Voters in San Francisco and Oakland approved[1] two measures with significant implications for residential property owners: San Francisco’s Proposition M, also known as the Empty Homes Tax, and Oakland’s Measure V, which expands Oakland’s Just Cause for Eviction Ordinance.

Proposition M – the Empty Homes Tax (San Francisco)

The Empty Homes Tax provides that owners of San Francisco properties with at least three residential units will be taxed on any residential unit that is vacant for more than 182 days in a tax year, whether consecutive or not. The tax ranges per unit for each year of vacancy, depending on the unit’s size, from $2,500-$5,000 for the first year, to $5,000-$10,000 for the second year, and $10,000-$20,000 for the third year and beyond.  These amounts are subject to adjustment for inflation. The assessed funds will be deposited into a Housing Activation Fund to support housing for elderly and low-income residents and rehabilitate multi-unit buildings for conversion to affordable housing.

Exceptions to the tax include single-family homes, two-unit buildings, primary residences, units intended for travelers or other transient occupants, and units owned by nonprofit organizations or government entities.  In addition, the tax does not apply during certain periods of time following: (i) a building permit application for the repair, rehabilitation, or construction of a qualifying residential unit; (ii) City issuance of a building permit for repair, rehabilitation, or construction of a qualifying residential unit; (iii) a natural disaster that severely damages a qualifying residential unit; (iv) City issuance of a certificate of final completion and occupancy for a new qualifying residential unit; and (v) the death or medical absence of an owner-occupant of a qualifying residential unit.

The Empty Homes Tax is effective as of January 1, 2024 and will expire December 31, 2053. Owners of qualifying residential units (e.g., a building with 3 or more residential units, not owned by a nonprofit or government entity) must file an annual return in the form and manner to be prescribed by the Tax Collector.

The Empty Homes Tax is the third such tax in the United States, following Washington, D.C., which reportedly generated $9.4 million from a similar tax in calendar year 2016, and Oakland, which reported gross revenues from its empty homes tax in the amount of $7.3 million in calendar year 2020. Vancouver, British Columbia, has a similar law that generated the equivalent of $21.3 million US dollars in calendar year 2019; and in the first year after the tax was adopted, Vancouver had a 21.2% reduction in vacant units.[2]

The Empty Homes Tax has similarities to San Francisco’s previously enacted Commercial Vacancy Tax, which became effective on January 1, 2022.  The Commercial Vacancy Tax applies to ground floor, street-facing commercial space in certain commercial districts that is vacant for more than 182 days in a calendar year. The Commercial Vacancy Tax is calculated at an initial rate of $250 per linear foot of storefront facing the street, increasing to $1,000 per linear foot for the third or greater year that a space is vacant. Filing and payment of the Commercial Vacancy Tax will first become due on February 28, 2023.

Measure V – Expanding the Just Cause for Eviction Ordinance (Oakland)

Oakland’s Measure V passed with 65% of the vote, expanding Oakland’s eviction protections in several ways.

The pre-existing Just Cause for Eviction Ordinance (Oakland Municipal Code Chapter 8.22, Article II) (“Just Cause Ordinance”) provided eleven just causes for an eviction of a residential tenant, including, generally: failing to pay rent; failing to cure a breach of the lease; refusing to sign a new lease after lease expiration; damaging the premises and failing to repair the same; disturbing other tenants; using the premises for an illegal use; refusing the landlord’s reasonable entry; a move-in by the owner or its qualifying relative; removal of the unit from the rental market; and the owner’s performance of substantial upgrades. A local COVID-19 eviction moratorium that is still in effect prevents most evictions in Oakland, even those permitted under the Just Cause Ordinance. When the Oakland City Council lifts the local emergency, the moratorium will end and Oakland will revert to the Just Cause Ordinance, as amended by Measure V.

Previously, the Just Cause Ordinance only applied to residential rental units (“Rental Units”) built before 1996. Measure V extends the eviction protections to Rental Units of any age, except during the first 10 years after the issuance of a certificate of occupancy for a newly constructed Rental Unit or building containing Rental Units. Measure V also extends the Just Cause Ordinance to tenants of Vehicular Residential Facilities, which includes qualifying motor homes, travel trailers, truck campers, camping trailers, and park trailers.

