New Law Creates Streamlined, Ministerial Approval Process for Certain Housing Projects

Governor Brown recently signed SB 35 into law, creating a streamlined approval process for certain housing projects. SB 35 requires local agencies to ministerially approve multifamily housing projects that meet a long list of standards if the Department of Housing and Community Development (“HCD”) determines that the local agency has issued building permits for fewer housing units than its share of the regional housing need, by income category. Unlike housing elements, demonstrating that zoning allows for the creation of the required number of units will be insufficient.

By creating a streamlined ministerial approval process for multifamily housing developments, SB 35 has the potential to change the way housing projects are reviewed and approved. The streamlined ministerial approval process would remain in effect through January 1, 2026.  However, it remains to be seen whether the requirements to take advantage of the streamlined approval process will be too burdensome for developers to elect to take advantage of it. Below is an explanation of key requirements in SB 35, and a checklist outlining the process for determining if a project qualifies for streamlined review is available here.

SB 35 is intended to increase the supply of market rate and affordable housing in California by requiring local governments to promptly approve eligible projects.  In order to qualify for streamlined processing, the applicant must propose a project that deed restricts a specified percentage of the project’s units to be affordable to households making below 80% of the area median income.  The percentages that the applicant is required to provide are dependent on the local agency’s progress toward meeting its RHNA obligations:

1. 10% affordable: if the latest production report submitted by the agency reflects that fewer units of above moderate income housing (above 120% of median income) were approved than required by the RHNA during the reporting period (either the first or second five-year period of the RHNA cycle). This 10% requirement applies if the project is over 10 units. If the project is 10 units or less, no affordability requirement applies.
2. 50% affordable: if the latest production report submitted by the agency reflects that fewer units of below moderate housing (80% of median income and below) were issued building permits than required by the RHNA during the reporting period.

If the agency’s inclusionary zoning ordinance requires a greater percentage of affordable units, the greater percentage applies to the project.

In addition to satisfying these affordability requirements, the proposed housing development must satisfy numerous other standards established by SB 35. A partial list of these standards includes:

• Density & Zoning:  The proposed project must be consistent with objective zoning and design review standards and not exceed the maximum density allowed within the general plan land use designation.
• Site Location:  The project may not be located on a site that is in a coastal zone, a high fire severity zone, within an earthquake fault zone, on a flood plain,  prime farmland or wetlands, or on certain other areas designated in the statute. Projects located in these areas may still qualify for streamlined review if they meet certain additional requirements. The project site must have at least 75% of the perimeter developed with urban uses.
• Existing Housing:  The project may not require the demolition of existing affordable housing or housing subject to rent control or be on a site previously used as rental housing within the previous 10 years.
• Labor Standards:  The applicant must certify, for projects greater than 10 units that are not otherwise considered a public work, that it will pay prevailing wage or the equivalent of prevailing wage. Applicants located in jurisdictions meeting certain population and geographic requirements will also need to certify that the project will meet “skilled and trained workforce” requirements specified in the bill.

A local agency must notify the applicant within 60 days of submittal if the proposed housing development conflicts with any of the applicable “objective standards” (or 90 days if the development is more than 150 units).  If the local agency does not provide a written determination to the applicant within the required time period, the proposed development is deemed to satisfy all of the required standards.  Similarly, any objective design review or public oversight of the development must be conducted by the local agency within 90 days of the project submittal (or 180 days if the development is more than 150 units).  Project approvals under SB 35 last a minimum of three years.

Meyers Nave is continuing to analyze SB 35, and is preparing a more comprehensive review of its impacts.  Meyers Nave attorneys Steve Mattas, John Bakker, Jon Goetz, and Alex Mog are available to consult with local government agencies and other interested parties regarding all aspects of this important legislation.