AB 2011 Offers New Streamlined Approvals for Qualified Infill Development

Nossaman eAlert

Effective July 1, 2023, a new chapter in the California Government Code provides for qualifying multifamily housing developments of five or more units to be a “by right” use and subject only to a streamlined ministerial review. Passed as the Affordable Housing and High Road Jobs Act of 2022 (AB 2011), these new provisions target urban infill development of affordable housing in commercial zones and mixed-income housing along commercial corridors.

Broadly speaking, eligible properties must be located within urban areas or urban clusters on parcels zoned for office, retail or parking as a principally permitted use. In addition, at least 75% of the perimeter of the site must adjoin parcels developed with urban use. However, the parcel may not be adjacent to a site where more than one-third of the square footage is dedicated to industrial use (i.e., utilities, manufacturing, transportation storage and maintenance facilities and warehouse uses). Mixed-income housing projects also are limited to sites not greater than 20 acres containing no less than 50 feet of frontage along a commercial corridor.

Affordability is the principal driver of this new law and each of the developments have their own requirements. For example, affordable housing developments within commercial zones must be exclusively for lower income households (except for any onsite managers’ units, which are excluded). Affordability deed restrictions must be recorded against the property for a term of at least 55 years for rental units and 45 years for owner-occupied units. Mixed-income housing developments along commercial corridors do allow for market-rate rentals and sales, provided the project meets designated affordable housing allocations. For rental housing, that means setting aside either 8% of the units for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For owner-occupied housing, that means setting aside either 30% of the units for moderate-income housing or 15% of the units for lower income households.

Eligible projects also must meet certain objective development standards. This includes not only objective zoning, subdivision and design review standards (i.e., “standards that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official before submittal”), but also enumerated requirements regarding project density, environmental remediation, location of housing on the property (i.e., not within 500 feet of a freeway or 3,200 fee of a facility that actively extracts or refines oil or natural gas), and in the case of mixed-income housing developments along commercial corridors, additional height and setback requirements.

The development of mixed-income housing along commercial corridors also requires the developer to notice and pay relocation assistance to eligible commercial tenants. Relocation assistance is based upon the total number of years the tenant has operated on the site and ranges from 6 months’ to 18 months’ rent and is due upon the expiration of the tenancy. It is not consideration paid to terminate existing leases.

In addition, eligible projects are subject to a prevailing wage and “skilled and trained” labor requirements. Projects containing 50 or more units also must participate in an apprenticeship program approved by the State of California Division of Apprenticeship and make health care expenditures as enumerated in AB 2011.

The benefit for qualifying projects is greater certainty for developers, both in terms of decision-making and timing. As a by right development subject only to ministerial review by the local land use agency, eligible projects are exempt from the California Environmental Quality Act (CEQA) which means no initial studies, environmental impact reports or CEQA litigation and the timing and expense associated with projects that are subject to CEQA. Similarly, the ministerial review process limits the local government’s review to objective planning standards, and if applicable, an objective design review, and sets timeframes in which projects must be approved or disapproved. Planning decisions must be rendered within 60 days for developments containing 150 or fewer units and 90 days for projects containing more than 150 units. Design review decisions must be completed within 90 days for developments containing 150 or fewer units and 180 days for developments containing more than 150 units. Planning decisions must be in writing and detail how the proposed development failed to meet the objective standards and a failure to respond within the stated period of time is deemed approval.

AB 2011 is another means by which the State is balancing multiple constituencies in an attempt to address the State’s housing needs. Alone, AB 2011 will not solve the problem, but for the right projects, it may be part of the solution

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