Measure V prohibits “no-fault” evictions of children enrolled in school and educators during the school year. No-fault evictions are those unrelated to a tenant’s actions, such as an owner move-in or removal of the Rental Unit from the rental market. Evictions due to the fault of the tenant, such as failure to pay rent, may still be pursued at any time during the year.  Measure V also removes from the list of “just causes” for eviction a tenant’s refusal to sign a new lease when its lease expires, and clarifies that an eviction based on illegal use does not include residing in a Rental Unit that violates building or planning codes.

Finally, Measure V clarifies that if an owner (or qualifying relative) fails to comply with move-in rules following an owner move-in eviction, the landlord must allow the tenant to move back into the Rental Unit at the same rental rate the tenant was paying when they vacated, and the landlord must pay the tenant all of its expenses incurred to return to the Rental Unit.

We will continue to provide further updates when they are available.

Contact Real Estate attorney Caitlin Connell at cconnell@coblentzlaw.com for additional information.

 

 

[1] See San Francisco Chronicle article linked here and Alameda County Election Results website linked here.

[2] See City and County of San Francisco Board of Supervisors Policy Analysis Report dated January 31, 2022, available here.

The 2021-2022 California Legislative Session closed on August 31 and was dominated by further efforts to address the state’s continued housing crisis. The flurry of major legislation passed by the Legislature and now on the Governor’s desk for signature focuses on expanding the types of development sites eligible for housing production and streamlining approval of that housing (AB 2011, SB 6, AB 2234), expanding the Density Bonus Law and providing enhanced density incentives (AB 682, AB 1551, AB 2334), and restricting minimum parking requirements (AB 2097). Taken together, these are potentially powerful tools to generate new housing opportunities as cities across California face significant housing production goals and work towards meeting state law deadlines for the ongoing Housing Element updates in the coming months.

This post focuses on the key housing-related bills that are, at the time of this publication, awaiting the Governor’s signature. The Governor has until September 30 to either sign or veto the bills. We will follow up with more in-depth coverage on the legislation ultimately signed by the Governor and insights on the resulting potential impacts on the housing landscape.

Repurposing Commercially Zoned Land for New Residential Development

The two blockbuster bills of 2022 – AB 2011 and SB 6 – both have the potential to result in major changes to the housing development pipeline by allowing new qualifying residential development on eligible commercially zoned sites. Both bills are the result of significant and hard-won efforts among legislators, development and pro-housing advocates, and organized labor. Each bill includes very specific eligibility requirements, applicable development standards, and density calculation metrics. The details are beyond the scope of this analysis, but the highlights are described briefly below. If signed by the Governor, both laws would take effect on July 1, 2023 – not in January 2023, as is the case for most new laws – and would remain in effect for 10 years, sunsetting in 2033 unless extended.

AB 2011 (Wicks) [Streamlined Approval Pathway for Qualifying Affordable or Mixed-Income Developments] – AB 2011 provides a streamlined, ministerial review process that is CEQA-exempt, comparable to the existing SB 35 law (see our previous posts on SB 35 here and here), for qualifying multifamily housing development projects on commercially zoned sites (where office, retail, or parking are principally permitted uses) that include requisite affordable housing units and meet certain wage and labor requirements, including paying prevailing wage. The goal of AB 2011 is to unlock significant affordable and mixed-income housing development potential in existing commercial zones.

The bill creates two primary pathways to qualify for its protections: (i) 100% affordable projects located on a commercially zoned site, or (ii) mixed-income projects located along a “commercial corridor,” meaning a street with a right of way width between 70 and 150 feet. The affordability requirements applicable to mixed-income projects are:

• Rental: (i) 8% very low income and 5% extremely low income, or (ii) 15% low income; and
• For-sale: (i) 30% moderate income, or (ii) 15% low income.

AB 2011 also requires development proponents to meet certain wage and labor standards, including that construction workers be paid at least the general prevailing rate of wages (but not requiring a “skilled and trained workforce” as required under SB 6). For developments of 50 or more housing units, construction contractors must also participate in an apprenticeship program or request dispatch of apprentices from a state-approved apprenticeship program, and make specified health care expenditures for construction craft employees.

