California Passes Bill to Streamline Affordable Housing Production in Commercial Zones

The California State Senate and Assembly approved the “Affordable Housing and High Road Jobs Act” (AB 2011) on August 29. The bill, introduced by Assembly Committee on Housing and Community Development Chair Buffy Wicks, establishes by-right approval for affordable housing development on commercially zoned land. The bill passed with overwhelming bipartisan support in both houses of the legislature. Governor Gavin Newsom is expected to sign the bill before a September 30 deadline.

AB 2011 will allow housing development in areas that are currently zoned for parking, retail, or office buildings. The bill exempts housing projects in these commercial areas from local approval processes and California Environmental Quality Act (CEQA) review – which is frequently invoked to delay housing construction – provided that the project meets affordability, labor, and other standards specified in the bill. Projects that qualify for by-right approval can be 100% affordable housing or mixed-income housing. Mixed-income housing developments are limited to commercial corridors (typically the locations of strip malls and parking lots) that are wide enough to accommodate increased density and transit, while 100% affordable housing can be developed in a wider range of commercial zones. All development must occur within infill areas, which will reduce sprawl, limit greenhouse gas emissions, and ensure that residents are connected to existing transit and infrastructure.

Many housing advocates across the state, including NLIHC state partners, strongly support AB 2011 and celebrated its passage. “The potential impact that this legislation could have on revitalizing communities, curbing climate emissions, and keeping the promise of the California Dream for Californians struggling with housing insecurity cannot be overstated,” said Christopher Martin, policy director of Housing California. “When we published our multi-tiered plan to address the housing crisis, Roadmap Home 2030, in concert with experts and advocates across the state, we proposed the conversion of unused commercial and retail spaces as a viable path for producing affordable housing, creating jobs with middle-class wages and workplace protections, and preserving natural habitats and green spaces. By working with leaders in the Assembly, Senate, and across the labor and affordable housing development sectors to ensure that this vision comes to fruition, we have reminded everyone here – and across the country – that innovative, creative, and forward-thinking solutions are what make California a truly Golden State.”

“AB 2011 is a breakthrough in the affordable housing landscape,” said Abram Diaz, policy director of the Non-Profit Housing Association of Northern California (NPH). “It unlocks over 100,000 acres to build homes for California’s working families and does so while advancing our ambitious climate agenda and supporting workers. With this bill, we’re turning commercial blight into communities and the housing crisis into opportunity. This is just the beginning of a strong partnership to advance housing solutions – on the ground, at the job site, in the Capitol, and beyond.”

To qualify as an affordable housing project under AB 2011, a development must make all units affordable for low-income households to rent or own. Mixed-income rental housing developments must make 8% of units affordable to very low-income households and 5% of units affordable to extremely low-income households, or 15% of units affordable to low-income households. Mixed-income owner-occupied developments must either make 30% of units affordable to moderate-income households or 15% affordable to low-income households. For both affordable and mixed-income projects, rental homes must be deed-restricted to maintain affordability for 55 years and owner-occupied homes must be deed-restricted to maintain affordability for 45 years.

Housing developments must meet or exceed geographically appropriate residential density and height standards, which vary based on location and affordability restrictions. The bill does not apply to sites that contain tribal cultural resources, are located within 500 feet of a freeway or 3,200 feet of an oil or gas refinery, or are located within state-designated high fire hazard zones. Construction under AB 2011 cannot result in demolition of existing housing or historic structures.

Researchers estimate that AB 2011 will spark much-needed growth in housing production in California. A recent analysis indicates that the mixed-income housing provisions could lead to the development of 1.6 to 2.4 million homes, including 300,000 to 400,000 income-restricted affordable homes. For every 100 low-income renter households in California, there are only 69 affordable and available homes. The projected increase in housing production under AB 2011 would mark significant progress towards closing this gap. The shortage, however, is most concentrated among extremely low-income renter households, for whom there are only 23 affordable and available homes for every 100 renter households. A small portion of new housing constructed under AB 2011 will be deeply targeted to this population.

The bill’s passage followed weeks of lengthy negotiations between legislators and labor groups, which were divided in their stance on AB 2011. The state’s Conference of Carpenters was among the leading labor supporters of the bill, while the Building and Construction Trades Council (the Trades) opposed the bill. The Trades successfully lobbied to block similarly ambitious housing proposals in past legislative sessions, and supporters were concerned that the Trades’ opposition would prevent the bill from moving forward. The Trades pushed for language that would require a portion of the construction workforce to be unionized, while the Carpenters argued that not enough construction workers are unionized to meet the demand for labor that AB 2011 would create.

Although the labor groups never came to a compromise on AB 2011, the Trades agreed to stop opposing AB 2011 if another housing bill that contains skilled and trained workforce requirements  – Senate Bill 6 – also moved forward. The Trades’ shift from opposition to neutrality ensured that the bill would have sufficient support to pass a floor vote in both houses of the legislature. The final legislative text of AB 2011 requires all projects to pay prevailing wages, which reflect the wages set in collective bargaining agreements between unions and employers, and projects of 50 or more units must provide healthcare benefits to their workers. Contractors must participate in state-approved construction apprenticeship programs or request the dispatch of apprentices from a program, but the project can still move forward if there are no apprentice workers available. The bill contains enforcement provisions to ensure that these labor standards are met.