A Well-Informed Start to 2025: BBK’s Guidance for New Laws in California – Housing Part Three
New Housing Legislation Related to Local Housing Elements and Density Bonus Law
In part three of the Housing New Laws series from Best Best & Krieger LLP (BBK), attorneys provide synopses of important new housing legislation for 2025 governing local housing elements and State Density Bonus Law. Below are key takeaways and analyses of SB 7, AB 1866, AB 2023, AB 2667, AB 3116 and AB 2430.
Housing Element Law
Under current state law, the Department of Housing and Community Development (HCD) determines existing and projected housing needs for different regions in California. A process conducted by HCD and regional planning councils of governments (COGs) then determines regional housing needs allocations (RHNA) of local governments to be incorporated into each locality’s adopted housing element.
SB 7 prohibits cities from filing an objection to RHNA determinations in regions where HCD must distribute regional housing needs and has not delegated its responsibility to a COG. Additionally, in the past, there was an alternative process for determining RHNA, but SB 7 eliminates that process.
When developing the methodology for RHNA determinations, state law also requires participation from other non-governmental organizations, including input from members of protected classes. HCD then reviews the allocation methodology, makes findings, and reports those findings to the applicable COG within 60 days of notice. SB 7 expands the solicitation requirement to households with special housing needs, as specified in Government Code Section 65583 (e.g., elderly, persons with disabilities, farmworkers, etc.). Under SB 7, HCD may also review a COG’s methodology for distributing RHNA, and this bill halves the timeline for HCD to report its findings from 90 days to 45 days.
SB 7 additionally authorizes a draft allocation plan to be adopted by a COG through a special procedure involving a public hearing, if a local government does not file an appeal to the COG within 45 days of receipt of the draft allocation from the COG.
AB 1866 provides that a housing element or amendment is not considered substantially compliant with state housing element law unless either of the following applies:
- HCD has found that the adopted housing element or amendment is in substantial compliance with the state housing element law and HCD’s findings “have not been superseded by subsequent contrary findings” by HCD or a court; or
- A court has determined that the adopted housing element or amendment substantially complies with state housing element law and the court’s decision “has not been overturned or superseded by a subsequent court decision or by statute.”
AB 1886 also clarifies that — for timing purposes under the state’s Housing Accountability Act (HAA) and Builder’s Remedy — a housing element or amendment is considered to be in substantial compliance with state housing element law “only if” it was in substantial compliance when a preliminary application was submitted, or if a preliminary application was not submitted when a complete application was submitted.
Existing law requires a housing element to include an inventory of land suitable for residential development, and requires a city to rezone sites if the inventory does not identify adequate sites for groups of all household income levels. For the seventh cycle and future revisions of the housing element, AB 2023 requires a city to complete the rezoning within either:
- One year of the statutory deadline for the adoption of the housing element; or
- Three years and 90 days of that same deadline if the city satisfies certain requirements, like timely submitting a draft element or amendment to HCD for review and adopting a draft element/amendment that HCD finds to be in substantial compliance with the law.
When a city adopts a draft housing element or amendment despite an HCD finding of noncompliance, AB 2023 additionally requires the city to submit its findings to HCD explaining the city council’s reasons for determining that the draft housing element or amendment does substantially comply with state housing element law. Previously, it was unclear whether such findings were required to be submitted to HCD. AB 2023 further declares that the fact that the city makes and reports those findings to HCD does not excuse the city from taking required actions in response to HCD’s position that the draft housing element or amendment does not comply with the law.
Finally, AB 2023 adds a rebuttable presumption of invalidity in any legal action:
- Challenging an action or failure to act by a city when HCD has found that the city’s action or failure to act does not substantially comply with its adopted housing element or housing element law; and
- Challenging the validity of a housing element or amendment if HCD has found the element/amendment does not substantially comply with the law.
AB 2667 modifies state housing element law to require — for the seventh and all subsequent revisions to the housing element — that cities make the draft housing element sites inventory available to HCD and the public (by, among other things, posting it on the city’s website) at least 90 days before the housing element’s initial adoption and at least seven days before any subsequent adoption submittal if changes have occurred to the inventory of the site.
AB 2667 also requires HCD to develop a standardized reporting format for actions regarding affirmatively furthering fair housing, and cities will be required to use HCD’s format in reporting after the seventh housing element cycle and future revisions.
Lastly, AB 2667 modifies state housing element law by requiring cities’ housing elements to analyze acutely and extremely low-income households in their analyses of special housing needs.
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Density Bonus Law
Student Housing
State density bonus law has expanded in recent years to include qualifying incentives when a project restricts a percentage of student housing units as affordable. AB 3116 clarifies the definition of a “student housing development” as containing bedrooms that include two or more “bedspaces,” a shared or private bathroom, access to a shared or private living room and laundry facilities, and access to a shared or private kitchen. In other words, state law now reflects the reality of a student dorm. AB 3116 also expands how student housing developers may evidence eligibility to the local agency issuing the density bonus, with a system that ensures all units are occupied by students in higher education, including lower-income students.
Additionally, AB 3116 establishes new density bonus levels, incentives and concessions for student housing developments that are set as units for low-income students. The bill also clarifies that any affordability provision that prevents lower-income students from sharing a room with non-lower-income students is “void as against public policy.” AB 3116 also provides that a city cannot require that a developer provide parking spaces per student housing “bedspace” within a qualifying student housing unit.
Residential Care Facilities for the Elderly
AB 3116 also broadens how state density bonus law can incentivize the creation of affordable units within a qualifying “senior citizen housing development.” AB 3116 expands the definition of “senior citizen housing development” to include a “residential care facility for the elderly,” as defined under the Health and Safety Code.
AB 3116 folds residential care facilities for the elderly into a type of senior citizen housing development that can receive density bonus incentives for restricted, affordable units. AB 3116 also clarifies that a developer can still take advantage of qualifying incentives for shared housing units within a residential care facility for the elderly.
AB 2430 limits monitoring fees that cities can impose on certain density bonus projects. Specifically, AB 2430 prohibits cities from charging a monitoring fee on density bonus projects that restrict 100% of units to low- or moderate-income households and are subject to a regulatory agreement with the California Tax Credit Allocation Committee (CTCAC), the California Housing Finance Agency (CalHFA), or HCD.
To qualify, the applicant must provide the city with a fully executed Tax Credit Reservation Letter before obtaining a building permit, a copy of the recorded regulatory agreement, and the necessary compliance monitoring documentation required by the relevant state agencies. Effective January 1, 2025, any housing development that meets these criteria and is currently subject to a monitoring fee will no longer be required to pay it. AB 2430 contains exceptions to allow local monitoring fees if the project utilizes a local incentive program that requires deeper levels of affordability, the units are restricted to moderate-income households, the local funding requires different affordability levels than what is required by other public funding, or if funding requires monitoring activities that would not be monitored by state oversight.
Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.
Key Contacts