AB 2011 imposes a detailed list of specific site exclusions, similar to the existing SB 35 ministerial streamlining site requirements, which must be reviewed on a site-specific basis to determine whether a project would potentially qualify for the bill’s protections.

SB 6 (Caballero) [Residential Use of Commercially Zoned Property Without Requiring Rezoning] – Similar to AB 2011, SB 6 allows qualifying housing or mixed-use development projects as a permitted use on commercially zoned (office, retail, or parking) parcels of 20 acres or less without requiring rezoning or other legislative approvals. However, SB 6 differs from AB 2011 in some important ways, including that it:

1. Does not provide a new streamlined ministerial or CEQA-exempt approval pathway for these housing or mixed-use projects, which therefore may leave some discretion to local jurisdictions, although existing SB 35 streamlining can be used for SB 6 projects, so streamlining could be available, depending on the jurisdiction;
2. Mandates that applicants not only commit to prevailing wages but also to a more robust and cost-intensive “skilled and trained workforce” requirement for construction work (unless fewer than two bids are received, in which case this heightened requirement does not apply during the rebid);
3. Does not mandate housing affordability requirements, although local inclusionary requirements may still apply; and
4. Contains fewer site-specific exclusions than AB 2011.

In sum and as a comparison, AB 2011 provides a streamlined approval process for affordable and mixed-income projects and does not require the use of a skilled and trained workforce, but the location restrictions, particularly the “commercial corridor” requirement for mixed-income projects, make its use more limited, whereas SB 6 more broadly allows residential or mixed-uses on commercially zoned parcels and does not have an affordability requirement, but it does not provide any streamlining and imposes more rigorous labor standards. Both bills would provide eligible projects with protection under the Housing Accountability Act, which limits a local agency’s ability to disapprove or condition the project to reduce density. Determining which applies to a site and which option is preferable will require a site-specific analysis.

Coblentz attorneys have extensive experience with the state’s latest housing laws, including SB 35, the Housing Accountability Act, and Density Bonus Law, and can help to navigate these newest complexities and opportunities.

Restricting Mandatory Minimum Parking Requirements Near Public Transit

AB 2097 (Friedman) – AB 2097 would generally prohibit a local agency from imposing minimum parking requirements on any residential, commercial, or other development project located within half a mile of a “major transit stop,” meaning existing or planned rail/bus rapid transit stations, a ferry terminal, or two or more bus lines with 15-minute frequencies during commute hours. The bill provides exceptions for local agencies to impose minimum parking standards for developments within half a mile of public transit if the agency makes specific written findings establishing that removing minimum parking standards would have a “substantially negative impact” on the jurisdiction’s ability to meet its state mandated affordable housing obligations; on special housing needs for the elderly or those with disabilities; or on existing residential or commercial parking within half a mile of a housing development project. However, local agencies would not be able to utilize that carve out for residential projects that contain less than 20 housing units or dedicate 20% of units to very low-, low-, or moderate-income households, students, the elderly, or persons with disabilities. AB 2097 would not make any changes to requirements for parking spaces for electric vehicle charging or persons with disabilities.

AB 2097 is a two-year bill that faced opposition last year from some affordable housing advocates who argued that eliminating minimum parking requirements could weaken developers’ incentive to utilize the state Density Bonus Law, which requires a minimum percentage of affordable housing units in exchange for providing relief from development standards, including parking requirements. The Governor is anticipated to hear similar arguments again this year as he considers this bill.

Key Changes to Density Bonus Law

AB 682 (Bloom) [New Provisions for Shared Housing Buildings and Revised Base Density Rules] – AB 682 expands the existing state Density Bonus Law program to apply to shared housing projects that provide qualifying percentages of affordable units. Shared housing projects are defined as residential or mixed-use structures with five or more shared units designed for permanent residential use of more than 30 days (i.e., dwellings that include a bathroom and kitchenette features) that share one or more common kitchens and dining areas. These qualifying shared housing projects may also include non-shared residential unit types or commercial uses subject to certain limitations and requirements.

