Newsom Signs Slate of Bills Aimed at Increasing Affordable Housing

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Last month, California Gov. Gavin Newsom signed 15 bills designed to address the state’s availability of affordable housing. The measures include incentives to build near public transit and increasing density bonuses for developers.

California has long struggled to deal with homelessness and housing affordability, as increasing rent and home values squeeze out working families and make housing difficult to attain. The pandemic has increased urgency around these issues, even as Governor Newsom expanded eviction moratoriums through the end of January. A housing crisis is expected throughout the US when the moratoriums are eventually lifted and renters are faced with balloon payments of accumulated rent.

“While the pandemic has dominated the news, millions of California families continue to struggle to afford housing,” Governor Newsom recently commented in a statement. “This is a crisis that never went away and this housing package will directly lead to more affordable opportunities for renters and homeowners.”

As the California population exploded over the last 20 years, construction failed to keep pace with the growth, forcing housing prices higher. Housing studies indicate that many California cities have failed to create the number of affordable units needed by working families. According to state agencies, an estimated 3.5 million new units would be needed to meet current needs.

On the other side, many developers shift the lack of affordable housing to the state, citing a long a costly approval process and bureaucratic red-tape that hampers development. Developers also point to local homeowner resistance to affordable housing as the cause of additional pressure to steer away from development.

Three California cities – Los Angeles, San Diego, and San Jose – rank in the top five nation-wide for the size of homeless populations, per the U.S. Department of Housing and Urban Development. Lagging development and astronomical costs are the primary drivers of the homeless population, as service workers and lower-paid employees struggle to afford the cost of living.

The new measures signed by Governor Newsom give preference to tenants to buy homes facing foreclosure. For instance, Senate Bill 1079 gives tenants, families, local governments and housing-related nonprofit organizations first priority to buy foreclosed homes ahead of large corporations.

Other measures signed by Newsom makes it easier for homeowners to build accessory dwelling units (“granny pods”) and encourages development of housing for school district employees.

Another initiative, Assembly Bill 2345, increases the statewide “density bonus” from 35% to 50%. This measure encourages development of affordable apartments by allowing developers to exceed local standards when planning to build units that will be offered at below-market rents. The measure also empowers local governments to grant waivers for affordable multi-unit projects located within a half-mile of public transit or projects that will be 100% affordable per median household income standards.

“This law will encourage the construction of more affordable housing units using a data-proven mix of incentives and density bonuses,” according to Lorena Gonzalez, the San Diego Assemblywoman who authored the bill.

Also signed by Governor Newsom was Senate Bill 288, sponsored by Sen. Scott Wiener of San Francisco, which fast-tracks projects that involve public transit (including bike lanes and pedestrian routes). The law limits the ability of individuals to delay projects by requesting environmental reviews.

Keystone Commercial Brokerage serves the needs of commercial real estate investors in the Santa Clara and San Mateo counties, specializing in land, multi-family, office, and industrial property. Paul Phangureh has over 18 years of experience in buying and selling in the Santa Clara and San Mateo County areas. Contact Paul at 650-924-2544, or email at [email protected]