY Action, Senator Scott Wiener, the San Francisco Chronicle, and various small business and merchants associations, who assert that the City’s current transfer tax – which is up to 6 percent on transactions of $25 million or more – is a significant barrier to a more vibrant downtown and disincentivizes the conversion of underused office buildings to housing. Opponents of the proposition, including Supervisor Dean Preston, John Avalos, the SF DCCC, the Affordable Housing Alliance, the San Francisco Labor Council, the San Francisco Tenants Union, and the Harvey Milk LGBTQ Democratic Club, maintain that the measure would take power away from the voters, provide unnecessary tax breaks to the rich, and limit funding for vital City services. A recent report by the Office of the Controller concludes that although the goals of revitalizing San Francisco’s downtown and increasing housing opportunities are important, office to residential conversion may not be currently financially feasible, and the proposed incentive is likely too small to close the feasibility gap.

Proposition C requires a simple majority to pass.

San Francisco Proposition D (Changes to Local Ethics Laws): Proposition D would tighten City ethics laws, including by:

• Expanding the types and sources of gifts that City officers and employees are prohibited from accepting;
• Amending the definition of bribery to prohibit City officers and employees from soliciting or accepting anything of value for themselves or a third party with the goal of influencing any government action;
• Requiring City department heads to report additional information about gifts to their department and allowing discipline for failing to meet these requirements;
• Creating a uniform set of rules for all prohibited nonwork activities for City officers and employees;
• Allowing for monetary penalties when City officers and employees fail to make required disclosures about their personal, professional, or business relationships;
• Requiring all City employees with decision-making authority to complete an annual ethics training; and
• Requiring voter approval or supermajority votes by both the Board of Supervisors and the San Francisco Ethics Commission to amend most City ethics laws.

According to the Ethics Commission, these changes are also designed to standardize ethics rules and enforcement across City departments. If this measure passes, the provisions would become effective six months after the election.

Support and Opposition: Proposition D was placed on the ballot by a unanimous vote of the Ethics Commission in response to recent incidents involving corruption on the part of City officials and those doing business with the City. Proponents, including SPUR, the San Francisco Chronicle, the SF DCCC, the San Francisco Labor Council, and TogetherSF, argue that recent City government corruption lays out a case for much-needed internal reform. Opponents of the proposition, including Larry Marso and 11th Congressional District candidate Eve Del Castello, state that it is more efficient to have City departments set individual, tailored policies rather than creating a uniform set of rules and that the measure would continue to expand the headcount, and spending, within the Ethics Commission.

Proposition D requires a simple majority to pass.

California Proposition 1 (Behavioral Health Services Act and Behavioral Health Infrastructure Bond Act): Proposition 1 would authorize the state to sell a total of $6.4 billion in new bonds to build treatment facilities for those with mental health and substance use challenges (up to $4.4 billion) and to fund the state program that gives money to local governments to turn hotels, motels, and other buildings into housing and to construct new housing ($2 billion). Proposition 1 would amend the Mental Health Services Act (Proposition 63), which was passed by voters in 2004 and taxes individuals with incomes over $1 million per year, to allow funding to be used to treat substance use disorders (and not just mental health disorders), reallocate funding for full-service treatment programs, behavioral health services, and housing programs, and require annual audits of programs.

Support and Opposition: Proposition 1 was put on the ballot by the Legislature. Proponents, including Governor Gavin Newsom, California Professional Firefighters, the California Chamber of Commerce, the SF DCCC, the Veteran Mentor Project, the San Francisco Chronicle, SPUR, TogetherSF, and the National Alliance on Mental Illness–California, argue that the state’s mental health system is broken and that the proposition would move people permanently off the streets, out of tents, and into treatment. Opponents, including Senate Minority Leader Brian W. Jones, Assemblymember Diane B. Dixon, and Mental Health America of California, argue that Proposition 1 is a heavy burden on taxpayers and that a better tactic is to attack the problem of homelessness and mental health challenges through the regular budget process. They also assert that the proposition reduces local control, bringing a one-size-fits-all approach to a program that counties already offer.

Proposition 1 would modify Proposition 63 and requires a simple majority to pass.

 

 

[1] Links provided in this post to substantive voter guides, where available.

