A Q&A With BB&K Of Counsel Todd Leishman and Partner Alisha Winterswyk
The last couple of years have been transformative for housing and development in California. Among the new laws passed in the last two years are a variety that seek to address the State’s ongoing housing shortage. Some of the new laws also aim to respond to the impacts caused by the COVID-19 pandemic and the resulting economic downturn. As we lived with these laws through the pandemic and beyond, we have given them a thorough read to decipher the nuance of some of the complicated implications.
Below is a brief overview of the new laws and a thorough Frequently Asked Questions section that addresses some of the major implications to municipalities:
The Laws: SB 330 and ADUs
The Housing Accountability Act
Senate Bill 330 (2019) made changes, many of which are in effect only until Jan. 1, 2025, to the Permit Streamlining Act and the Housing Accountability Act and establishes the Housing Crisis Act. Under the new rules, cities and counties will be limited in the ordinances and policies that they can apply to housing developments.
ADUs
The Legislature passed a handful of new laws in 2019 and 2020 that further limit local regulation of accessory dwelling units, or ADUs. The Legislature’s goal is to accelerate ADU development throughout the State.
FAQs
Because of the firm’s reputation for planning, zoning and development, Best Best & Krieger LLP has received many questions from clients about the new laws and how they apply to existing and potential projects, including the following:
Q: Do we have to forget about subjective standards under SB 330?
A: No, we do not forget about subjective standards. Under the Housing Crisis Act, municipalities are precluded from adopting NEW subjective standards until 2025. However, they can still be thoughtful about how to apply subjective standards that were already in effect as of Jan. 1, 2020.
The need for thoughtful application of subjective standards isn’t new. Long before SB 330, cities and counties were already limited in their ability to deny or condition a housing development based on a subjective standard. The crux of this limitation lies in the Housing Accountability Act, and it has been law for years. SB 330 just amended the Housing Accountability Act to make it dovetail with the bill’s new preliminary-application provision for even earlier vesting.
Q: We can approve a project for N units, and then people can add twice as many units for a total of 3N units and there is no CEQA review?
A: Correct. There is no CEQA review for ministerially approved ADUs. The state requires ministerial approval of both an ADU and a junior ADU on a lot with a single-family home, as well as of multiple ADUs on a lot with a multifamily dwelling structure. This potentially allows a full tripling of number of dwellings on one lot — without any further CEQA review because there is no discretionary approval involved.
This is rapidly evolving, and there may be potential implications for general plan environmental impact reviews. It may be only a matter of time before municipalities have to revisit general plans and require EIR reviews at the onset of the development of the primary residential uses. Instead of X dwellings as anticipated in the plan and EIR, there are potentially 3X dwellings. Changes in the law raise this question but don’t answer it. Consult early with your CEQA and land-use counsel.
Q: Can municipalities require a direct utility connection and charge a connection fee for an ADU?
A: Yes, in most situations, they may. When any ADU is built with the main house, a municipality may treat it like a new house and require a full separate connection and impose its full normal connection-fee and capacity-charge. It’s business as usual when the ADU is built with the main house, regardless of the type or configuration of the ADU.
If the ADU is not built with the main house, then municipalities must be completely hands-off when the ADU is created by converting space in the main house or in an existing accessory structure on a lot with a single-family dwelling. The municipality may not require a direct connection or impose any connection fee or capacity charge. (Note, junior ADUs are, by definition, created from space in the main house and are therefore covered by this exemption.)
For any other ADU (i.e., not built with the main house and not a converted ADU or JADU), a municipality may require a direct connection and may require a connection fee and capacity charge, but the fee or charge must be reduced, proportionate to the relative floor areas or the relative number of plumbing fixtures in the ADU versus the main house. (This gets complicated if the ADU is larger than the existing house. Consult with your attorney early if this situation arises.)
Q: At what point do a developer’s rights vest under the Housing Accountability Act?
A: A developer’s rights vest under the Housing Accountability Act as soon as the developer submits a preliminary application (commonly, a “pre-app”). Every municipality is supposed to have its own preliminary application and related process, but it must mirror the statute and the form pre-application that HCD has developed applies if a municipality hasn’t created one of its own. There are only a few questions that the developer needs to answer, but some of the information is quite detailed (e.g., detailed elevations, showing exterior materials and colors of every building in the project). Note: The pre-application does not give developers a right to move forward with their project; they must submit a full application (within 180 days of the pre-application) to proceed. However, submission of a complete pre-application locks in the universe of rules that may be applied to the project. Talk with your attorney early in the pre-application process to ensure that the municipality follows the myriad rules relating to vesting and the deadlines triggered by pre-application submission.
Q: How do we streamline housing?
A: One significant way to streamline housing is to provide a path for ministerial approval of certain (if not all) housing projects. In the City of Los Angeles, officials established robust but purely objective standards for certain housing projects. The city shouldered the burden of CEQA review and determined the precise criteria — home and lot sizes, aesthetic, etc. The approval process is purely ministerial now that the standards are adopted. The promise of purely ministerial approval — and no CEQA — draws developers because it eliminates the significant cost and uncertainty that comes with CEQA litigation.
Most municipalities have a mix of subjective and objective criteria and standards in their general plans and zoning codes. A city or county can replicate L.A.’s ministerial-approval path by boiling down the results of its subjective-review process into objective standards. To be effective, the city or county would have to front-load the thinking that typically goes on in a hearing on a particular project and enshrine the results in a concrete list of requirements. The goal is to develop objective standards (for example, include specific features that: make a project this big, result in the project looking like this, incorporate these kinds of amenities and mitigation measures, etc.) so that when a development is submitted in the future the development gets reviewed administratively and approved ministerially, with no public hearing and no CEQA review that is specific to that project. The CEQA clearance would have theoretically happened up front when the standards were developed. If cities and counties can do the analysis all at once at the front end, it would streamline housing developments that usually get bogged down in the CEQA quagmire. While CEQA can be a significant investment, costs might be susceptible to recapture through future development fees and grant resources.
Cities and counties must still ensure that legal lots are created and accepted by the assessor. The government code is very clear that despite CEQA review, municipalities must create legal lots for ownership that comply with the Subdivision Map Act. However, if a developer already has a legal lot, a municipality might clear the way going forward by providing a ministerial-approval path.
BB&K provides California public agencies with summaries of some of the most critical legislation to ensure they stay in compliance while working to serve their communities. If you have questions or concerns about the new laws or their impacts on housing in their area, please contact one of our attorneys to vet through the implications.
This article first appeared in PublicCEO on June 25, 2021. Republished with permission.
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