AB 682 also makes several important changes to the definitions of “maximum allowable residential density” and “base density” that would impact how base density and resulting bonus density must be calculated per project. The bill states that density shall be calculated based on dwelling units per acre (DU/A), but if the applicable local land use controls do not provide this type of DU/A standard, then AB 682 would require that base density instead be calculated by estimating the realistic development capacity of the site based on applicable objective standards. Also, in the event that the base density allowed under the applicable zoning is inconsistent with the density allowed under an applicable specific plan or general plan, AB 682 would require that the greater of the density applies – under current law, the general plan density prevails in the event of conflict. Overall, these proposed changes may prove helpful in reducing ambiguity for calculating base and bonus density for these projects and ensuring that Density Bonus Law is interpreted in favor of producing the maximum number of housing units.

AB 1551 (Santiago) [Reinstating Density Bonuses for Commercial Projects] – AB 1551 reinstates the expired density bonus program for commercial/non-residential developments (previously enacted under AB 1934 in 2016). This would allow a commercial developer to obtain one of six commercial density bonuses – for example, 20% increases in floor area ratio, height or development intensity – by partnering with a housing developer to provide qualifying affordable housing (at least 30% total units available to low-income tenants, or 15% affordable to very low-income tenants) through either directly building affordable housing units, donating land for affordable housing units, or providing direct funding to an affordable housing developer for development of an affordable housing project. This commercial density bonus program would be extended through January 1, 2028.

Data provided to HCD indicates that this commercial density bonus program was not widely utilized when previously in effect from 2016 to 2022, and it is unclear whether developers will now take advantage of the same provisions, as extended through 2028.         

AB 2334 (Wicks) [Enhanced Density Bonuses for Qualifying Affordable Projects in Low VMT Areas] – AB 2334 expands the Density Bonus Law to allow 100% affordable housing projects to receive unlimited density and a height increase of 33 feet or three stories if located within qualifying “very low vehicle travel areas” in 17 qualifying counties (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, Sacramento, and Santa Barbara). “Very low vehicle travel area” is defined as an “urbanized area . . . where the existing residential development generates vehicle miles traveled [VMT] per capita that is below 85[%] of either regional [VMT] per capita or city [VMT] per capita,” and additional analysis will be required at the local level to determine what specific areas within each county qualify for this enhanced density bonus.

This bill builds on the density bonus framework adopted under AB 1763 in 2019, which allowed for an enhanced density bonus for qualifying housing projects but only within a half mile of a major transit stop. AB 2334 aims to increase the number of eligible project sites to include all qualifying sites within very low vehicle travel areas that otherwise might lack the level of public transportation service required under AB 1763.

Streamlining Post-Entitlement Permitting Issuance

AB 2234 (Rivas) [New Deadlines and Process for Review and Approval of Post-Entitlement Permits] – AB 2234 establishes time limits and other procedural streamlining changes for review and approval of post-entitlement permits related to housing development projects. These time limits are similar to those required for initial entitlements and approvals under the Permit Streamlining Act but do not apply to post-entitlement permits. The categories of post-entitlement permits covered by this new law include permits for demolition, most excavation and grading permits, building permits, and permits for most offsite improvements. In brief, AB 2234 requires that a local agency determine whether an application for a post-entitlement phase permit is complete and provide written notice of its determination within 15 business days after application submission. If the local agency fails to meet initial deadlines, the permit application may be deemed complete. Once the application is complete, the local agency then has a relatively short window to approve or deny the application, 30 business days for projects with 25 units or fewer and 60 business days for projects with 26 units or more. Local agencies may extend these timelines by making written findings that the post-entitlement phase permit might have a specific, adverse impact, as defined, on public health or safety and that additional time is necessary to process the application. Notably, a violation of AB 2234 requirements constitutes a violation of the Housing Accountability Act, which establishes penalties – including potential monetary fines – for violations by cities and counties. Other limitations and carve outs apply, so close review of this bill is required to determine specific applicability.

The Coblentz Real Estate team continues to track changes in state and local legislation impacting housing production. Please contact us for additional information and any questions related to the impact of these new bills on land use and real estate development.