Throughout 2023, the State’s Department of Housing and Community Development (HCD) loomed large in San Francisco land use policy and politics. In January 2023, the City adopted and HCD certified a new Housing Element setting forth San Francisco’s plan for approving and building a State-mandated 82,000 new housing units over the next eight years (see earlier post). In October, HCD released its San Francisco Housing Policy and Practice Review, which concluded that San Francisco has the longest review and approval process for housing projects in the State. It deemed San Francisco an “outlier,” with “approval processes [that] are also notoriously complex and cumbersome, creating unpredictability and uncertainty.” At the end of the year, the Board of Supervisors passed the Constraints Reduction Ordinance contemplated in the Housing Element, after HCD advised in the fall that failure to do so could result in Housing Element de-certification.

The Constraints Reduction Ordinance makes numerous changes to the Planning Code to remove barriers to approving and building housing, particularly in well-resourced portions of the City that have traditionally seen less multifamily development. Among other changes, the Ordinance exempts certain housing projects from neighborhood noticing procedures; removes certain conditional use authorization requirements for some projects in lower height and density zoning districts; authorizes the Planning Commission to delegate to the Planning Director approval of many State Density Bonus Law projects without a conditional use or large project authorization; and relaxes rear yard, open space, and other development standards in specified zoning districts.

Looking ahead, no break in the action should be expected in 2024. In light of recent reporting that the City issued permits for only 581 new units in 2023—a 13-year low—we anticipate continued HCD oversight and involvement in the legislative process. In addition, SB 423, authored by Senator Scott Wiener (D – San Francisco) extended the SB 35 streamlined, ministerial approval program and added a San Francisco-specific annual HCD reporting and review requirement. If, as expected, HCD determines this year that San Francisco is not making adequate progress toward its market-rate housing production goals, a significantly larger number of predominantly market-rate housing projects may be eligible for streamlined, ministerial approvals.

As we discussed in prior posts from November 2022 and February 2023, San Francisco voters passed the Empty Homes Tax Ordinance, which is now codified in San Francisco Business Tax and Regulations Code Article 29A (the “Empty Homes Tax”), and becomes effective as of January 1, 2024.

San Francisco (the “City”) will impose the annual Empty Homes Tax on each person that owns a building with three or more “Residential Units” for keeping any of those units “Vacant” during the prior tax year. While the Empty Homes Tax will only apply to Vacant Residential Units, the filing requirement will apply to all non-exempt owners of Residential Units, even if no tax is due.

In the beginning of 2023, local landlords filed a lawsuit challenging the validity of the Empty Homes Tax. As discussed further at the end of this post, on December 20, 2023, the San Francisco Superior Court ruled that the case would be allowed to proceed, even though the Empty Homes Tax has yet to be assessed or collected—denying the City’s reliance on California’s longstanding “pay first, litigate later” rule.

Overview of the Empty Homes Tax

A “Residential Unit” for purposes of the Empty Homes Tax  means a “house, an apartment, a mobile home, a group of rooms, or a single room that is designed as separate living quarters, other than units occupied or intended for occupancy primarily by travelers, vacationers, or other transient occupants. Separate living quarters are those in which the occupants live and eat separately from any other persons in the building and which have a kitchen and direct access from the outside of the building or through a common hall.”

“Vacant” for purposes of the Empty Homes Tax means “unoccupied, uninhabited, or unused, for more than 182 days, whether consecutive or nonconsecutive, in a tax year.”

For purposes of the 182-day threshold, certain periods of vacancy are not counted. Periods of vacancy which are not counted toward the 182-day threshold include the following:

