Happy Tuesday and welcome to another edition of Rent Free. This week’s stories include:
- A new bill introduced by Sen. John Fetterman (D–Pa.) and Rep. Lisa Blunt Rochester (D–Del.) aims to help localities reform their zoning codes through consultation with the U.S. Department of Housing and Urban Development.
- The University of California, Berkeley, at long last, gets the California Supreme Court’s blessing to move forward with a contentious redevelopment of People’s Park.
- Austin considers applying an “equity overlay” to its “missing middle” reforms, much to the alarm of some YIMBYs who say the new overlay will only reduce new housing construction.
But first, our lead story on whether a proposed California bill would give “more teeth” to the state’s builder’s remedy law or defang it entirely.
YIMBYs Divided on Reforms to ‘Builder’s Remedy’
Over the past few years, developers across California have been dusting off a little-used provision of state housing law called the “builder’s remedy” to try to get massive residential projects approved in communities that are out of step with state housing law. They’ve had limited success.
The builder’s remedy law prevents communities without state-approved “housing elements”—lengthy plans outlining how local laws will change to accommodate new housing—from denying residential projects just because they’re inconsistent with local zoning codes.
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In theory, this would allow developers to build projects of unlimited density in the 183 jurisdictions that don’t have a state-compliant housing element. In practice, ambiguities in state law and persistent local intransigence have seen most builder’s remedy projects stalled in the courts or negotiated down to smaller projects with fewer units.
Proposed Fixes
Enter Assembly Bill (A.B.) 1893, authored by Assemblymember Buffy Wicks (D–Berkeley) and supported by California Attorney General Rob Bonta, which aims to make the builder’s remedy process more predictable and functional for developers and a little less scary and offensive for cities.
“The message to local jurisdictions is clear—the days of shirking your responsibility to your neighbors are over,” said Wicks in an April press release, when her bill was first introduced.
For developers, Wicks’ bill attempts to clarify the kinds of standards local governments can apply to builder’s remedy projects, streamline project approvals, and lessen project costs. For cities, Wicks’ bill would impose density caps on builder’s remedy projects and limit the areas where they could be built.
Given the difficulty that developers have had in getting builder’s remedy projects approved, the bill would seem to offer a win-win compromise.
Uncertain Improvements
But many YIMBY housing advocates are skeptical of the bargain the bill tries to strike: its process improvements are minimal and its density caps will undermine many builder’s remedy projects.
“When we look at the uncertainty that they’re trying to take away, it’s like 5 percent of the uncertainty,” says Sonja Trauss, the executive director of YIMBY Law. Meanwhile, “there are whole [categories] of builder’s remedy projects that are possible now that would become just off the table.”
The current builder’s remedy law says that local governments can’t disapprove projects for being inconsistent with local zoning, but they can require they abide by development standards consistent with meeting state housing goals, without defining what those development standards are.
A.B. 1893 attempts to clear this up by saying that cities can only apply “objective development standards” that don’t make a project physically impossible and don’t add to a project’s “actual costs.”
Trauss argues that this will do little to prevent builder’s remedy projects from ending up in court. A city eager to prevent a builder’s remedy project could impose expensive or impractical development standards and argue they don’t increase costs. A developer will disagree and sue over standards. At the end of the day, projects still end up in court.
Two Steps Back
Meanwhile, the bill would impose density caps on projects of between two to three times the base density allowed by existing zoning. Builder’s remedy projects could also only be built on land currently zoned for housing, retail, office, or parking. Current law has no such restrictions.
Some builders’ groups complain that these density caps would make many builder’s remedy projects financially infeasible.
“Builder’s remedy only applies when a jurisdiction’s housing element doesn’t comply with state law and if it does not comply with state law, chances are it has very low base density,” says Andrew Malick of the Council of Infill Builders.
Being able to build at three times a city’s existing duplex densities, he says as a way of an example, isn’t that much of enticement.
These density caps could also discourage cities from more broadly reforming their zoning codes.
Builder’s remedy projects are intended to work as a stick: If a city doesn’t broadly reform its zoning code to be more development-friendly, it runs the risk that it will have no ability to say no to residential mega-projects totaling thousands of units.
But if builder’s remedy projects are capped at lower densities, there’s less of an incentive to adopt a compliant housing element or risk a builder’s remedy project.
Much Ado About Affordability
A.B.
In 1893, there was a contradictory approach to reducing project costs in builder’s remedy projects by lowering the affordability requirements. The current law states that 20 percent of units in a builder’s remedy project must be affordable to low-income households or 100 percent to moderate-income households. A.B. 1893 proposed to change this requirement so that only 10 percent of units must be affordable to very low-income households.
This change would mean a lower percentage of units below market rate, but also lower rents that developers could charge. Additionally, the bill would eliminate affordability requirements for smaller builder’s remedy projects on single-acre sites. However, there is concern that local governments could apply their own affordability mandates to these projects, potentially undermining the bill’s intent.
Despite these concerns, there are positive aspects of A.B. 1893 that would allow builder’s remedy projects to make use of incentives and waivers provided by state laws. These provisions aim to streamline the approval processes for qualifying projects. The bill has passed the California Assembly and is now being considered by the California Senate.
In a separate development, the California Supreme Court ruled that noisy students are not considered pollutants, allowing the University of California, Berkeley to proceed with a student housing project on People’s Park. This project had been delayed due to legal challenges regarding noise pollution under the California Environmental Quality Act. The ruling sparked significant controversy among CEQA observers, who feared that such a broad interpretation of the law could potentially be used to obstruct nearly any housing project.
“In 2023, the California Legislature passed a very limited bill stating that residential noise is not considered an environmental impact requiring CEQA study. Given this law, it was not surprising that the recent Supreme Court ruling allowing the People’s Park project to proceed,” some scholars argue that this ruling signifies a shift where California courts may be less inclined to support the broadest interpretation of CEQA.
The city council of Austin, Texas, has recently put a pause on implementing certain zoning reforms in areas vulnerable to displacement and is contemplating a permanent “equity overlay” that would restrict new development in these neighborhoods.
In other news, New York Gov. Kathy Hochul’s decision to indefinitely delay the implementation of tolls for drivers entering lower Manhattan has elicited mixed reactions from commuters and transit advocates. Additionally, the YIMBY Act has unanimously passed the House Financial Services Committee.
The Cincinnati City Council has approved a series of zoning reforms that will allow for multi-unit development in more parts of the city. National Public Radio covers a developer’s proposal to construct the tallest building in the country in Oklahoma City. Judge Glock of National Review discusses the concerning growth of government-sponsored mortgage companies, while Bloomberg critiques the economic feasibility of the “15-minute city” concept.
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