 

 

 

In early June, we reported on the key land use-related ballot propositions San Francisco voters faced during the June 7, 2022 special election. Now that the dust has settled after the election, voters came very close to approving but ultimately rejected the new Muni bond, but did approve changes at the Building Inspection Commission and further restrictions on behested payments.

Summary of San Francisco Results:

Proposition A (Muni Reliability and Street Safety Bond)

Proposition A would have allowed the City and County to issue $400,000,000 in general obligation bonds to increase Muni’s reliability, safety, and frequency, including upgrades to its transportation infrastructure and equipment. The measure came very close to passing, requiring two-thirds (66.6 percent) affirmative votes but receiving only 65.1 percent. REJECTED.

This was a surprising result for many, as San Francisco voters are typically friendly to infrastructure bond spending. However, a two-thirds requirement is a difficult bar to pass even under the best of circumstances, and the results may have been influenced by the off-year election with lower voter turnout. As expected, according to the San Francisco Chronicle, Proposition A’s support centered in the typically transit-friendly downtown, central, and eastern neighborhoods, but did not fare as well in the somewhat more car-dependent southern and western neighborhoods of the City.

San Francisco Municipal Transportation Agency will attempt to find alternative sources for these funds, which may prove difficult for an agency still reeling from the financial effects of depressed ridership during the pandemic.

Proposition B (Building Inspection Commission)

Proposition B authorizes the City to amend the Charter to change the appointment process and qualifications for Building Inspection Commission (BIC) members and the appointment process for the Director of the Department of Building Inspection (DBI). This measure required a simple majority, and received nearly 62 percent affirmative votes. PASSED.

With this proposition, the Mayor will now have authority to appoint and remove the Director of DBI, after receiving a list of three qualified candidates from the BIC; previously, the BIC had sole authority to appoint and remove the Director.

Proposition E (Behested Payments)

Proposition E directs the City to amend its behested payments law to prevent members of the Board of Supervisors from seeking behested payments–donations made at the request of a City official for legislative, governmental, or charitable purposes–from certain contractors who received Board approvals, and to allow further changes to this law only if the City Ethics Commission and two-thirds of the Board of Supervisors approve those amendments. This measure also required a simple majority, but received almost 70 percent affirmative votes. This new ordinance was effective on or around July 8, 2022, 10 days after the official vote count was declared by the Board of Supervisors on June 28, 2022. PASSED.

In response to Proposition E, and with concern that it may constrain certain philanthropic activities in the City, Mayor Breed has proposed a ballot measure for the November ballot to modify some of Proposition E’s provisions. Similar legislation modifying Proposition E is pending at the Board of Supervisors and, if adopted, could preempt the need for the ballot measure. Stay tuned.

San Francisco voters will again confront a formidable ballot during the special election on June 7, 2022, with an array of ballot propositions to consider. Key land use-related measures are as follows:

Proposition A (Muni Reliability and Street Safety Bond): Proposition A would provide up to $400,000,000 in general obligation bonds that would be used to repair, construct, and improve Muni bus yards, facilities, transportation infrastructure and equipment, and construct and redesign streets and sidewalks. The measure proposes to raise these funds through an estimated average tax of 1 cent per $100 of assessed property value. Landlords can pass through to tenants in rent controlled units 50 percent of this real property tax increase. The Citizen’s General Obligation Bond Oversight Committee would be required to conduct an annual review of the bond expenditures, and provide an annual report to the Mayor and the Board of Supervisors.

Measure A was proposed by the Mayor and approved by an 11-0 vote of the Board of Supervisors. Proponents of Proposition A, including the Board of Supervisors, SPUR, the San Francisco Chronicle Editorial Board, State Senator Scott Wiener, and the San Francisco Chamber of Commerce, argue that the measure is necessary to save Muni and to maintain the City’s strong public transit system, particularly in light of the significant impacts to ridership during the pandemic, and to invest in improved street safety. Opponents, including Larry Marso, the YES on Recall Chesa Boudin Committee, and the San Francisco Taxpayers Association, argue that work from home is here to stay, that support of the City’s transit system is unworthy of this level of debt burden, and that Muni has a questionable record of completing capital projects on time and on budget. Proposition A requires a two-thirds vote to pass.