• Building Permit Application Periods – the period following the date that an application for a building permit for repair, rehabilitation, or construction with respect to a Residential Unit is filed with the City, through the date that the Department of Building Inspection grants or denies such application (not to exceed one year);
• Construction Periods – the one-year period following the date that the City issues a building permit for repair, rehabilitation, or construction with respect to a Residential Unit;[1]
• Disaster Periods – the two-year period following the date that a Residential Unit was severely damaged and made uninhabitable or unusable due to fire, natural disaster, or other catastrophic event;
• Homeowners’ Exemption Period – the period during which a Residential Unit is the principal place of residence of any owner of that Residential Unit and for which such owner validly has claimed either the homeowners’ property tax exemption under Section 218 of the California Revenue and Taxation Code or the disabled veterans’ exemption under Section 205.5 of that Code;
• Lease Periods – the period during which any owner of a Residential Unit or any person in the Owner’s Group (as defined in Article 29A) of that owner leases that Residential Unit to one or more tenants under a bona fide lease intended for occupancy, but not including any lease or rental of that Residential Unit to anyone in the Owner’s Group or to travelers, vacationers, or other transient occupants;
• New Construction Periods – the one-year period following the date that the City issues a certificate of final completion and occupancy with respect to a Residential Unit in a newly erected building or a newly added Residential Unit in an existing building;
• Owner Death Period – upon the death of an owner who was the sole occupant of a Residential Unit immediately prior to death, when such Residential Unit passes to a co-owner, or the deceased owner’s estate, heirs, or beneficiaries, the 182-day period does not include the period during which such Residential Unit is unoccupied, uninhabited, or unused due to the deceased owner’s death (limited to one year, unless such Residential Unit is subject to the authority of a probate court); and
• Owner in Care Periods – the period during which a Residential Unit is unoccupied, uninhabited, or unused because all occupants of the Residential Unit who used that Residential Unit as their principal residence are residing in a hospital, long term or supportive care facility, medical care or treatment facility, or other similar facility.

Exemptions & Exclusions

Excluded from the definition of “Residential Unit” are any units to which the Welfare Exemption from property tax applies, or any unit in an operational nursing home, residential care facility, or other similar facility. The Empty Homes Tax also provides a broader exemption for any organization with a valid exemption from income taxation under Section 501(c)(3) of the Internal Revenue Code.

Residential Units located in a building with two or fewer Residential Units are exempt from the Empty Homes Tax.

Filing Requirements and Applicable Rates

The Empty Homes Tax will apply beginning January 1, 2024, but will not be collected until 2025. The applicable rates for 2024 are as follows:

• $2,500 for each Residential Unit with square footage less than 1,000;
• $3,500 for each Residential Unit with square footage 1,000 to 2,000;
• $5,000 for each Residential Unit with square footage over 2,000.

Any person that owns a Residential Unit at any time during the tax year, unless exempt from the Empty Homes Tax pursuant to the exemptions described above or covered by the homeowners’ exemption period for the entire year, must file a return for that tax year with the Tax Collector. That is, all owners of Residential Units, unless exempt, must file a return—even if no Residential Units are vacant and even if no Empty Homes Tax is due for the year.  The Tax Collector has not yet released the form of the Empty Homes Tax return, but filing requirements and collection of the Empty Homes Tax will begin in 2025.

Update on Pending Litigation

In February of 2023, the San Francisco Apartment Association, the Small Property Owners of San Francisco Institute, the San Francisco Association of Realtors, and four individual landlords filed a lawsuit in San Francisco Superior Court challenging the constitutionality of the Empty Homes Tax. The lawsuit was brought under California Government Code Section 50077.5, which allows for challenges to test the validity of a voter-approved special tax.

The City’s primary defense in the lawsuit thus far has been that California law does not allow for a challenge to the Empty Homes Tax, and, if a challenge is available, it would only be available after the payment of the tax.

On December 20, 2023, the Superior Court overruled the City’s challenge, meaning that the lawsuit may proceed and the validity of the Empty Homes Tax may be challenged, even though the tax has not yet been assessed or collected. However, unless or until the resolution of the lawsuit results in changes to the Empty Homes Tax, the tax will take effect beginning in 2024.

We will continue to provide further updates on the Empty Homes Tax and the status of the lawsuit when they are available.

 

 

[1] However, if the City issues multiple building permits to or for the benefit of one or more persons in the Owner’s Group (as defined in SF Bus. Tax. & Reg. Code § 2952) for the same Residential Unit, the Construction Period shall mean only the one-year period following the issuance of the first building permit to or for the benefit of anyone in the Owner’s Group.

