A California housing law led to thousands of new homes, report says. Why that's not enough

One of California's most powerful housing laws helped lead to the construction of thousands of new homes, according to a new report published Thursday, providing an early indicator of success while also highlighting the difficulty the state faces in solving its multimillion-unit shortage.

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Between 2018 and 2021, Senate Bill 35 has led to 156 pending and approved housing projects in California, according to an updated study published Thursday by the UC Berkeley Terner Center for Housing Innovation. Those projects total 18,215 proposed new units.

The report comes as state lawmakers consider expanding the housing law's scope and extending it another 10 years beyond 2026, when the state mandate to streamline certain housing developments is scheduled to expire.

The report specifically showed how SB 35 has been used to bolster affordable housing stocks in cities across the state. Of the 156 projects, nearly two-thirds are considered 100% affordable, meaning the housing was built specifically for lower-income families.

"We see SB 35 working really well when it comes to producing affordable housing," said Ryan Finnigan, one of the report's authors. That's likely because affordable housing projects frequently come with public funding, which require labor standards that the law already has baked into its requirements, Finnigan said.

The law went into effect in 2018 and was part of a broader package of housing bills signed by then-Gov. Jerry Brown to encourage development in California.

The law created by SB 35 allows housing developers to bypass much of the typically bureaucratic process required for building multi-family projects, though only in cities that are not on track to meet state-mandated housing goals.

To qualify a project, developers must stick to "infill" projects, or building in urban areas that already have development, and adhere to certain labor standards, which often means using a unionized workforce. A certain percentage of the units are required to be affordable, with the amounts depending on how far behind the city is on its housing goals.

The law has incentivized developers to include more affordable units in their projects, said Melinda Coy, the proactive accountability chief for the California Department of Housing and Community Development. Developers can tap into public funding streams and expedite construction if their project includes more affordable units.

"Every single unit counts in order for us to achieve our objectives and be able provide the amount of affordable housing we need in the state," Coy said.

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The law has helped shorten timelines for production, said David Garcia, the Terner Center's policy director, but it's not able to "facilitate the amounts of housing we need as a state" on its own. State officials say that California must plan for 2.5 million new homes over the next eight years, with at least 1 million set aside for low- to very low-income households, in order to meet housing demand and to mitigate a worsening homelessness crisis.

"SB 35 is a really important tool, but it's certainly not the only one," Garcia said.

Most projects approved under the housing law are in Los Angeles County and the Bay Area, though the law applies to most of the state. The report pointed to a housing development for seniors and veterans experiencing homelessness at 11010 Santa Monica Blvd. in Los Angeles as a successful SB 35 project.

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Some cities already had robust housing planning departments that were able to implement the streamlined process more efficiently, Finnigan said, while others needed additional time. Other roadblocks included local resistance, whether from city officials themselves, or from residents skeptical of more housing in their neighborhoods.

The state has on a handful of occasions had to step in and help cities get into compliance with the law, including Cupertino and Burbank.

State Sen. Scott Wiener, the San Francisco Democrat who wrote SB 35, said more time is needed to ensure it's as successful as he anticipates.

"Every single law always starts out slow," Wiener said. "These laws are complicated and it takes time for people to figure out how to use them."

The Berkeley report analyzed data only through 2021, meaning additional housing projects are already underway.

San Francisco, for example, has 26 total projects either completed, under construction, approved or submitted as of Aug. 1, totaling more than 3,400 units. According to the Los Angeles City Planning agency, changes under SB 35 were used in 33 projects as of the end of 2022. That accounts for nearly 3,000 housing units, according to planning spokesperson Jamie Francisco, with about 98% deemed affordable.

Carly Grob, a senior planner for the San Francisco Planning Department, said the city has been focused from the start on how to make the housing law "as functional as possible," especially around building up the city's affordable housing supply.

"I think it helps us to expedite and prioritize those projects to an enormous extent. Where before we couldn't do that," Grob said. "We literally had to just take affordable projects through the same process that we would take market-rate projects."

Even incremental progress with SB 35 is critical, Grob said: "It has helped start moving the needle, for sure."

The numbers offer insight for state lawmakers currently debating new legislation to expand SB 35's scope, which includes extending it by another 10 years and making more communities eligible for streamlined projects.

That proposal, Senate Bill 423, reduces some of the labor requirements under SB 35, which proponents of the bill said will make it easier to find the necessary workforce to help build the projects.

The proposal still mandates jobs to offer union-level wages and some healthcare benefits, but does not restrict the labor requirements to a "skilled and trained" workforce, which usually means that workers are unionized.

The bill also makes some cities along the California coast that were exempted from the original law now eligible for development, which could lead to more housing in some of the state's wealthiest communities.

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This story originally appeared in Los Angeles Times.