Proposition B (Building Inspection Commission): Proposition B would amend the Charter to change the appointment process and qualifications for Building Inspection Commission (BIC) members, and would grant the Mayor appointment authority over the Director of the Department of Building Inspection (DBI). The BIC has sole authority to appoint and remove the DBI Director. The BIC has seven members, four appointed by the Mayor and three appointed by the Board President. By Charter, the Mayor’s appointees must include a structural engineer, a licensed architect, a residential builder, and a representative of a nonprofit housing developer, and the Board President’s nominees must include a residential tenant, a residential landlord, and a member of the public.

Proposition B would allow the BIC to forward three candidates for Director to the Mayor, who would have the authority to appoint and effectively remove the Director. The Mayoral BIC appointees would include two that are either structural engineers, architects, or residential builders, and two without required qualifications. The Board appointees would include one that is either a residential tenant or current or former employee of a nonprofit housing organization, and two without required qualifications. All Mayoral BIC appointments would require confirmation by the Board of Supervisors. The Charter amendment would also require that all appointments emphasize the inclusion of members concerned with tenant and habitability issues.

Proposition B was placed on the ballot by an 11-0 vote of the Board of Supervisors. Proponents of Proposition B, including the Board of Supervisors, SPUR, the San Francisco Chronicle Editorial Board, the San Francisco Labor Council, and a former Building Inspection Commissioner, argue that the measure is an appropriate and necessary response to a series of high profile scandals, including some that involved DBI staff and BIC members. They further state that the amendments would bring more rigor and transparency to the appointment process and would reduce the potential for special interest groups to control the BIC. There are no official opponents of the measure although some proponents state that the measure may not do enough to address the challenges faced by the BIC and DBI. This measure requires a simple majority to pass.

Proposition E (Behested Payments): Proposition E would expand the prohibition on the solicitation of behested payments to include certain City contractors seeking Board of Supervisors approval. Behested payments are donations to individuals or organizations made at the request of a City official for legislative, governmental, or charitable purposes. In 2021, the Board of Supervisors approved a law prohibiting elected officials, department heads, commissioners, and some City employees from requesting behested payments. Now Proposition E, based on a 50-page report on public integrity released by the City Controller’s office, would also prevent the Board of Supervisors from soliciting these types of payments.

Proposition E was placed on the ballot through a proposed ordinance signed by five Supervisors. Proponents, including certain members of the Board of Supervisors, the San Francisco Chronicle Editorial Board, the San Francisco Labor Council, and a group of former City Ethics Commissioners, allege that behested payments are a form of pay-to-play politics, indirectly enriching public officials through their preferred organizations or funds. Opponents of the proposition, including other members of the Board of Supervisors and State Senator Scott Wiener, maintain that the measure would prevent the Board of Supervisors from helping with nonprofit fundraising on issues of vital City importance, including homelessness, housing, equity, public safety, and environmental justice, where potential donors are also City contractors. SPUR also opposes the proposition because it believes that the changes could be made legislatively and that the ballot measure makes future changes unreasonably difficult. This measure requires a simple majority to pass.

On March 14, 2022, a new eviction ordinance took effect, amending the San Francisco Administrative Code to require that landlords provide residential tenants a 10-day written warning and opportunity to cure prior to initiating “just cause” eviction proceedings. “Just causes” for eviction include failure to pay rent, a material lease violation, severe nuisance, illegal use of the premises, and refusing certain landlord access to the premises.

Just over a week later, the San Francisco Apartment Association and Small Property Owners of San Francisco Institute filed a lawsuit challenging the validity of the ordinance. The San Francisco Superior Court ordered a temporary stay on the 10-day warning notice requirement pending resolution of the lawsuit. A hearing is set for May 17, 2022.

If the ordinance is upheld, the 10-day notice must describe the alleged violation and warn that failure to cure within ten days may result in initiation of eviction proceedings. The amendment to Section 37.9 of the San Francisco Administrative Code states that the Rent Board will prepare a notice form for landlords to use.