 

In 2018, San Francisco voters passed the Early Care and Education Commercial Rents Tax (“Commercial Rents Tax”), which became effective as of January 1, 2019. The Commercial Rents Tax generally imposes a 3.5% surtax on amounts that a business receives from the lease or sublease of commercial spaces in the City, and a 1% surtax on leases or subleases of certain warehouse space. There have been multiple challenges to the constitutionality of the Commercial Rents Tax, but it has been upheld.[1]

In April of 2023, a San Francisco taxpayer (“Taxpayer”) filed a complaint with the Superior Court of San Francisco, seeking a refund of approximately $1,861,000 for amounts overpaid for the Commercial Rents Tax, contending that a portion of its total gross receipts from leases used to calculate the Commercial Rents Tax did not constitute revenue from the lease of “commercial space,” as defined in the San Francisco Tax and Business Regulations Code.[2] “Commercial space” under the Commercial Rents Tax is generally defined as any building or structure, or portion of a building or structure, that is not “residential real estate,” subject to a number of exceptions based on the use of the building or structure.

Taxpayer operates a portion of its business in the City as a full service data center. A portion of the revenue under Taxpayer’s business model is allocable to its “colocation” data center, which Taxpayer asserted does not meet the definition of “commercial space” under the Commercial Rents Tax. “Colocation” services generally consist of renting space in data center facilities for the purpose of providing power, cooling, physical security for the server, storage, and networking equipment of customers. The agreement for colocation services is generally referred to as a “license” rather than a “lease.”

Taxpayer’s argument was that, under California law, “[a] license as to real estate is an authority to do a particular thing upon the land of another without possessing an estate therein. The test to determine whether an agreement for the use of real estate is a license or a lease is whether the contract gives exclusive possession as against all the world, including the owner, in which case it is a lease, or whether it merely confers a privilege to occupy under the owner, in which case it is a license.”[3] Generally, a licensee under a colocation agreement is limited in the manner of use of the  property, the location of where to place its equipment, the weight of the equipment, and alteration to the area around its equipment. A licensee cannot prevent the licensor from accessing the property. Thus, Taxpayer’s complaint asserted, colocation revenue should have been excluded from the calculation of the Commercial Rents Tax.

Taxpayer’s claim for refund also asserted that it overpaid Commercial Rents Tax by the improper inclusion of other amounts in the calculation of its total gross receipts, such as amounts derived from the need for specific machinery to be placed in its centers to support specialized computers for certain customers. Taxpayer argued that such revenue is not for commercial rental space and should not be considered in the calculation of the Commercial Rents Tax.

Although the case is still pending in Superior Court, an ordinance authorizing settlement of Taxpayer’s lawsuit against the City was introduced in June of 2023. The ordinance passed its first reading at a meeting of the Board of Supervisors on October 3, 2023, and passed its final reading before the Board of Supervisors on October 17, 2023. The ordinance was approved by the Mayor’s Office on October 20, 2023.

For space generating revenue that does not fit neatly within the definition of “commercial space” under the Commercial Rents Tax, and for revenue from commercial occupancy agreements that are more like a license than a lease, taxpayers may consider pursuing the exclusion of such amounts from the calculation of the tax. The success of a challenge to the application of the Commercial Rents Tax will depend, in large part, on the lease agreement and any other agreements with respect to the use of the space.

 

 

 

[1] See City and County of San Francisco v. All Persons Interested in the Matter of Proposition C on the November 6, 2018 San Francisco Ballot, No. CGC-19-573230 (Cal. Sup. Ct. S.F. County Jul. 5, 2019); see also Howard Jarvis Taxpayers Association, Building Owners and Managers of California, California Business Properties Association, and California Business Roundtable v. City and County of San Francisco and All Persons Interested in the Matter of Proposition C of the June 5, 2018 San Francisco Ballot, No. CGC-18-568657, (Cal. Sup. Ct. S.F. County Jul. 5, 2019).

[2] Verified Complaint for Refund of Business Taxes, Digital Realty Trust, Inc. v. City and County of San Francisco, No. CGC-23-605912 (Cal. Super. Ct. S.F.).

[3] Id. (citing Shaw v. Caldwell, 16 Cal. App. 1, 115 P. 941 (Cal. Ct. App. 1911)).

The 2023 California Legislative Session, which closed on September 14, was dominated yet again by efforts to address the state’s continued housing crisis. For the last several years, we have written about many bills enacted with the goal of increasing housing production. Although these efforts have helped move the state toward its housing goals, the practical results—new units of housing built—have been slower to materialize than many have hoped.

This lesson has not been lost on pro-housing legislators, who broadly focused their efforts this session on removing barriers to achieving those results: targeting excessive CEQA review (AB 1633 and AB 1307), streamlining housing development and discretionary post-entitlement permitting (SB 423 and AB 1114), and enforcing a state-imposed streamlined process for general plan-compliant projects (AB 821).

