Bill extends exemption from CEQA and discretionary entitlements for housing projects while adding the Coastal Zone to the mix
If you are having trouble keeping track of all the housing bills in California this year, there’s a good reason—Gov. Gavin Newsom has signed 56 this year alone to address the state’s unyielding housing shortage. Previously, we wrote about a few of these bills, including Assembly Bill 1287, which puts further weight behind the Density Bonus Law, and Senate Bill 4, the Affordable Housing on Faith and Higher Education Lands Act of 2023. Here, we cover yet another: SB 423. This bill extends the life of and expands upon a landmark state law (known as SB 35) that removed the bureaucratic hurdles developers often blame for slowing down housing projects, but only in cities that haven’t met state-mandated housing quotas. SB 423 also extends these provisions to coastal cities that were previously exempt.
Passed in 2017, SB 35 created a streamlined, ministerial approval process for qualifying multifamily and mixed-use affordable housing projects in localities that had failed to meet their Regional Housing Needs Assessment (RHNA) goals. Projects that qualify for SB 35, therefore, are exempt from discretionary entitlements and are not subject to the requirements of the state’s rigorous California Environmental Quality Act (CEQA). Based on a 2023 report from the UC Berkeley Terner Center for Housing Innovation, SB 35 has become the streamlining method of choice among affordable housing developers with 156 projects—a total of 18,000 new units—having been submitted or approved between 2018 and 2021. Of note, the vast majority of those projects were 100% affordable due to restrictive labor requirements imposed on mixed-income developments. SB 35 was previously intended to sunset on Jan. 1, 2026.
SB 423 was proposed by Sen. Scott Wiener to extend the operation of SB 35 until Jan. 1, 2036, and expand upon its applicability, including in the following ways:
- Notably, whereas SB 35 was explicitly inapplicable in the “Coastal Zone”—a portion of California’s coast protected under the California Coastal Act—SB 423 allows for the application of SB 35 in portions of the Coastal Zone subject to certain exceptions. For instance, SB 35 would still not apply in areas of the Coastal Zone that are closest to the beach, vulnerable to five feet of sea level rise, located within 100 feet of a wetland, not zoned for multi-family housing, or areas not subject to a certified local coastal plan or land use plan.
- Similarly, the bill amends existing law to apply SB 35 in specified hazard zones and some high fire severity zones, provided that the property is not located within the State Responsibility Area, as defined in the bill.
- The bill prohibits a local government from requiring, prior to approving a qualifying development, compliance with any standards necessary to receive a post-entitlement permit.
- Finally, the bill amends the required labor standards for mixed-income projects, a major point of contention among housing advocates and construction unions. While SB 35 required the use of “skilled and trained” labor for all but 100% affordable projects, SB 423 instead sets up a three-tiered regime for projects that include market-rate units: projects with fewer than 10 units have no additional labor provisions, projects between 10 and 50 units must pay prevailing wage, and projects with greater than 50 units must employ apprentices and provide health care for workers. An additional nuance is that projects over 85 feet in height (generally projects that use steel-frame construction), must utilize a “skilled and trained” workforce.
As local jurisdictions push to adopt compliant housing elements for the next housing cycle, with many jurisdictions failing to do so and many more failing to rezone sufficient sites to meet their RHNA goals, the SB 35 process has continued to gain in popularity amongst affordable housing developers. With SB 423 extending the life of this process and allowing for its application into portions of the Coastal Zone, we can expect this trend to continue.
This document is intended to provide you with general information regarding SB 423 in California. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.