There would be several exceptions to the 10-day notice requirement: first, any longer notice and cure period agreed to in a lease agreement or otherwise applicable would supersede the ten day notice requirement; second, the ten day notice would not apply where the landlord is seeking eviction based on an imminent risk of physical harm to persons or property; and third, the ten day notice would not apply to evictions based on non-payment of rent or other amounts that came due between March 1, 2020 and March 31, 2022, as those proceedings are governed by the State’s COVID-19 Tenant Relief Act (SB-91) and generally require 15 days’ notice.

According to the San Francisco Chronicle, the local ordinance is the first in California to impose such a warning period and opportunity to resolve a dispute prior to formal eviction proceedings.  The legislation’s stated purpose is to eliminate confusion about how long a tenant’s misconduct must continue before it rises to the level of just cause to evict, and to provide a reasonable timeframe for a tenant to correct a violation, thereby reducing undue hardship suffered by tenants who face sudden evictions and promote economy in the use of judicial resources.

We will continue to provide further updates when they are available.

Contact Real Estate attorney Caitlin Connell at cconnell@coblentzlaw.com for additional information.

The Association of Bay Area Governments (ABAG) is finalizing its Regional Housing Needs Allocation Plan (RHNA Plan) for the sixth housing element cycle (2023-2031), which allocates a total of over 440,000 housing units across all Bay Area cities and counties, more than double the allocation from the prior 2015-2023 cycle. Notably, 27 Bay Area cities and counties have appealed to ABAG to reduce their draft RHNA allocations. ABAG has begun holding hearings for these appeals and will finalize RHNA allocations for each city and county in December. For housing developers, a jurisdiction’s high RHNA allocation may create more opportunities for project streamlining under SB 35, if that jurisdiction is unable to meet its RHNA obligations.

An Overview of the RHNA Process

Generally, the RHNA process is a coordinated effort between state, regional, and local governments to ensure that local planning efforts collectively address state-wide housing needs, in compliance with housing element law (Government Code section 65584, et seq.). First, the California Department of Housing and Community Development (HCD) consults with each regional council of governments or “COG” (ABAG, for the nine Bay Area counties) to determine each COG’s Regional Housing Needs Determination. This determination sets forth the total amount of housing that must be planned across the entire region to address four major affordability levels: very-low, low, moderate, and above-moderate income. Then, the COG allocates this total number of units among each of its constituent cities and counties through its RHNA Plan, which each city or county may appeal. Once the RHNA Plan is finalized, each city or county must actively plan to accommodate its RHNA allocation over the next eight years. Each jurisdiction is required to update its general plan housing element to identify an inventory of land suitable for residential development and, as a result, may need to amend its zoning ordinance to allow for higher-density housing development on an increased number of parcels. Each city and county must also annually report progress towards its RHNA allocation to HCD.

Implications of the Pending RHNA Plan

Though the RHNA process does not obligate a jurisdiction to construct actual units, falling short of the RHNA allocation has become increasingly tied to reductions in local control over land use decisions. For example, SB 35 streamlining, which limits a local government’s authority to deny a housing project that meets affordability and other requirements, only applies to jurisdictions that have failed to meet their RHNA allocations for lower income housing (households earning 80 percent or less of area median income) or above-moderate income housing (households earning over 120% of area median income). To qualify for SB 35 streamlining, a project in a jurisdiction that has failed to meet its lower income RHNA allocation must provide 50% of the project’s units for lower-income households. If a jurisdiction has failed to meet its RHNA allocations at the above-moderate income level, a project only needs to provide 10% of its units for lower-income households; in the nine-county Bay Area, a project could alternatively provide 20% of its units for moderate income households (those earning between 80 and 120% of area median income). Currently, most of the jurisdictions in the highest-cost regions of California are subject to the 50% affordability requirement, which has limited use of SB 35. The increased RHNA allocation across all income levels may cause many more projects, including those in the highest-cost regions, to become eligible for SB 35 at the lower 10% or 20% affordability level. Additionally, a city or county that fails to adequately plan for its RHNA allocations or otherwise violates housing element law may be subject to an enforcement action by the Attorney General’s Office, which, as clarified under Assembly Bill 215, has the authority to pursue enforcement actions against non-compliant jurisdictions. Conversely, cities or counties with compliant housing elements receive preferential consideration for certain state-administered incentive programs.