This post focuses on the key housing-related bills that have already been signed by Governor Newsom, or are, at the time of this publication, awaiting the Governor’s signature. He has until October 14 to either sign or veto the bills remaining on his desk.

Targeted CEQA Reforms to Increase Housing Production

AB 1633 (Ting) [Holding Jurisdictions Accountable for Abusing the CEQA Review Process] – The premise of AB 1633 is simple: local jurisdictions must not use CEQA to delay zoning-compliant housing projects. The Housing Accountability Act (HAA) prevents local jurisdictions from disapproving or reducing the density of housing projects that comply with zoning and the Permit Streamlining Act provides strict timelines within which local jurisdictions must approve or deny projects. But neither law restricts a local jurisdiction from unreasonably delaying a project’s CEQA review.

AB 1633 intends to close this loophole. To do so, the law bolsters the HAA’s definition of “disapprove the housing development project” to include any instance in which a local government:

• fails to make a determination of whether the project is exempt from CEQA or commits an abuse of discretion; or
• fails to adopt a negative declaration or addendum, certify an environmental impact report, or approve another comparable environmental document for the project, if certain conditions are satisfied.

After an applicant notifies a local jurisdiction of a failure to take CEQA action, the jurisdiction has a 90-day period to make a CEQA determination, which can be extended in limited circumstances, but not indefinitely. And unlike other recent pro-housing bills giving developers the power to streamline CEQA (e.g., AB 2011 and SB 35), AB 1633 is not limited to projects with affordable units or special labor commitments.

Instead, the law would apply to infill projects with at least 15 dwelling units per acre (i.e., townhome or rowhouse projects, or denser). Project sites must meet SB 35’s extensive environmental criteria, which exclude sites on sensitive environmental areas, such as wetlands, flood zones, and hazardous waste sites, among others.

As with other violations of the Housing Accountability Act, a local jurisdiction can be liable for attorney’s fees and potentially penalties if it violates AB 1633. At the other end of the spectrum, the bill also makes it more difficult for project opponents to recover attorney’s fees when challenging housing projects, in most cases prohibiting the award of attorney’s fees if a local jurisdiction acted in good faith when approving a housing project. AB 1633 sunsets on January 1, 2031 unless extended.

AB 1307 (Wicks) [Providing More CEQA Certainty and Clearing Roadblocks to University Housing] – Earlier this year, the First District Court of Appeal in Make U.C. a Good Neighbor v. Regents of University of California held that the University of California must analyze “the potential noise impacts relating to loud student parties” as part of the CEQA analysis for the proposed student housing project at Berkeley’s People’s Park. Although noise is one of the original environmental impacts under CEQA, the requirement to analyze noise generated by residents of a housing development was a novel reading of the law. That decision is now pending before the California Supreme Court.

AB 1307 responds directly to this court ruling and effectively eliminates the “people as pollution” argument under CEQA by stating that noise generated by residential project occupants and their guests, “is not a significant effect on the environment.” In addition, AB 1307 helps clear the way for more than 1,200 units of U.C. housing at People’s Park and will streamline other housing development at California Community Colleges, California State Universities, and other U.C. campuses by eliminating the requirement that these institutions consider alternatives to the location of a residential or mixed-use housing project if: (1) the project is located on a site smaller than 5 acres that is substantially surrounded by qualified urban uses, and (2) the project has already been evaluated in the environmental impact report for the institution’s most recent long-range development plan.

On September 7, the Governor signed AB 1307 into law, which took immediate effect as an urgency statute to address California’s housing crisis.

Streamlining Development and Post-Entitlement Permitting

SB 423 (Wiener) [Updating the SB 35 Ministerial Process for Mixed-Use and Multifamily Projects] – This bill both extends and expands the reach of SB 35, a groundbreaking 2017 law that has primarily been used by affordable housing developers to obtain ministerial approvals on an expedited schedule, without CEQA review, for projects consistent with objective zoning and design standards. Projects can use State Density Bonus Law to obtain relief from objective standards and still take advantage of SB 35, creating a powerful combination.

SB 423 effectively reduces the amount of onsite affordable units needed to qualify for SB 35 in certain jurisdictions from 50% of project units to just 10%, opening the door for more mixed-income projects. To qualify, projects must pay prevailing wages, and must use skilled and trained workforces for projects exceeding 85’ in height.

The reduction to 10% affordable will happen at different times in different jurisdictions, but generally will occur in four phases: (1) January 1, 2024, for jurisdictions without a compliant Housing Element, until compliance is achieved; (2) mid-2024, for San Francisco specifically; (3) 2025 for Southern California jurisdictions with a compliant Housing Element that are not making adequate progress toward their market rate Regional Housing Needs Allocation (“RHNA”) goals; and (4) 2027 for other Bay Area jurisdictions not making adequate progress toward their market rate RHNA goals. Because the 6th Cycle RHNA numbers are so high, many, if not most, jurisdictions likely will not be making adequate progress during these timeframes. A brief table introducing these timelines is below:

Council of Governments	6th Cycle Housing Element Planning Period	Earliest SB 35 Recategorization (6th Cycle half-way point)
ABAG (Bay Area)	1/31/23–1/31/31	2027 (excluding San Francisco, which is mid-2024)
SCAG (Los Angeles)	10/15/21–10/15/29	2025
SANDAG (San Diego)	4/30/21–4/30/29	2025

 

HCD tracks Housing Element progress for all jurisdictions, which can be found here. As more jurisdictions change to 10% affordable for SB 35 eligibility, the permitting process for many housing projects could change radically. This is particularly true in jurisdictions such as San Francisco where the use of union labor on large projects is common.

AB 1114 (Haney) [Streamlining San Francisco’s Discretionary Post-Entitlement Permitting] – We previously wrote about AB 1114, which targets appeals of San Francisco post-entitlement building permits for housing projects. The bill builds on AB 2234, a bill that applied strict review timelines statewide for local jurisdiction response to and issuance of non-discretionary post-entitlement building permits. AB 1114 targets San Francisco’s unique discretionary post-entitlement building permit process, applying AB 2234’s review and issuance timelines and blocking appeals of building permits for projects that are, “at least two-thirds residential.”

Currently in San Francisco, only projects that have received a Conditional Use Authorization from the Planning Commission are protected from post-entitlement building permit appeals to the Board of Appeals. Expanding this protection to all San Francisco housing projects is particularly important in the context of expanded use of non-discretionary entitlement processes under SB 35/423. One inspiration for the bill was 2550 Irving Street, a 90-unit affordable housing project in the Sunset District, which was approved under SB 35 quickly, but was then subjected to multiple building permit appeals. Without a Conditional Use Authorization, the project had no protection from such appeals, but would be protected under AB 1114. San Francisco has historically had the longest processing times for post-entitlement permits. However, because such permits would now be non-discretionary, they will be subject to the strict review timelines in AB 2234.

State Mandates on Local Planning and Zoning

AB 821 (Grayson) [Enforcing a Streamlined Process for General Plan-Compliant Projects] –State law requires that the zoning ordinances of a city or county be consistent with its general plan. If a zoning ordinance is amended in a manner that makes it inconsistent with a local jurisdiction’s general plan, state law allows residents and property owners to take the jurisdiction to court to enforce compliance with the law. However, if the local jurisdiction amends its general plan in a manner that makes it inconsistent with the zoning ordinance, there is currently no built-in enforcement mechanism.

To address this issue, AB 821 requires that if a development application is submitted for certain projects consistent with the general plan, the local jurisdiction must either make the zoning ordinance consistent with the general plan within 180 days from the receipt of the development application, or if it does not do so, the local jurisdiction must process the development application based on the general plan and any zoning provisions that are not inconsistent. AB 821 also provides a legal remedy for residents and property owners to ensure compliance with these requirements. The key for this bill is that it allows general plan-compliant projects to move forward in a timely manner and removes the possibility of a protracted local rezoning process that can stymie housing production. It is noteworthy that AB 821 is not limited to housing projects.

The Coblentz Real Estate Team has extensive experience with the state’s latest housing laws, including SB 35, AB 2011, SB 6, the Housing Accountability Act, the Permit Streamlining Act, and Density Bonus Law, and can help to navigate the laws’ complexities and opportunities. Please contact us for additional information and any questions related to the impact of these new bills on land use and real estate development.