ABAG RHNA Allocations and the Appeals Process

In 2020, HCD issued a Regional Housing Needs Determination that 441,176 total housing units would be needed across the nine Bay Area counties (see table below). This updated determination is a substantial increase from the 187,990 total housing units designated for the Bay Area during the prior RHNA cycle (2015-2023) and tracks with HCD’s state-wide efforts to increase housing production in major metropolitan areas. In May 2021, ABAG released its Draft Regional Housing Needs Allocation Plan (2023-2031) to establish a methodology and apportion this total across all Bay Area local governments.

From ABAG’s Draft RHNA Plan

Local governments were allowed to appeal their housing allocations set forth in the Draft RHNA Plan until July 9, 2021, and the following 27 Bay Area governments have submitted appeals:

• Cities and Towns: Alameda, Belvedere, Clayton, Corte Madera, Danville, Dublin, Fairfax, Lafayette, Larkspur, Los Altos, Los Altos Hills, Mill Valley, Monte Sereno, Palo Alto, Pleasant Hill, Pleasanton, Ross, San Ramon, Saratoga, Sausalito, San Anselmo, Tiburon, and Windsor; and
• Counties: Contra Costa County, Marin County, Santa Clara County, and Sonoma County [two appeals].

ABAG accepted written comments to these appeals from HCD and members of the public through August 30, 2021, and has begun conducting public hearings via Zoom to consider the appeals (starting September 24, and continuing through October 29). Following the hearings, ABAG will issue a final determination on each appeal, and if an appeal is successful, ABAG will redistribute RHNA allocations as appropriate. ABAG has already denied several of these appeals. In December, the ABAG Executive Board will conduct a public hearing to adopt the Final 2023-2031 RHNA Plan. Each local government must complete its housing element updates in accordance with these final allocations and submit its housing element to HCD by January 2023.

We will be monitoring the outcomes of the appeals process and will provide an update when ABAG adopts its Final 2023-2031 RHNA Plan. Please contact Dan Gershwin at dgershwin@coblentzlaw.com for additional information.

The San Francisco Board of Supervisors continues to pursue options for COVID-19 tenant protections, in anticipation of the September 30, 2021 expiration of State protections of residential tenants from eviction for non-payment of rent due to COVID-19.

On September 28, the Board of Supervisors unanimously passed on second reading amendments to the City’s COVID-19 residential eviction prohibition in the Administrative Code. A prior version of this legislation attempted to provide residential eviction protections for non-payment of rent due to COVID-19 from July 1, 2021 through December 31, 2021. In June, however, the State passed Assembly Bill 832, which provides such protections only until September 30, 2021, and precludes localities from providing protections that extend past this date. In response, the new legislation provides that any of its non-payment of rent eviction protections for the October to December 2021 time period “shall not be operative so long as [State law] continues to prohibit local governments from enacting or amending local ordinances that apply to rental payments that came due” between October and December, and urges the State to modify Assembly Bill 832 to allow San Francisco to provide such protections.

In addition to the provisions pertaining to non-payment of rent evictions, the Mayor and the Board have provided additional protections in the Administrative Code, through executive actions and legislation, against “no-fault” evictions, such as evictions for owner move-ins or capital improvements. These COVID-19 protections, which were set to expire on September 30, 2021, generally prohibit evictions “unless necessary due to violence, threats of violence, or health and safety issues.” Notably, these protections do not apply to evictions for non-payment of rent, which are covered by the State and local laws discussed above. On September 28, the Board unanimously approved an emergency ordinance to temporarily extend for 60 days the City’s COVID-19 no-fault eviction protections, making findings that an emergency exists justifying prevention of a “wave of evictions on October 1,” and that “it is in the public interest to prevent tenant displacement in San Francisco due to COVID-19 to the maximum extent permitted by law.”

We will continue to provide further updates when they are available.

Contact Real Estate attorneys Dan Gershwin at dgershwin@coblentzlaw.com and Caitlin Connell at cconnell@coblentzlaw.com for additional information.